Countrywide moves to ease mortgage terms

CALABASAS, Calif., Oct. 25 (UPI) -- A move by Countrywide Financial to modify mortgages for homeowners facing foreclosure should be a model for national legislation, consumer advocates say.

The plan by Countrywide, a unit of Bank of America based in Calabasas, Calif., is aimed at borrowers with subprime or "option ARM" mortgages and would temporarily cut their interest rates to as low as 2.5 percent. The move has been hailed by consumer groups and by Rep. Barney Frank, D-Mass., The Los Angeles Times reported Saturday.

A spokesman for Frank, chairman of the House Financial Services Committee, called the program "the first truly comprehensive plan we've seen from the private sector."

With Frank and others calling for more efforts to help "Main Street" victims of the U.S. mortgage meltdown in addition to bailouts for Wall Street bankers, the Countrywide program would also allow some borrowers who owe more than their homes are worth to perhaps see their loan balances reduced, giving them equity once again in their properties.

"That sounds like good news, in particular if a huge percentage of other loan servicers go along with it," Robert Gnaizda of the Greenlining Institute, a borrower advocacy group, told the Times.