Nonprofits Complain about Countrywide Loss Mit Team

Nonprofits ACORN and National Training and Information Center increasingly are finding it difficult to work with the loss mitigation staff of Countrywide Financial Corp., the nation's largest residential servicer.

Countrywide - which has a subprime delinquency rate north of 20% - is telling investors and regulators that it has 2,700 employees working on loss mitigation, boasting that it completed more than 17,000 loan modifications during first nine months of 2007.

To CFC, these accomplishments might appear to be a success, but Michael Shea, executive director for ACORN Housing Corp., isn't so sure.

He says Countrywide is "clearly understaffed" and overwhelmed by the volume of troubled borrowers it's dealing with. He faults the company for failing to develop a streamlined loan modification program.

"If someone is current and they have a reset coming, we see Countrywide doing very little compared to other lenders," Mr. Shea told Mortgage Servicing News. "For borrowers already delinquent, they will do loan modifications, but it is often a struggle to get there. Often they capitalize the arrears or do a short-term modification." (Based in Chicago, ACORN stands for Association of Community Organizations for Reform Now.)

National Training and Information Center manager Michelle Rodriguez Taylor said that the communication it has had with Countrywide is "absolutely unacceptable."

Telephone calls are not returned and it is difficult to get anyone on the phone, she said. Documents have to be re-faxed because they often get lost, she added. "Countrywide is doing a lot of lip service but they are not following up or doing anything to really help homeowners," said Ms. Taylor.

Based in Chicago, NTIC was founded by the late Gale Cincotta, who is credited with being the "mother" of the Community Reinvestment Act. New NTIC executive director George Goehl has called on the Calabasas, Calif.-based Countrywide and Wells Fargo Home Mortgage, Des Moines, to implement a two-year moratorium on resets.

The moratorium would allow for loan workouts to proceed while a plan is developed for handling 600,000 ARM resets, Mr. Goehl said. "We feel like it is a tsunami-like foreclosure crisis but, so far, it has been a Katrina-like response."

NTIC singled out Countrywide and Wells Fargo because they are the two biggest players.

Wells Fargo said its foreclosure rate is below the industry average and it works hard to keep customers in their homes. "Moratoriums may appear to offer relief for consumers in the short run, but actually can hurt borrowers long term. At the end of a moratorium, a significant event would need to occur to enable the customer to get caught up," the company said.

CFC partnered with ACORN Housing Corp. following Hurricane Katrina to help establish contact with its borrowers in New Orleans. ACORN also has worked with CFC in contacting delinquent borrowers in Detroit and Cleveland.

Countrywide's approach to loan modification is marked with "inconsistencies" and "old-school approaches that don't work today," Mr. Shea said. "They consider a deed-in-lieu as a modification, which is intolerable."

For subprime borrowers with 2/28 ARMs, CFC will offer a "two-step mod," which adjusts the interest rate upward for two years but not as high as the scheduled reset. "We've seen a 30-year fixed-rate modification but it is the exception," he added.

NTIC and its affiliate community group have relationships with Chase Home Finance, CitiMortgage, Ocwen Financial Corp. and Select Portfolio Servicing to help distressed homeowners.

"People coming to affiliates are getting servicers on the phone and 95% of the time we are keeping them in their homes," Mr. Goehl said. With Countrywide, "we are lucky to get someone on the phone. People are experiencing this all around the country." (c) 2007 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com/ http://www.sourcemedia.com/