Countrywide is catching hell from consumer advocates who say they’re not doing enough to help the homeowners they’ve foreclosed on.
While other lenders are refinancing troubled borrowers into fixed rate mortgages, critics say Countrywide is funneling customers into yet another risky ARM loan.
ACORN Housing Director Michael Shea said that while his group is “often able to get workouts” from Countrywide, his team is “very frustrated” with the company because “it takes a long time – months” to deal with a case.
And, Shea said, the company relies heavily on “repayment plans” for its workouts. Such a plan may stave off foreclosure by letting delinquent borrowers pay off what’s past-due over 12 months in addition to their regular mortgage payment. While the servicer is making a concession by not demanding payment all at once, delinquent borrowers have to pay substantially more than their regular monthly payment. And if they fail to pay in full and on time, the lender can reinstate foreclosure proceedings.
One of the biggest complaints from NTIC counselors is that what loan workouts Countrywide does provide serve more as foreclosure postponement than real prevention. “They refuse to make ARMs fixed for the remainder of the loan. Instead, they are only agreeing to do so for 12-24 months, if at all,” said Mark Seifert, executive director of the Cleveland-based NTIC affiliate, The East Side Organizing Project (ESOP), in an e-mail.
Countrywide’s alleged preference for shorter-term loan modifications in Siefert’s experience “is very different from what we see from our lender/servicer partners where EVERY mod includes making the ARM a fixed rate going forward.”
NTIC and its affiliates have partnerships with four servicers: Chase, Citi, Ocwen and Select Portfolio Servicing (SPS). “They’re showing absolute diligent effort to help homeowners stay in their home, not band-aid solutions,” said Michele Rodriguez Taylor, who heads NTIC’s foreclosure-prevention program.
Countrywide responded to the criticism by saying that it “is doing as much as, if not more than, any servicer in the industry, striking the appropriate balance between the interests of borrowers and investors whenever they can.”
It also reminded CNNMoney that it “received the highest ranking for its workout programs from both Freddie Mac and the Department of Housing and Urban Development (HUD), which evaluates servicers based on their use of workouts to avoid foreclosures.” We find this hilarious because Freddie Mac deals exclusively with “prime” loans. Way to change the subject.