13,000 mortgage holders in Ariz. eligible for program
by J. Craig Anderson - Oct. 7, 2008 12:00 AM
The Arizona Republic
Thousands of former Countrywide Financial customers on the brink of foreclosure will be eligible for lower mortgage payments in the coming months, thanks to a settlement agreement.
Borrowers with subprime and other adjustable-rate loans will be eligible for significant loan modifications beginning in December, Arizona Attorney General Terry Goddard's office said Monday.
The deal requires Bank of America to modify the loans of struggling borrowers to make their monthly payments more affordable, and it places a temporary hold on any bank action to take their homes.
About 13,000 Arizona mortgage holders are eligible for loan modifications under the agreement, said Susan Segal, Goddard's public-advocacy division chief.
The modifications would be based on what each borrower can afford, Segal said, and most borrowers would end up with fixed-rate loans. Some also would get a reduction in the loan's principal, she said.
In cases where foreclosure already has occurred or cannot be prevented, Segal said the borrowers would be eligible for relocation assistance from Bank of America.
A group of five state attorneys general and Bank of America, Countrywide's new corporate parent, signed the agreement Friday.
In exchange, the group of attorneys general representing Arizona, Texas, Ohio, Iowa and Washington state, agreed not to pursue any legal action against the former Countrywide based on its "alleged use of deceptive practices in their mortgage-lending business."
"There is no admission of guilt," Segal said about the agreement.
Still, it could take weeks or months for every eligible borrower to get a loan modification, she said.
Countrywide is supposed to launch the program Dec. 1 but has said it will need about 60 days to prepare.
Segal said the bank has committed to a staff of 3,200 loss-mitigation specialists to provide service to all of the affected customers nationwide.
Six other states, including California, have worked out their own loan-modification deals with Countrywide, formerly the nation's No. 1 subprime lender and overall largest mortgage lender, in exchange for dropping consumer-protection lawsuits.
Segal said similar deals with other subprime and "alternative" mortgage lenders should be forthcoming.
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