Countrywide has made a deal with Ohio to modify poorly written mortgage loans and to help people in need refinance. In addition, for those who have already lost their homes, Countrywide has also agreed to pay a one time payment/settlement to thousands of families in order to compensate them for their hardship. The total being paid to Ohio from Countrywide Financial Corporation is about $44 million, which is part of a multi-state, $150 million settlement.
The Ohio Attorney General said that over 8,000 subprime mortgage customers in Ohio will be eligible for help. Borrowers will be offered loan modifications in order to make their home mortgages more affordable and easier to pay for those families.
Most of the borrowers who receive assistance from the settlement will fall into one of two categories.
They may have taken an adjustable-rate home loan that allowed the borrower to make minimum payments on that mortgage. However their monthly payment may not have even covered the interest charges, so each and every month they were falling further behind. These Countrywide loans are called "option ARMs, and they harmed the homeowner. Many people never even paid any of their principal balance on their home from these option ARMs.
Other families who will receive help include those who used high-interest subprime loans. In these cases it is very well possible that the borrowers didn't have bad credit. However Countrywide and their mortgage brokers still issued the borrower a loan that was several percentage points above the going interest rates at the time. So basically Countrywide took advantage of certain homeowners who may not have been as knowledgeable. This is borderline, if not official fraud on their part.
The settlement can help in several ways. For example, someone whose adjustable rate either already has or is getting ready to increase in the near future to an unaffordable level could get a five-year extension of the low introductory rate. So this provides the homeowner time. After that 5 year window, the borrowers home mortgage would set be at prime or the introductory rate, whichever was higher at that moment. Either way their monthly payment will be at a lower rate than it was prior to this lawsuit.
In addition, Countrywide and Bank of America will work with families in Ohio on a one-on-one basis. The lender will aim to set their monthly payments at no more than to 34 percent of the borrower's total income. Between these various groups and forms of assistance being offered, both Countrywide and Ohio estimate that over 8,000 homeowners will be eligible for some type of assistance from this settlement program.
In addition, the Attorney General said that about 4,000 borrowers who have had their homes sold in the foreclosure process will be offered relief payments of up to $1,500 as part of the Countrywide settlement. This money can help a family moe into a new apartment or more affordable home, and funds can be use to pay for deposits, moving costs, or other housing expenses. While $1500 may not seem like much to someone who has lost their home, at least the lender is provding some form of compensation to those who have been impacted.
Mortgage loans will be modified based on what families can afford to pay. The new mortgage offered will be no more than 34 percent of a homeowner's total income.
Dial 1-800-669-6607 to learn more about the settlement plan.
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