Countrywide Financial Corp. has teamed up with one of its most relentless critics to launch a new program intended to help thousands of borrowers restructure their loans and save their homes.

Countrywide, which announced the bailout program at a press conference on Wednesday in Washington, D.C., is joining the Massachusetts-based Neighborhood Assistance Corporation of America to restructure roughly $21 billion in outstanding loans.

The multi-faceted program will apply to all Countrywide borrowers, including patrons of covering subprime, prime, fixed and adjustablerate loans.

The initiative coincides with Countrywide's own home preservation program, announced a day earlier. Meant to benefit more than 80,000 borrowers, the plan includes refinancing loans into prime or FHA loans, refinancing into Fannie Mae or Freddie Mac's expanded criteria programs for those with credit issues, or implementing loan modifications that borrowers can afford.

NACA will provide counseling programs and develop a "realistic budget" for borrowers.

Each plan will consider the borrower's net income after expenses - such as car notes and medical bills - according to Pam Brooks, NACA's housing services director. "We will look at those things that never get considered in a traditional loan qualification," she said. "They need to be considered as part of every day living."

Zena Collins, a Countrywide client from Maryland, had her loan adjusted from $2,200 a month with 11% interest rate to $1,368 with a 6% interest rate. She called the refinancing a "stunning" turn for her. "I feel like I can breathe again," she said, during a company Webcast. "I can live my life and not think about what I can afford this month."

According to Sandor Samuels, Countrywide's executive managing director, the deal was brokered after a meeting with NACA Chief Executive Bruce Marks that lasted for 48 consecutive hours. "We found we had much more in common than we had differences," he said. Marks called the initiative "revolutionary."

But following a summer in which the country's largest and arguably most beleaguered mortgage lender had to tap millions in emergency loans to shore up a liquidity crisis, it is perhaps not surprising that Countrywide would also face troubling news.

The company was expected to announce its third-quarter earnings on Oct. 26, after press time, and analysts predicted losses between $700 million to $1.8 billion, according to published reports.

Countrywide declined comment this week, citing a "quiet time" before the earnings were to be announced.

The deepening financial woes come amid calls for Chief Executive Angelo Mozilo to step down for securing profits in excess of $100 million by speeding sales of company stock. CtW Investment Group, a Washington, D.C.-based activist-shareholder group for pension funds, sent a four-page letter to Countrywide on Oct. 19 demanding Mozilo's ouster.

"We want the company to turn around," said Brishen Rogers, legal counsel for CtW. "There's no agenda here beyond that. We think that Mozilo is setting a very, very bad example right now.

"He's clearly losing shareholder confidence and market confidence. They need the right leadership at the top if they are going to turn around in the short-term."

The group sent a subsequent letter to Countrywide on Oct. 25 recommending that Lynn Turner, former chief accountant for the Securities Exchange Commission, replace Henry Cisneros, who resigned from the company's board on Wednesday. Turner serves as a trustee of the Colorado Public Employees Retirement Association, a pension fund with close to $40 billion in assets.

"There should be representation on the company's board who is clear of shareholder activist and will keep open communication with shareholder activists," said Rogers.

He added that the pension funds represented by CtW have approximately 3.5 million shares invested with Countrywide.

Countrywide did not return a call seeking comment.

(c) 2007 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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