Bank of America settles suits over mortgages

October 6, 2008 7:09:46 PM PDT
Thousands of California homeowners, with bad mortgages, may be getting some relief, now that a major lawsuit is settled involving Bank of America. Countrywide Financial, now owned by Bank of America, will modify many of its subprime loans for its most troubled customers.

Unlike all the legislation, the government reforms we've heard of lately where lender participation is voluntary, in this case Countrywide must participate because it's part of a leagal settlement, but there is still no guarantee everyone who needs help will get it.

Countrywide customer Merlyn Amaya made the call to the lender's customer service department as soon as she heard the news.

"We think this is a significant settlement," said California Attorney General Jerry Brown.

California and other states settled their lawsuit against Countrywide a deal that could help 125,000 Californians like Amaya save their homes.

"The reason why Bank of America settled this case is because their new entity, Countrywide, was guilty of massive irregularities," says Attorney General Brown.

To qualify for Countrywide's new Home Retention Program, a customer must have a subprime or pay-option adjustable-rate loan, the first payment was due between 2004 and 2007, loan in default, and a balance that's 75 percent or more of the current home value.

"This is huge," says John Holmgren, a mortgage broker.

Holmgren is a former president of the East Bay chapter of the California Association of Mortgage Brokers.

"Certainly I would be amazed if six months from now we look back and find that Countrywide mortgage holders had not had huge benefits associated with this program," says Holmgren.

As it turned out, after 45 minutes on the phone, Amaya was told by Countrywide that she probably wasn't eligible because her loan was originated by another lender.

"The lady said that I can't qualify for that because I didn't start my loan with them. That's crazy," says Merlyn Amaya, a Countrywide customer.

The program doesn't start until December 1, 2008. That's when Countrywide will proactively try to contact eligible borrowers to see if they might qualify. In the meantime, Countrywide customers can call or follow the link below.

Number for Countrywide Customers needing loan help:
1-800-669-6607

*Please note: While this number is working now, this loan help program does not begin until December 1, 2008.
Countrywide Home Retention Program


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