Schwarzenegger, Countrywide in mortgage deal

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A day late, my apologies, but worth noting: ‘Four major sub-prime lenders promised to give a break to California homeowners who cannot afford escalating mortgage payments, under a plan announced Tuesday by the lenders and Gov. Arnold Schwarzenegger.’

More, from SFGate.com: ‘Countrywide, GMAC, Litton and HomeEq - which collectively service more than one quarter of sub-prime loans to people with poor credit - agreed to maintain the initial, lower interest rate for some sub-prime borrowers whose rates are scheduled to jump significantly higher. To qualify, borrowers must occupy their homes, have made their payments on time and prove they cannot afford payments with the higher interest rate.’

It’s not clear how long the lenders will freeze rates under the plan, which Schwarzenegger says will save ‘tens of thousands of people from being added to the foreclosure lists.’

Where did the idea come from? According to the governor’s press office, ‘The agreement the Governor negotiated with lenders builds off a proposal put forward by Federal Deposit Insurance Corporation Chair Sheila Bair that encourages lending agencies to keep sub-prime mortgage borrowers at their initial interest rate if they are living in their home, making timely payments, but can’t afford the loan ‘reset’--or jump to a higher rate.’

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Photo Credit: AP
Hat tip: E&A, via email.