Darlene Stutzman, a young wife and mother from suburban Parma, OH and her husband, Michael, got in trouble when he got sick and had to take an unpaid leave from work. She found out about ESOP (East Side Organizing Project) when she called Cleveland’s 211 government resources line. Michael, who was back at work, was unable to join her for the counseling session
With hard work and diligence on behalf of both the Stutzman family and ESOP counselors they were able to get Countrywide to convert the Stutzmans’ ARM into a fixed rate mortgage at 8.75 percent. The second mortgage was entirely forgiven with the debt wiped out. The couple’s loan payment would drop to $785 a month, plus taxes, and it would stay there, well within their budget.
Dame was surprised: While other ESOP partners have made similar concessions like loan forgiveness, it was the first time Countrywide did it for one of her clients.
But the plan made sense for the company, she said. A single foreclosure costs a lender an average of $50,000, according to a study from Congress’ Joint Economic Committee. Countrywide may be losing money on its original deal with the Stutzmans, but it’s still receiving payments, and it doesn’t have to unload a house in a depressed market.
“It makes good sense, because Countrywide will be collecting on a loan that someone can afford to pay,” said Dame.
Stutzman more reserved about the outcome. “It sounds good, but I think it’s something that should have been done a long time ago,” she said.
Countrywide did not make itself available for comment on this piece.
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