The country's largest mortgage lender has received plenty of bad press lately, most of it the result of questionable business practices. Its subprime loans are defaulting in record numbers, it has well-documented liquidity problems and then it appears to be stonewalling in helping borrowers facing foreclosure. It isn't fun being the target of that kind attention.
In the past week or so it has abruptly changed course and is clearly trying to polish its tarnished image. Just earlier this week it announced that it'd orchestrate comprehensive workouts for ARM borrowers, including refinances, rate reductions and loan restructurings. In essence, the whole package of mortgage mitigation.
And it's going another step further. It'll be partners with NACA, or Neighborhood Assistance Corporation of America, an advocacy organization that has been pestering Countrywide for years about its mortgage practices. Somehow they are now best of friends and having cozy lunches in corner tables.
The former foes just announced a foreclosure prevention program that'll get results, they promise. The two evidently are serious about assisting distressed homeowners, prime and subprime customers alike. How the initiative works is that borrowers who desire a loan workout will have to pass NACA's semi-tough approval regimen. It consists of an application, a buyer's workshop and then a one-on-one counseling session where realistic budgets are prepared.
The process is not interested in debt-to-income or loan-to-value ratios, rather it concentrates only on incomes and expenses and what the homeowners can afford to pay. After that the loan's balance or the interest rate is carefully adjusted to fit within the established limits. There is a 6-month trial phase and if the homeowners make timely payments, the workout becomes permanent.
Hopefully the program works out for everybody.