IT'S A NIGHTMARE for any homeowner: An interest-rate hike pushes your monthly mortgage payments into such costly territory that you fall behind, and soon the foreclosure notice arrives in the mailbox. Unfortunately, this scenario has already played out for hundreds of thousands of homeowners across the country and could become a harsh reality for many more Americans whose adjustable-rate loans are about to reset in the upcoming months.
Making matters even worse: Home values continue to slide and lending standards remain tight. Those factors have made the one logical solution for homeowners that face ballooning mortgage payments — refinancing their mortgage to a loan with a lower rate — nearly impossible, especially for those with subprime loans.
So when Countrywide Financial, the U.S.'s largest mortgage lender, announced on Tuesday that it was launching a program aimed at helping cash-strapped homeowners by canceling rate resets or modifying their loans, you could almost hear a collective sigh of relief.
After all, lenders are facing a glut of foreclosures, so it's no surprise that they're warming up to the idea of helping delinquent borrowers by, for example, restructuring a mortgage so the homeowner can catch up on missed payments. However, the actual act of a lender like Countrywide reaching out to people who have yet to miss a payment — but are likely to do so because of a pending rate reset — is something new.
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