Financing Update

This week Countrywide Financial announced that they will restructure or refinance $16 billion in adjustable-rate mortgages that have recently reset to higher interest rates or will reset by the end of next year. Some feel that this proactive move is a little late, while others are appaulding Countrywide. The plan which was outlined to the media would accomplish the following:

Homeowners/borrowers that are in default on their loans because of an interest-rate reset in the past few months, will receive a letter offering to roll back their rate to the previous, lower level. Countrywide expects to modify 10,000 of this type of loan totalling $2.2 billion, by the end of this year.

Homeowners/borrowers that are likely to have difficulty affording an upcoming rate increase and are unable to refinance, Countrywide will modify the loan to a rate that will keep the borrower in their home. They expects to modify 20,000 loans totally $4 billion through the end of next year.

Homeowners/borrowers that had subprime credit, but have been making payments on time, Countryside will offer to refinance them into a lower interest "prime" loan, or a mortgage insured by the FHA, Fannie Mae, or Freddie Mac. The expect 52,000 borrowers would qualify for a new loan and expect to refinance $10 billion in mortgages. These borrowers will have to pay the fees to refinance their loans.

With this relief in sight for some homeowners, Wall Street did not take kindly to this announcement and Countrywide's stock fell considerably. As an agent out there trying to help people, it is positive to see the leadership role that Countrywide has taken on this matter.