Countrywide settles lawsuit. Will modify mortgages.

Countrywide Financial, now owned by Bank of America, has agreed to the largest and most extensive mortgage modification program in the country’s history as part of a lawsuit and subsequent settlement with almost 20 state governments and attorney generals.

The largest loan servicer and mortgage lender in the country is still Countrywide. They were involved in numerous lawsuits in which many states claimed that Countrywide was using illegal, predatory, and aggressive sales and lending practices.

As a result of this lawsuit, Countrywide will be proving almost $10 in mortgage and foreclosure help, and it will assist almost 500,000 borrowers nationwide. In addition, they will reduce or completely waive certain fees and charges, and they will also be putting aside additional funds to help families through the foreclosure process and even relocate people that lose their homes. Just in California alone, California and Countrywide anticipate modifying over $3 billion in mortgages.

The mortgage assistance program that Countrywide is pushing is encouraging borrowers who have fallen behind on their payments, who will have problems in the near future, or who have defaulted on their loan to switch into a fixed-rate mortgage at a low, competitive interest rate. Countrywide will be trying to modify mortgages on a large scale. In addition to this mortgage help in the form of a modification or refinancing, Countrywide will be waiving late fees of almost $100 million and they will also cancel prepayment penalties of almost $60 million. They will even be stopping foreclosures on delinquent homeowners who they gave the riskiest loans to.

More aid provided includes the creation of a foreclosure relief fund that will provide almost $200 million to assist borrowers who are at least four months behind on their payments and it will also help those that may have already have had their home foreclosed on. Countrywide will give almost $100 million to help troubled borrowers move and relocate to rental housing.

There cold also be adjusting to the total loan principal balance. In some cases, Countrywide will reduce principal balances and of course reduce interest rates in others. Interest rates charged to go down to an incredible low 2.5 percent, depending upon the homeowners ability to pay back the mortgage, and the rates could remain at that low interest rate for up to five years.

The mortgage and foreclosure assistance program will primarily focus on homeowners who were placed in the most high risk mortgages, including interest only, pay-option loans and adjustable-rate mortgages whose interest rates reset significantly after the loans was made. All of these loans, and more, are eligible for mortgage help, mainly in the form of a modification.

Not all Countrywide customers can participate in this program. Borrowers who made their first payment between Jan. 1, 2004, and Dec. 31, 2007 are able to participate in the program.

Other states in the settlement are Arizona, Connecticut, Florida, Iowa, Michigan, North Carolina, Ohio, Texas and Washington.

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