Local
8,900 Va. homeowners to see loan help after Countrywide settlement
By: William C. Flook
Examiner Staff Writer
January 13, 2009
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| An $8.4 billion dollar settlement between Countrywide Financial and states will offer mortgage relief to more than 8,900 Virginia homeowners who received subprime adjustable rate or pay-option adjustable-rate mortgages before Dec. 31, 2007. (AP file) |
The state joins an $8.4 billion settlement between states and Countrywide, which follows a series of state lawsuits that accused the company of misleading customers into risky loans.
Virginia had not filed suit, and the settlement precludes McDonnell from pursuing any related consumer protection claims against Countrywide, which was acquired by Bank of America last year.
“I hope this settlement will serve as a model for other mortgage lenders to follow as they develop plans to help homeowners facing foreclosure,” said McDonnell, a Republican running for governor.
The settlement will provide $218.8 million to allow troubled Virginia borrowers to keep their homes by freezing or cutting interest rates, refinancing or reducing principal owed, or converting to fixed-rate loans.
It applies to borrowers who received a subprime adjustable rate mortgage or pay-option adjustable-rate mortgage from Countrywide or its affiliates before Dec. 31, 2007, according to the attorney general.
The settlement began with a handful of states in October. Virginia was not part of the initial investigation that sparked the lawsuits — and the settlement — against Countrywide because its Consumer Protection Act excludes mortgage lenders, members of McDonnell’s staff said. The attorney general is pursuing legislation that would undo that exception.
Countrywide spokeswoman Jumana Bauwens said Bank of America approached Virginia officials about joining the settlement.
“Based on the current mortgage environment, we want to help our borrowers sustain homeownership,” Bauwens said.
She said the company is contacting borrowers through phone and mail to let them know of the program.
