Concerns About Countrywide Home Loan Modification

Countrywide Bank, which was bought by Bank of America in July of 2008, is a major mortgage lender. Many homeowners with mortgages from Countrywide heard about its new plan to help more homeowners than ever refinance and modify their loans when they are having trouble paying. But they may have more questions about the Countrywide home loan modification process, what it entails, and who qualifies.

First off, Countrywide has gotten a bit of a bad reputation in the mortgage lending business. It was sued in 2008 by State Attorney Generals for predatory lending practices, and doing a simple Internet search for "Countrywide loans" will probably result in lots of angry messageboards from dissatisfied customers. Among the top complaint is that Countrywide customer service reps never tell customers the same thing twice, or that miscommunications or clerical errors have cost homeowners a lot of time and money.

As a result of the lawsuit, Countrywide announced a statement that they had a new plan in place to help troubled homeowners in a streamlined fashion. For loan modification, Countrywide’s goal is to lower the monthly payment to within 34% of the gross monthly income so that people can afford to make their monthly mortgage payments. The modified loans will feature step-rate interest payment adjustments as time goes on. To be eligible for a Countrywide home loan modification, you must be a current Countrywide borrower who occupies the home as a primary residence.

Countrywide plans to modify loans in several ways. For FHA loans, HOPE for Homeowners is a special refinancing program that allows people with low home equity to refinance through a special equity-sharing program. If a homeowner refinances through HOPE and then sells their home later on, they will follow a sliding scale for how much of the home’s equity they will give to the FHA at that time. Other options for loan modification include interest rate reductions, plus principal reductions to restore lost equity.

Even though the past reputation of the company is spotty, if you’ve already got a mortgage with Countrywide then you need to move forward. Be proactive and seek a loan modification if your monthly payments are too high a percentage of your monthly income. Bank of America is trying hard to change the image and procedures of Countrywide, and since the lawsuit new plans for loan modification have been implemented. Countrywide automatically reviews many mortgages and will send letters to borrowers who are 60 days delinquent or may become delinquent to inform them of their loan modification policies.

For more information about loan modifications.