Friday, October 17, 2008
Maybe I'm just out of it, but it took me until this morning to learn that on October 6, Attorney General Lisa Madigan reached a settlement with Bank of America, which acquired notorious mortgage lender Countrywide earlier this year. Among other benefits, the settlement will stop Countrywide's pay-option ARM loans from putting homeowners in the position of increasing the principal owed on their house even as they make payments ("negative amortization"). Her office says 11,000 Illinois homeowners should benefit.
Here's the gist from her office's press release:
As part of this landmark agreement, Countrywide agreed to implement a range of homeowner relief programs and to drastically modify its future lending practices. Specifically, Countrywide agreed to:
* Suspend foreclosures on the riskiest loans to determine if borrowers qualify for modification.
* Establish a Foreclosure Relief Fund of $8.5 million for borrowers in subprime and pay-option ARM loans who lost their homes due to early payment default or default at the time the interest rate reset. Early payment default is a strong indication that the loan was not underwritten properly and that the homeowner couldn’t afford the loan from the beginning.
* Help homeowners through a $1 million relocation assistance program, which will provide payments to homeowners who cannot qualify for a loan modification. The funds will help borrowers relocate if necessary.
* Waive loan modification fees and late fees.
* Waive prepayment penalties on subprime and pay-option ARM loans owned by Countrywide.
* Pay $1.7 million for the costs incurred in Madigan’s investigation, eliminating taxpayer expense.
Let's get the word out in the neighborhoods to help stop the bleeding from the foreclosure crisis.