Bank of America: Deal Reached in Countrywide Mortgage Claims

In a deal that could be worth more than $8.6 billion, Bank of America (BAC) according to the WSJ, has agreed to settle claims brought by state Attorneys General regarding certain risky loans originated by Countrywide Financial. The settlement applies to borrowers who obtained their mortgages through Countrywide, which Bank of America acquired on July 1 at the same time Illinois and California sued the company.

The deal, expected to be announced today, would cover as many as 390,000 borrowers and would apply to those who took out subprime loans with adjustable or fixed interest rates as well as those with option adjustable-rate mortgages that are serviced by Countrywide.

BofA, said the Journal, will split the cost of the program, and investors who own securities that have mortgages originated by Countrywide or by third parties who sold those loans to Countrywide. The eligible mortgages were originated prior to Dec. 31, 2007.

Under the terms of deal, Bank of America has agreed to refinance borrowers into government-backed loans under the federal Hope for Homeowners program. Other options include term loan modification, where possible, and reducing interest rates, in some cases to as low as 2.5% then increase it in a stepwise fashion over time, and adjusting principal so that borrowers don’t wind up actually losing equity under some payment plans.

The modification program is valued at $8.4 billion and the cost of the program “have already been estimated and accounted for” by Bank of America as part of its acquisition of Countrywide, a BofA spokesman told WSJ.

California Attorney General Edmund G. Brown Jr. said in a statement that Countrywide settlement is likely to become the largest “predatory lending” settlement in history.

Countrywide has faced civil lawsuits from a number of states, including California, Florida and Illinois, which have played a key role in negotiating the settlement. The other states joining the settlement are Arizona, Connecticut, Florida, Iowa, Michigan, North Carolina, Ohio, Texas and Washington.

Bank of America will launch the new mortgage aid program by December 1.

Disclosure: None

Comments

[cicirn:]

I believe I am one of the mortgagees that should be included in this lawsuit against Countrywide/BoA. How do I proceed to get help with a refinance/restructure? I cuurently have a ARM due to expire in two years. I live in Georgia, but my loan payment goes to Countrywide in Texas? Thank you

2008 Oct 09 07:31 PM

[kolbmann:]

dont bother trying .. i'm in the process of trying to refi and with $10,000 on top to do my roof and paint house and of course their giving me grief cause the appraisal came in lower than the value plus cause of needed roof work? i cant believe the logic here. any excuse to keep taxpayer bailout money and keep making a fleecing off me.

Jun 12 09:53 AM