Mortgage Vs. Medicine

"Now that we understand they're having financial difficulties, we'll reach out to them," says spokesperson Jumana Bauwens. "We urge other borrowers in similar situations to contact us." While some loan modification programs require borrowers to be behind on their payments before seeking a modification, she says Countrywide welcomes calls from troubled borrowers even if they're payment record is clean.

While Bauwens could make no guarantees, she said that since the Annese's loan is an Option ARM, they may be eligible for some relief under an agreement Countrywide reached last month with the California Attorney General's office, which had sued the company earlier this year. While the company would need to closely study the family's finances before making a loan modification, Bauwens says they are now routinely converting Option ARM borrowers into fixed-rate mortgages with payments equal to 34 percent of the borrower's income. In some cases, Countrywide is willing to reduce the total amount owed to 95 percent of what the home is currently worth, to help borrowers who are now underwater.

Overall, Bauwens says, Countrywide expects to modify nearly 400,000 mortgages under the settlement. So far this year, the company has already given concessions to over 158,000 borrowers who were having trouble making payments.

But even if Countrywide helps Billy's parents convert to a more affordable mortgage, other experts say they'd benefit from having an outsider take a hard look at their larger financial picture. "There are several different red flags," says Josh Fuhrman, director of counseling at the Homeownership Preservation Foundation. "They refinanced several times, they're [maxing out] credit cards, borrowing from family—they're probably over their heads and need some guidance on how to look at their overall situation, not just their mortgage-related problems."

Fuhrman's organization has counselors available 24 hours a day to help troubled borrowers deal with mortgage problems. They can be reached at 888-995-HOPE.

Amid a deepening recession and with the Thanksgiving holiday approaching, the Anneses' story is a reminder that those of us who are able to pay our bills have much to be thankful for—and that we should keep those who aren't so fortunate, like this family, in our prayers.

—Daniel Mcginn Is A National Correspondent At Newsweek And The Author Of "House Lust: America's Obsession With Our Homes."

© 2008