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The largest U.S. mortgage lender, Countrywide, has announced plans to refinance up to $16 billion in loans, to prevent homeowners from losing their houses to foreclosure.
Countrywide Tuesday said its new program will help some 80,000 borrowers who will be at risk of losing their homes when the adjustable interest rates on their mortgages increase by more than they can afford.
Through the first half of this year, an increasing number of people were not able to pay off so-called sub-prime mortgages given to borrowers with poor credit histories. The rising number of defaults contributed to global economic turmoil.
Countrywide said its plan will allow many of its sub-prime customers to refinance into prime rate and government-backed loans.
On Monday, U.S. Congressman Barney Frank - a Democrat from the northeastern state of Massachusetts - introduced a bill that would restrict risky lending practices, and protect future borrowers.
Last week, Treasury Secretary Henry Paulson called an ongoing housing slump the most significant risk to the economy, and he urged lenders to modify and refinance more loans.
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