However, analysts said the move, which the company''s COO called an "unprecedented remedy" in a media release, is just a public relations measure to draw attention to something that Countrywide and other large mortgage houses have already been doing.

CFC said it has created a special finance unit with about 2,700 employees to work with borrowers who are more or less able to meet their present mortgage payments, but are likely to have trouble continuing to make payments once their adjustable rate mortgages are reset with higher interest levels.

Countrywide seems to be in urgent need of good PR. In its third-quarter earnings, scheduled to be released on 26 October, analysts expect the company to report a net loss of around $1.10 a share.

The company has said it is prepared to refinance up to $10 billion in mortgages and modify the terms of another $4 billion that doesn''t qualify for refinancing. Countrywide said it will give borrowers who qualify the option to refinance into a prime loan or one insured by the Federal Housing Administration.

For borrowers with credit issues, the company will offer Fannie Mae or Freddie Mac''s expanded criteria programs. So far this year, Countrywide said it''s helped more than 31,000 borrowers refinance to prime fixed-rate mortgages, totalling more than $5 billion.

Countrywide also plans to offer a pre-determined reduced rate to borrowers of an additional $2.2 billion, who are late on their loan payments and are having trouble paying because of a recent rate reset.

In addition to sending out letters to debtors as much as 180 days before a scheduled mortgage reset to ensure that the borrowers understand their options, Countrywide has said it plans to set up face-to-face meetings with distressed homeowners by hosting seminars around the country, participating in foreclosure prevention workshops, teaching borrowers about possible foreclosure scams, and offering instant loan workout sessions.

Standard & Poor''s has said the programme might help some borrowers avoid foreclosure in the short term, and Countrywide''s charge-off levels and delinquent loans will likely be lower than they ordinarily would have been. The risk is that charge-off levels will rise later if these same borrowers are unable to keep pace with the terms of the renegotiated loans.

Analysts say the programme is motivated more by practical considerations than any charitable impulse, and the primary beneficiaries will be hedge funds, foreign banks and other institutions that have loaded up on mortgage-backed securities, not Countrywide itself.

It is also a pre-emptive move ahead of proposed legislation in Congress requiring that lenders modify loans instead of allowing resets to occur. Lenders obviously prefer to renegotiate voluntarily, in order to maintain the freedom to negotiate more favourable terms with borrowers.

Consumer rights groups like Americans for Fairness in Lending say the programme won''t help those most in need - homeowners whose loans are already in default. It says the 82,000 mortgages the programme will cover are just a tiny fraction of the 500,000 mortgages due for imminent resets, which Housing and Urban Development Secretary Alphonso Jackson recently said he expects to go into foreclosure.

But analysts also say some borrowers would be better off losing their homes and moving on, whether to rent or buy a more affordable place to live in, now that home prices are coming down. The only problem here is, who will lend to such a recently delinquent borrower?

In September, Countrywide said delinquencies in its mortgage portfolio rose to 5.87 per cent from 5.05 per cent in August. But, it said, half the increase could be because there are four fewer working days in September than in August.

Mortgage loan funding fell 44 per cent from a year ago to $21 billion in September, while its servicing portfolio grew by $215 billion, or 17 per cent from a year earlier, to $1.46 trillion at the end of September. The company expects negative earnings during the third quarter of 2007.