CNN: Countrywide’s Broken Promise

December 8, 2008

Countrywide made a promise to help homeowners struggling after Hurricanes Katrina and Rita, but is now reneging on that promise and cashing in on their hardship.  The company is slapping homeowners with interest and penalties and sending homeowners into foreclosure if they don’t pay.  CNN Money profiled one family who’s been victimized and a former Countrywide employee who’s come forward.

After Hurricanes Rita & Katrina, Countrywide Mortgage offered 90-day mortgage payment deferrals to homeowners affected by the devastation and in many cases 6 month deferrals.  Countrywide represented this as a good deed to help people in their time of suffering and issued a Press Release to promote its actions.

Homeowners were told by agents over the phone “not to worry” about making payments.  They were told deferred payments would be tacked on to the end of their mortgages.  They were assured they would not face penalties like late fees, interest and reports to the credit bureaus.

Countrywide went so far as to tell some homeowners who wanted to pay, not to do it.  In some cases, they even returned checks.  Representatives said the company was not accepting payments from Hurricane damaged areas at that time.  Struggling hurricane victims accepted the offer of help, but soon found out Countrywide was not so charitable in the end.

Many homeowners followed up three months later to make a payment, only to be told Countrywide was reneging on its promise.  The company said it could not add the payments to the end of the loan, without penalty, after all.  Instead, Countrywide told homeowners they would either have to pay the lump sum owed immediately or face a loan restructuring which would cause them to pay thousands of dollars more over the life of their loan.

Devastated homeowners in several states are now in an impossible situation.  Many must dip into savings, if they have any, to make the payments now or face losing their homes-if they try to fight.  The Class Action Lawsuit in Texas, filed on behalf of Elvin and Teresa Hill, hopes to hold Countrywide accountable for its unfair and deceptive practices.  A second Class Action suit was filed in Louisiana on behalf of borrowers Donna and Andrew Helmers and  Desiree Martin.  A third class action was filed in Mississippi on behalf of homeowner Shermanda Brumfield.

Now, it’s three years later and these same homeowners are suffering the effects of more devastating hurricanes, but have yet to have the problems created by Countrywide with Hurricanes Rita and Katrina resolved.