Countrywide Financial Corp. is trying very hard to settle with states around the country in an effort to limit its exposure arising out of its predatory lending practices. For example, the company has reached a settlement in Pennsylvania relating to its lending practices. The company has agreed to provide an estimated $150 million in mortgage relief and cash assistance for Pennsylvania homeowners to settle a state lawsuit over its lending practices. Countrywide, once the nation’s largest mortgage lender and now part of Bank of America Corp, also agreed to freeze foreclosure proceedings until it determines whether borrowers are eligible to take part in the settlement. According to state officials, as many as 10,200 borrowers who hold some of the riskiest and highest-defaulting loans written by Countrywide could be eligible for relief estimated to be worth more than $150 million. Of course, that amount comes from Countrywide which makes it suspect.
The settlement would provide persons who qualify with loan modifications, relocation assistance and foreclosure relief as well as waivers of default or delinquency fees, according to Pennsylvania Attorney General Tom Corbett. It’s office found in its investigation that Countrywide relaxed its underwriting standards to sell risky loans to consumers who did not understand them and could not afford them. That resulted in the state filing suit against Countrywide. The agreement covers loans originated by Countrywide Financial Corp, Countrywide Home Loans Inc and Full Spectrum Lending Inc. I’m not real sure settlements of this sort are quite as good as they appear to be on paper. Countrywide – and most likely Bank of America – will avoid a great deal of legal exposure to individual citizens who have been hurt financially and emotionally as a result of wrongdoing in sub-prime housing loans.
Countrywide has also reached some sort of a settlement with Texas. Texas homeowners struggling with mortgage loans from Countrywide Financial might qualify for financial settlements or better loan terms under a restitution program. The program includes $7.5 million for Texas Countrywide customers who lost their homes to foreclosure or who had fallen far behind on payments as of Oct. 6, 2008. Also, $2.8 million is available to an estimated 1,400 Countrywide customers who have defaulted on their subprime loans or who might soon. They could receive up to $2,000 each if they “voluntarily and appropriately” turn over their residences, avoiding foreclosure. All of the payments are part of the settlement with the Texas Attorney General’s Office over allegations that Countrywide encouraged homeowners to accept loans they could not afford, failed to fully disclose risky loan terms and wrote loans for unqualified borrowers. It’s estimated by Countrywide that distressed Texas homeowners would get $345 million worth of benefits under the settlement. Frankly, I take anything said that involves Countrywide with a large “grain of salt!”
Source: Reuters and Chronicle News Service
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