Help is on the way for homeowners feeling the crunch of the mortgage and credit crisis.
Countrywide, the nation?s largest mortgage lender, said Monday it would refinance $16 billion in loans due to reset at higher payments. Also on Monday, a leading House Democrat introduced a bill to restrict lending practices blamed in part for the current crisis.
Countrywide?s refinancing would target 80,000 borrowers who risk defaulting on their variable-rate mortgages when payments on those mortgages reset through next year at levels they can?t 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,” Countrywide President David Sambol said in a statement.
The $16 billion in loans represents only a fraction of the more than $250 billion total backed by the company, said Chip Reichhart, Northeast regional president of First Horizon Home Loans. But he said the move will help specific loans that Countrywide believes can be spared from foreclosure.
“They?re doing something to help the people that they can help,” he said. “The problem with it is there?s some people you can?t help, that are too far gone.”
Countrywide?s announcement came on the same day U.S. Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, introduced a bill that would remove incentives for those offering exotic or overly expensive loans, and force lenders to give borrowers a variety of suitable loan options.
The bill would urge states to enact stricter mortgage regulations and set up federal regulations if they fail to do so, but wouldn?t help borrowers already facing increased payments when their adjustable-rate mortgages reset.
Frank was hopeful that his bill could pass the House by the end of the year. A similar measure was introduced in the Senate this spring by Sen. Chuck Schumer, D-N.Y., but has stalled.
“There?s been a lot of buzz about [the bill]. I think there?s definitely some positives about it,” said Lance Cassell, managing director of the Hunt Valley-based Better Mortgage Bureau. “Some pieces of the industry are going to have issues with [cutting out incentives], but from consumer perspective, there?s some value there.”
The Associated Press contributed to this report.
