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OAG reaches agreement with Countrywide

Posted Monday, October 13, 2008

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Texas Attorney General Greg Abbott and six other state attorneys general have reached a nearly $8 billion agreement with Countrywide Financial Corp. The settlement resolves states’ lengthy investigation into Countrywide’s lending practices. Bank of America, which recently acquired Countrywide, agreed to the settlement.

Texans who are in default or likely to default on sub-prime mortgages issued by Countrywide could be eligible to participate in an extensive loan modification program. Through this program, eligible borrowers will be able to modify the terms of their loans to make monthly payments more affordable and allow more borrowers to stay in their homes.

Modified loan terms will vary according to each borrower’s individual circumstances. Under the agreement, Countrywide customers may benefit from an automatic freeze or reduction in interest rates, an extension of loan terms, conversion to fixed term loans, or principal reduction. Eligible borrowers who participate will not be charged late fees, loan modification fees, foreclosure fees, or pre-payment penalties. Bank of America estimates that up to 30,000 Texas homeowners will qualify for the loan modification program.

“Today’s agreement will help keep struggling homeowners out of foreclosure and in their homes,” Abbott said. “Under the loan modification program negotiated by the states, Texas families can benefit from frozen or reduced interest rates, loan term extensions and conversions to fixed rate mortgages. As a result, this agreement not only assists homeowners, but also helps shore up communities and markets that have been affected by the residential mortgage lending crisis.”

Under today’s agreement, Bank of America will spend $150 million nationwide to assist homeowners who have already lost their homes. The lending giant will spend up to $70 million to homeowners who, despite the loan modification program, are ultimately unable to keep their homes.

Bank of America also agreed to suspend the foreclosure process for eligible homeowners who are in default but wish to stay in their homes. The settlement resolves investigations into Countrywide’s lending practices by Texas, Arizona, Iowa, Ohio and Washington. The settlement also resolved lawsuits against Countrywide initiated by Illinois, California and Florida. Other states also are participating in the settlement.

Under today’s agreement, Countrywide borrowers who have been foreclosed or who are unable to afford their homes even under a modified loan arrangement will be offered soft landing payments to ease re-location to another home.

Texans who believe they may be eligible for the program should visit www.countrywide.com or call (800) 669-0102.

In September 2007, Abbott launched the Texas Residential Mortgage Fraud Task Force, which includes key state and federal regulatory and law enforcement agencies that track and prosecute mortgage fraud.

The OAG has also taken legal action against a variety of mortgage-related practices, including title scams, fraudulent refinancing ploys, and other mortgage-related fraud.

Consumers who believe they have been targeted by a mortgage-related scam should contact the Office of the Attorney General at (800) 252-8011.

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