Arizonans qualify for $245 million from Countrywide

More than 13,000 Arizona residents will qualify for a loan modification program under a multi-state agreement to settle Countywide Financial Corporation's alleged use of deceptive practices in their mortgage lending business.
 
Under the agreement announced by Arizona Attorney General Terry Goddard, the program Arizonans will qualify for is valued at $245 million, although Goddard spokeswoman Anne Hilby said that amount does not represent a cash disbursement.
 
How much that could affect Yuma area is not clear, because Countrywide has not broken down the figures to determine the impact on the state's individual counties, Jumana Bauwnes, Countrywide spokeswoman, said.
 
There are two parts of the settlement, Hilby said. The first part covers the $245 million which is the value of the adjusted terms that can save the state's borrowers and varies with each individual but may include: an automatic freeze or reduction in interest rates, conversion to fixed-term loans, and refinancing or reduction of principal owed, Hilby said.
 
"We feel this a positive step forward," she said. "It's a streamlined, wide reaching program that until now was unprecedented in the lending industry and it is a positive tool for Countrywide borrowers."
 
Arizona and other states had alleged that prior to 2008, Countrywide used unfair and deceptive tactics in its loan origination and servicing activities and placed borrowers in structurally unfair and unaffordable loans.
 
The settlement does not constitute an admission of wrongdoing, Hilby said.
 
In the second part, Countrywide will provide $150 million to be divided among any states that choose to join the settlement, she added. Each state's pro-rated share is fixed and is determined by the number of borrowers in their state.
 
The above figure also includes up to $70 million nationwide to help borrowers unable to retain their homes to relocate and $60 to $80 million to forego prepayment penalties and default fees, she said.
 
The loan modification is a win for all parties, Goddard said in a press release. Loan modifications help borrowers to avoid foreclosure and keep families in their home. And avoiding foreclosure is in the best interest of businesses, neighborhoods and the economy as as whole, the release said.
 
The modifications nationwide, could be over $8 billion in value to nearly 400,000 borrowers, Hilby said.

"We hope other lenders would use this as a template to provide relief to other borrowers," she said.   
 
Because of a widespread spike in mortgage defaults and foreclosures and a possible bankruptcy of Countrywide, Bank of America bought the troubled lender in January for $4.1 billion. Countrywide had been the country's largest mortgage lender but its acquisition now makes Bank of America the biggest mortgage lender and loan service provider. Countrywide will continue to operate under its brand for the remainder of the year.
 
The loan modification program is expected to be implemented by Dec. 1 by the states that have already joined the settlement, which include: Ariz., Calif., Wash., Ohio, Ill., Texas, Iowa and Fla., Hilby said.


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For more information, Countrywide customers can call 1-800-669-6607 while other borrowers may contact Arizona Foreclosure Helpline at 1-877-448-1211.