Countrywide Financial Corp, the largest U.S. mortgage lender, on Tuesday offered to refinance or restructure up to $16 billion of adjustable-rate mortgages through the end of 2008.

The lender said its program may help about 82,000 borrowers who face higher payments stay in their homes.

It announced the program as pressure mounts on the mortgage industry from politicians and consumer groups worried about rising foreclosures to clean up lending excesses, and make only home loans that consumers can afford in the first place.

Countrywide plans to offer new mortgages to 52,000 subprime borrowers with $10 billion of home loans. It also plans to modify $4 billion of loans for 20,000 prime and subprime borrowers who cannot refinance, and $2.2 billion of mortgages for 10,000 subprime borrowers who are already delinquent.

Unprecedented times call for unprecedented remedies, Chief Operating Officer David Sambol said in a statement. We are determined to assist borrowers who have the willingness and wherewithal to remain in their homes, but need a little help.

Countrywide did not immediately return requests for further comment. It said it has this year helped 31,000 subprime borrowers with adjustable-rate loans refinance into more than $5 billion of prime, fixed-rate loans. Subprime mortgages go to people with weaker credit.

Rates on 2 million mortgages will rise by the end of 2008, and one-fourth of the affected homes may face foreclosure, the U.S. Department of Housing and Urban Development estimates.

Calabasas, California-based Countrywide is struggling with the housing slump, and has set plans to cut up to 12,000 jobs, or one-fifth of its work force. Analysts expect it on Friday to post a large third-quarter loss.

The company is now emphasizing smaller, higher-quality loans. It stopped making most subprime mortgages, and adjustable-rate loan fundings slid 76 percent in September. Overall mortgage volume that month fell 44 percent.

Like many rivals, Countrywide has faced criticism that it fed the housing slump by putting Americans into mortgages they could not refinance once home prices stopped rising.

Congress is considering legislation to require lenders to put borrowers in loans they can afford, rather than loans that are more profitable, and to let homeowners sue Wall Street banks that package loans that should never have been made into securities.

Investors have also criticized Angelo Mozilo, Countrywide's chief executive, for selling well over $100 million of Countrywide stock as the housing boom was cresting.

Countrywide made $468.2 billion of mortgage loans in 2006, including $40.6 billion of nonprime mortgages.

It also services $1.46 trillion of mortgages, and said that as of June 30, payments were at least 30 days late on one in five nonprime loans it serviced.

(Additional reporting by Ankur Relia in Bangalore)

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