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| Pennsylvania’s attorney general announced a $150 million settlement with Countrywide Financial Corp. The agreement is part of an $8 billion subprime settlement reached last year with several states.Attorney General Tom Corbett announced today that the lender, along with affiliates Countrywide Home Loans Inc. and Full Spectrum Lending Inc., agreed to an Assurance of Voluntary Compliance with the state.
More than 10,000 borrowers are expected to be impacted by the move. Available options include streamlined loan modifications, relocation assistance and foreclosure relief. Around $3 million in foreclosure relief benefits will be provided. Countrywide will waive modification fees, prepayment penalties and default and delinquency fees. Countrywide will reportedly institute a moratorium on foreclosures “until each eligible consumer has had their financial status verified.” The settlement is the result of an investigation over several months by the state of Countrywide’s subprime originations. “We allege that Countrywide’s practices misled many Pennsylvanians and encouraged them to take out loans they did not understand and ultimately could not afford,” Corbett said in the statement. Among the allegations are that the Calabasas, Calif.-based lender misrepresented program details to its borrowers, ran misleading advertisements and abandoned concern over the ability of borrowers to repay the loans. In addition to subprime borrowers, pay-option borrowers may also qualify for the settlement. “Assuming every eligible borrower participates, this loan modification program will provide more than $150 million in savings to Pennsylvania borrowers,” the statement said. The Pennsylvania settlement is part of an $8.4 billion settlement announced in October 2008 by Bank of America Corp. — which acquired Countrywide in July 2008. A Countrywide spokesman indicated that the settlement was originally with 15 states, though the number of participating states has now grown to 31. The October settlement resolved outstanding claims against Countrywide and called for the lender to provide up to $8.4 billion in interest-rate and principal reductions in the systematic modification of nearly 400,000 loans. “This makes qualified borrowers in Pennsylvania eligible for the foreclosure relief payments (for loans that defaulted early and were foreclosed prior to this agreement) and the relocation assistance for qualified borrowers who go to foreclosure in the future,” the spokesman said. But BoA is actually passing the costs of that settlement along to investors of its residential mortgage-backed securities. That approach has landed the mammoth financial institution in court with RMBS investors who are attempting to force BoA to repurchase up to $80 billion in mortgages after they are modified according to the settlement. Related: |
