Countrywide to aid more mortgage borrowers

By Jonathan Stempel

NEW YORK (Reuters) - Countrywide Financial Corp CFC.N, under heavy pressure to help borrowers avoid foreclosure, on Monday announced an expanded program to help people with subprime mortgages stay in their homes.

The program created by the largest U.S. mortgage lender and the Association of Community Organizations for Reform Now, or ACORN, comes as hundreds of thousands of borrowers nationwide face rising rates on their adjustable-rate mortgages.

It is intended to allow struggling borrowers refinance into less costly fixed-rate loans, or have their monthly payments frozen or lowered. Some economists believe the nation's housing crisis may have helped push the economy into recession.

"From a borrower's perspective, any program to help people stay in their homes is a good idea," said Jaime Peters, an analyst at Morningstar Inc. "Borrowers who can demonstrate they can afford lower payments will be most helped."

Michael Gross, managing director of loan administration at Countrywide, did not say on a conference call what the program would cost or how many borrowers might be assisted, but said he expects the program to last "many years."

The announcement was delayed more than three weeks, after Countrywide agreed on January 11 to be acquired by Bank of America Corp (BAC.N: Quote, Profile, Research, Stock Buzz), the second-largest U.S. bank.

Countrywide in 2007 made about one in six U.S. home loans. It essentially stopped making subprime mortgages, which go to people with poor credit, after critics said it fueled the housing crisis by offering loans that people could not afford. Bank of America has not made subprime mortgages since 2001.

In October, Calabasas, California-based Countrywide announced a separate partnership with the Neighborhood Assistance Corporation of America, another advocacy group, to counsel borrowers. It has also said it helped more than 81,000 borrowers in 2007 stay in their homes and avert foreclosure.