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By Beacon Journal staff and wire services
POSTED: 02:06 p.m. EDT, Oct 06, 2008
Facing a lawsuit over deceptive mortgage practices, Bank of America Corp. is agreeing to pay more than $8 billion to modify hundreds of thousands of loans to keep people in Ohio and other states from losing their homes.
Charlotte, N.C.-based Bank of America said today it will modify troubled mortgages with up to $8.4 billion in interest rate and principal reductions for nearly 400,000 customers of Countrywide Financial Corp., the mortgage lender it acquired last summer.
Countrywide is the same company that owned the mortgage on the Akron home of 90-year-old Addie Polk before it sold the loan to Fannie Mae, which foreclosed on the property. Polk on Thursday shot herself as sheriff's deputies arrived at the house to notify her of her eviction. By Friday afternoon, after Polk's story was thrust into the national spotlight, Fannie Mae officials said they were forgiving Polk's mortgage and allowing her to return to her home.
She still has an $11,380 home-equity loan through Countrywide.
The attorney general offices in 11 states announced today that the bank was modifying loans.
Some borrowers stuck with Countrywide customers might qualify for having to pay nothing but interest for a decade. Even people who can't afford to keep their homes with such changes will be able to get help moving to a new home.
''More than 8,000 Ohioans will be offered mortgage loan modifications that will help thousands of Ohio families avoid foreclosure and stay in their homes,'' said Ohio Attorney General Nancy H. Rogers.
Illinois and California sued Countrywide earlier this year. Nine other states have also joined the settlement, and other states could sign on, officials said.
In California alone, the settlement will offer $3.5 billion in relief. For Ohio, that would translate to $97 million.
''Countrywide's lending practices turned the American dream into a nightmare for tens of thousands of families by putting them into loans they couldn't understand and ultimately couldn't afford,'' California Attorney General Jerry Brown Jr. said in a statement Sunday.
The other states joining the settlement are Arizona, Connecticut, Florida, Iowa, Michigan, North Carolina, Ohio, Texas and Washington.
In a statement, Barbara Desoer, president of Bank of America's mortgage, home equity and insurance services, called the plan ''a comprehensive program that provides more solutions than ever before to assist troubled borrowers and put them back on the path to sustained home ownership.''
The mortgage aid includes revising customers' payments so they don't exceed 34 percent of income. Other options include reducing interest rates and adjusting principal so that borrowers don't wind up actually losing equity under some payment plans.
Countrywide will not charge loan modification fees and will waive prepayment penalties.
Illinois Attorney General Lisa Madigan said she hopes the settlement could serve as a model for steps that other lenders could take to make up for misleading mortgage practices. She stressed that the agreement involves no tax money but will help people keep their homes and keep money flowing to lenders
''This settlement will help homeowners stay in their homes, which ultimately helps investors and also helps communities,'' said Madigan.
Facing a lawsuit over deceptive mortgage practices, Bank of America Corp. is agreeing to pay more than $8 billion to modify hundreds of thousands of loans to keep people in Ohio and other states from losing their homes.
Charlotte, N.C.-based Bank of America said today it will modify troubled mortgages with up to $8.4 billion in interest rate and principal reductions for nearly 400,000 customers of Countrywide Financial Corp., the mortgage lender it acquired last summer.
Countrywide is the same company that owned the mortgage on the Akron home of 90-year-old Addie Polk before it sold the loan to Fannie Mae, which foreclosed on the property. Polk on Thursday shot herself as sheriff's deputies arrived at the house to notify her of her eviction. By Friday afternoon, after Polk's story was thrust into the national spotlight, Fannie Mae officials said they were forgiving Polk's mortgage and allowing her to return to her home.
She still has an $11,380 home-equity loan through Countrywide.
The attorney general offices in 11 states announced today that the bank was modifying loans.
Some borrowers stuck with Countrywide customers might qualify for having to pay nothing but interest for a decade. Even people who can't afford to keep their homes with such changes will be able to get help moving to a new home.
''More than 8,000 Ohioans will be offered mortgage loan modifications that will help thousands of Ohio families avoid foreclosure and stay in their homes,'' said Ohio Attorney General Nancy H. Rogers.
Illinois and California sued Countrywide earlier this year. Nine other states have also joined the settlement, and other states could sign on, officials said.
In California alone, the settlement will offer $3.5 billion in relief. For Ohio, that would translate to $97 million.
''Countrywide's lending practices turned the American dream into a nightmare for tens of thousands of families by putting them into loans they couldn't understand and ultimately couldn't afford,'' California Attorney General Jerry Brown Jr. said in a statement Sunday.
The other states joining the settlement are Arizona, Connecticut, Florida, Iowa, Michigan, North Carolina, Ohio, Texas and Washington.
In a statement, Barbara Desoer, president of Bank of America's mortgage, home equity and insurance services, called the plan ''a comprehensive program that provides more solutions than ever before to assist troubled borrowers and put them back on the path to sustained home ownership.''
The mortgage aid includes revising customers' payments so they don't exceed 34 percent of income. Other options include reducing interest rates and adjusting principal so that borrowers don't wind up actually losing equity under some payment plans.
Countrywide will not charge loan modification fees and will waive prepayment penalties.
Illinois Attorney General Lisa Madigan said she hopes the settlement could serve as a model for steps that other lenders could take to make up for misleading mortgage practices. She stressed that the agreement involves no tax money but will help people keep their homes and keep money flowing to lenders
''This settlement will help homeowners stay in their homes, which ultimately helps investors and also helps communities,'' said Madigan.
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