To help borrowers at risk of defaulting on home loans, Countrywide Financial Corp. is working with an activist group that had been strongly critical of the nation's largest mortgage lender.
The Boston-based Neighborhood Assistance Corporation of America, which in recent weeks called for a boycott of the Calabassas, Calif.-based company and staged protests at branch offices, said Wednesday it is assisting Countrywide on loan modifications, payment plans and refinancing programs.
As defaults and foreclosures rise, the mortgage industry is under pressure to do more to help financially strapped borrowers hang on to their homes. Countrywide said Tuesday it will begin calling borrowers to offer refinancing or modifications on $16 billion in loans with interest rates set to adjust by the end of 2008.
The NACA announcement made late Tuesday could help restore the company's tattered image. Many consumer advocates had charged Countrywide with being less willing than other lenders to help borrowers modify loans due to reset at sharply higher levels.
Moody's Investors Service recently surveyed 16 companies that service mortgages, such as billing, which account for 80 percent of the market for subprime loans made to borrowers with shaky credit histories. The credit rating agency found that most of those companies had modified only about 1 percent of adjustable-rate loans with interest rates that reset in the first half of this year.
Countrywide executives said they were impressed with NACA's mortgage counseling program, which seeks to move borrowers into traditional 30-year fixed-rate loans and requires income documentation.
Steve Bailey, Countrywide's senior managing director for loan administration, said in a telephone interview, that he couldn't estimate how many borrowers would be helped by the NACA pact. However, he said the company would like to reach similar agreements with other community groups around the country.
NACA has already worked with about 25 Countrywide borrowers the past week, a spokesman for the nonprofit said.
