Monday, October 6, 2008

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Attorney General Abbott Reaches Agreement With Countrywide, Helps Homeowners Avoid Foreclosure

AUSTIN - Texas Attorney General Greg Abbott and six other state attorneys general today reached a nearly $8 billion agreement with Countrywide Financial Corp. The settlement resolves states’ lengthy investigation into Countrywide’s lending practices. Bank of America, which recently acquired Countrywide, agreed to the settlement.

Texans who are in default or likely to default on sub-prime mortgages issued by Countrywide could be eligible to participate in an extensive loan modification program. Through this program, eligible borrowers will be able to modify the terms of their loans to make monthly payments more affordable and allow more borrowers to stay in their homes.

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Multi-state Settlement with Countrywide

Modified loan terms will vary according to each borrower’s individual circumstances. Under the agreement, Countrywide customers may benefit from an automatic freeze or reduction in interest rates, an extension of loan terms, conversion to fixed term loans, or principal reduction. Eligible borrowers who participate will not be charged late fees, loan modification fees, foreclosure fees, or pre-payment penalties. Bank of America estimates that up to 30,000 Texas homeowners will qualify for the loan modification program.

“Today’s agreement will help keep struggling homeowners out of foreclosure and in their homes,” Attorney General Abbott said. “Under the loan modification program negotiated by the states, Texas families can benefit from frozen or reduced interest rates, loan term extensions and conversions to fixed rate mortgages. As a result, this agreement not only assists homeowners, but also helps shore up communities and markets that have been affected by the residential mortgage lending crisis.”

Under today’s agreement, Bank of America will spend $150 million nationwide to assist homeowners who have already lost their homes. The lending giant will spend up to $70 million to homeowners who, despite the loan modification program, are ultimately unable to keep their homes.

Bank of America also agreed to suspend the foreclosure process for eligible homeowners who are in default but wish to stay in their homes. The settlement resolves investigations into Countrywide’s lending practices by Texas, Arizona, Iowa, Ohio and Washington. The settlement also resolved lawsuits against Countrywide initiated by Illinois, California and Florida. Other states also are participating in the settlement.

Under today’s agreement, Countrywide borrowers who have been foreclosed or who are unable to afford their homes even under a modified loan arrangement will be offered soft landing payments to ease re-location to another home.

Texans who believe they may be eligible for the program should visit countrywide.com or call (800) 669-0102.

The Office of the Attorney General (OAG) continues working to protect struggling homeowners. In September 2007, Attorney General Abbott launched the Texas Residential Mortgage Fraud Task Force, which includes key state and federal regulatory and law enforcement agencies that track and prosecute mortgage fraud.

The OAG has also taken legal action against a variety of mortgage-related practices, including title scams, fraudulent refinancing ploys, and other mortgage-related fraud. In 2007, Attorney General Abbott secured $21 million in restitution for Texas homeowners who were harmed by lending giant Ameriquest Mortgage Co. The case resolved allegations that the company and its affiliates did not clearly disclose certain terms to homeowners, including unpredictable adjustable rates.

In 2006, Attorney General Abbott negotiated an agreement with Green Tree Servicing L.L.C., a Minnesota-based firm that services manufactured housing debts in Texas. Under the settlement, Green Tree agreed to assist more than 1,200 Texas homeowners who may have been issued invalid titles to homes they purchased from unlicensed retailers in 2003. In a related move, the Attorney General secured an injunction and asset freeze against the unlicensed manufactured housing sellers. The OAG has also halted scams purporting to save homeowners properties from condemnation and cracked down on various title-related and refinancing scams.

Consumers who believe they have been targeted by a mortgage-related scam should contact the Office of the Attorney General at (800) 252-8011.