When Attorney General Lisa Madigan sued Countrywide Financial in
June for engaging in deceptive mortgage lending practices, her goal
was "to help homeowners now." It now appears she's done just that:
Countrywide Financial Corp., the home mortgage lender
When Attorney General Lisa Madigan sued Countrywide Financial in June for engaging in deceptive mortgage lending practices, her goal was "to help homeowners now." It now appears she's done just that:
Countrywide Financial Corp., the home mortgage lender acquired by Bank of America Corp. in July, will offer interest rate and loan principal reductions plus other distressed borrower relief valued at $8.4 billion to settle consumer fraud complaints from 11 states.
The accord, which includes relocation assistance for homeowners whose homes have been or are about to be foreclosed, will affect about 400,000 customers and resolves lawsuits filed by attorneys general in Illinois, California, Connecticut and Florida and complaints from seven other states, according to attorneys general Lisa Madigan of Illinois and Edmund G. ``Jerry'' Brown of California.
While the bailout negotiations dominated the news last week, Madigan and her fellow attorneys general came to an agreement with Bank of America late last week. The deal establishes the nation's first mandatory mortgage relief program, making sure monthly payments do not exceed 32 percent of a family's household income, and should help 21,000 Illinois residents keep their homes:
"We will have the first-ever mandatory loan modification program. We're going to be using this as a model for other lenders," Madigan said. "Our goal was to keep as many people in Illinois as possible in their homes." [...]
The bulk of the settlement—$8.4 billion—represents the reduction in principal and interest payments for Countrywide customers who hold adjustable-rate and fixed-rate subprime mortgages. In addition, Countrywide expects to waive $56 million in prepayment penalties and $79 million in late fees. The firm will pay $150 million to people already forced out of their homes and another $60 million in relocation costs for people in the process of being forced from their homes.