The Attorney General of Illinois as well as Attorneys General in ten other states have reached a settlement with Countrywide. Countrywide, which is the country's largest mortgage lender and servicer, agreed to a settlement worth about $8.7 billion. The agreement is the first of its kind and may serve as a model for other companies who may have a substantial amount of defaulted loans.
Under the terms of the settlement, Countrywide agreed to the following:
- Suspend foreclosures on the riskiest loans to determine if borrowers qualify for modification.
- Establish a Foreclosure Relief Fund of $8.5 million for borrowers in subprime and pay option ARM loans who lost their homes due to early payment default or default at the time the interest rate reset. Early payment default is a strong indication that the loan was not underwritten properly and that the homeowner couldn’t afford the loan from the beginning.
- Help homeowners through a $1 million relocation assistance program, which will provide payments to homeowners who cannot qualify for a loan modification. The funds will help borrowers relocate if necessary.
- Waive loan modification fees and late fees.
- Waive prepayment penalties on subprime and pay option arm loans owned by Countrywide.
- Pay $1.7 million for the costs incurred in Madigan’s investigation, eliminating taxpayer expense.
Homeowners who have questions about the settlement may call Bank of America at 1-800-669-6607 or Lisa Madigan's Homeowners' Referral Hotline at 1-866-544-7151 from 8 a.m. to 8 p.m. Monday to Friday. You may also read the Illinois Attorney General's press release at its web site.
Don't have a loan with Countrywide but you would like to see if you are a candidate for a loan modification? Get the special report, "Are You a Candidate for a Loan Modification".
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