Tuesday 7 October 2008

Countrywide to Revise Property Mortgage Deals with Borrowers

Facing a lawsuit over deceptive mortgage practices, a Bank of America Corp subsidiary has agreed to modify tens of thousands of loans to keep people in 11 states from losing their homes, the Illinois attorney-general’s office said.
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Guanyu said...

Countrywide to Revise Property Mortgage Deals with Borrowers

Agencies in Los Angeles
7 October 2008

Facing a lawsuit over deceptive mortgage practices, a Bank of America Corp subsidiary has agreed to modify tens of thousands of loans to keep people in 11 states from losing their homes, the Illinois attorney-general’s office said.

Borrowers stuck with Countrywide Financial Corp mortgages that they cannot afford could see their interest rates reduced or have the loan principal cut. Some might qualify for having to pay nothing but interest for a decade. Even people who cannot afford to keep their homes with such changes will be able to get help moving to a new home.

“This is going to provide a tremendous amount of relief,” said Illinois attorney-general Lisa Madigan.

If all 50 states were to join, the settlement could provide US$8.7 billion in relief to 400,000 borrowers, Deborah Hagan, chief of Ms Madigan’s Consumer Protection Division, said.

In California alone, the settlement will offer US$3.5 billion in relief. For Illinois, that would translate to US$190 million.

The settlement applies to people who obtained their mortgages through Countrywide - which Bank of America bought in June - at the same time Illinois and California sued the company.

The other states joining the settlement are Arizona, Connecticut, Florida, Iowa, Michigan, North Carolina, Ohio, Texas and Washington.

Bank of America will launch the new mortgage aid programme in December, said Barbara Desoer, president of Bank of America’s mortgage, home equity and insurance services.

The mortgage aid includes revising customers’ payments so they do not exceed 34 per cent of income. Other options include reducing interest rates and adjusting principal so that borrowers do not wind up actually losing equity under some payment plans.

Countrywide will not charge loan modification fees and will waive prepayment penalties.

Ms Madigan stressed that the agreement involves no tax money but will help people keep their homes and keep money flowing to lenders.