October 23 2007: 4:05 PM EDT
NEW YORK (CNNMoney.com) ? Countrywide Financial, the nation’s largest mortgage lender, announced a program Tuesday to refinance or modify up to $16 billion of its loans.
The program is targeted to 80,000 borrowers who face the risk of default because their current variable rate mortgages would see payments jump to levels they could not afford.
“Countrywide believes that none of our subprime borrowers that have demonstrated the ability to make payments should lose their home to foreclosure solely as a result of a rate reset,” said a statement from Countrywide President David Sambol.
The bank says it has identified 52,000 borrowers, who collectively have borrowed about $10 billion, that it believes it can move into prime loans or those guaranteed by the Federal Housing Administration.
Another 20,000 borrowers who have more severe credit issues but are current with their loan payments could be eligible for modifications of their loans. That group has loans totaling about $4 billion.
Finally, Countrywide said it will send letters offering pre-determined, pre- approved rate reduction for an additional 10,000 borrowers who are delinquent on payments on loans totaling $2.2 billion.
The move was welcomed by foreclosure prevention counselors. Everyone at the Home Ownership Preservation Foundation, which operates a foreclosure hotline (1-888-995-HOPE), was talking about it, according to spokeswoman Tracy Morgan.
“We’re impressed,” Morgan said. “It’s going to be an important offering.”
