“Notice Packets” are being mailed Friday to Countrywide borrowers who lost their homes. “Countrywide also is offering mortgage loan modifications that will help hundreds of Iowans avoid foreclosure and loss of their homes,” Miller says.
(DES MOINES) Attorney General Tom Miller said “Notice Packets” will be mailed Friday to 427 Iowa Countrywide Financial borrowers with information on how they can claim a share of $398,966 Countrywide is paying to Iowans who lost their homes.
“Eligible consumers should watch for their notices to arrive in the next few days,” Miller said. “The packet will explain the settlement Iowa entered into with Countrywide / Bank of America, and it will have all materials needed to file a claim with the Settlement Administrator.”
Eligible consumers must have had a loan made by Countrywide, a loan for an owner-occupied property (not rental property), and a loan whose first payment was due between 1-1-04 and 12-31-07. Borrowers must have lost their property through foreclosure, short sale, or a deed in lieu of foreclosure.
The payments are part of a settlement involving 40 states and Countrywide Financial. The settlement in principle was reached Oct. 3, 2008, between states and Bank of America, which acquired Countrywide in July 2008. The settlement resolved allegations that Countrywide used unfair and deceptive tactics, and that borrowers often were put in structurally unfair and unaffordable loans. Countrywide was the largest provider of sub-prime mortgages in the U.S. [Go to Iowa 10-6-08 news release.]
Miller said Countrywide also is implementing a large and systematic program to modify loans if borrowers still have loans originated and serviced by Countrywide, but can’t afford the loans. Modifications may make monthly payments more affordable and help many people avoid foreclosure. Modified loan terms will vary according to the borrowers’ circumstances, but modifications may include an automatic freeze or reduction in interest rates, conversion to fixed-term loans, or reduction of principal owed.
Countrywide’s loan modification program started in December 2008 and will continue through June 30, 2012. Thus far, Countrywide has offered 399 modifications to Iowa borrowers from December through March, and 249 of the offers were accepted.
Countrywide also is making an identical payment of $398,966 to the Attorney General’s Office for ongoing foreclosure prevention programs and foreclosure relief or mitigation, and a payment of $100,000 for the costs of litigation. At least $157,000 of the $398,966 in foreclosure prevention funds will be used to support the Iowa Mortgage Help Hotline.
“Iowa’s Mortgage Help Hotline is free, confidential, and open to anyone who may not be able to make their mortgage payments,” Miller said. The number is 877-622-4866, and the web site is www.IowaMortgageHelp.com. The Iowa Mortgage Help Hotline offers counseling to borrowers in distress and negotiates modifications of loan terms with lenders to payments borrowers can afford. The Hotline does not offer monetary payments to borrowers.
Miller encouraged Iowans to call the Hotline even if they have received a foreclosure notice or notice of a sheriff’s sale. Countrywide borrowers in Iowa who want to consider the company’s loan modification program also may call the Iowa Mortgage Help Hotline, or they may call Countrywide directly, if they choose.
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More background and information.
Countrywide settlement payments -- info for consumers:
Who’s eligible -- main criteria: The loan was made by Countrywide; the loan was for an owner-occupied property (not rental property); the loan’s first payment was due between 1-1-04 and 12-31-07; the borrower must have lost the property through foreclosure, deed in lieu of foreclosure, or a “short sale.”
Eligible borrows will receive a Notice Packet: Packets are being mailed July 24th. Countrywide borrowers should contact the Settlement Administrator toll-free at 866-411-6987 if they did not receive a packet, if they think they may be eligible, and if they are not sure that Countrywide has their current address.
Iowa’s total sum that is directly for consumers ($398,966) will be divided equally between all eligible Iowa consumers who file a Claim Form and Release from the Notice Packet. The payment amount thus will depend on how many of the 427 eligible Iowans file the Form and Release. The Settlement Administrator hopes to begin mailing payments early in 2010.
Countrywide’s loan modification program:
Countrywide’s loan modification program was designed to achieve affordable and sustainable mortgage payments for borrowers who financed their homes with sub-prime loans or pay option adjustable rate mortgages serviced by Countrywide that were originated prior to Dec. 31, 2007, and who are seriously delinquent or are likely to become seriously delinquent as a result of loan features, such as interest rate resets or payment recasts. Only residential properties occupied by borrowers are eligible for Countrywide’s loan modification program under the settlement.
First-year payments of principal, interest, taxes and insurance (PITI) will be targeted under the modifications to equate to 34 percent of the borrower’s income (or 25 percent of income for borrowers for whom taxes and insurance are not escrowed.)
Note: The Settlement Administrator is not involved with Countrywide’s loan modification program. Again, Iowa Countrywide borrowers who want to consider loan modifications should call the Iowa Mortgage Help Hotline, or call Countrywide directly.
The States’ agreement with Bank of America / Countrywide Financial Corp.:
The agreement in principle was announced in October 2008. Iowa Attorney General Tom Miller was a lead negotiator of the agreement. States finalized individual agreements earlier this year (go to Iowa’s “Assurance of Voluntary Compliance.”)
Nationwide, Countrywide agreed to pay $150 million to the states for foreclosure relief for consumers and for state foreclosure prevention programs. It also agreed to pay up to $70 million for relocation assistance payments to borrowers unable to retain their homes, and to waive up to $60-$80 million in prepayment penalties and default fees. With the additional effect of hundreds of thousands of loan modifications by Countrywide, the total permanent relief is expected to total billions of dollars.
Under the settlement, Bank of America / Countrywide also agreed to stop offering pay option ARMs, to significantly curtail offering “low-documentation” and “no-documentation” loans, to initiate an early identification and contact program for people who have trouble making their payments, and to take other actions.
The Iowa Mortgage Help Hotline -- 877-622-4866 or www.IowaMortgageHelp.com:
Iowa’s Hotline is organized by the Attorney General’s Office, Iowa Mediation Service, Iowa Finance Authority, Iowa Legal Aid, and IHOEP – the Iowa Home Ownership Education Project. Callers will reach experienced Iowans prepared to help other Iowans who are having trouble making mortgage payments, or who may have trouble in the near future.
Callers should be prepared to provide full financial information, so the Hotline can explore if restructuring or modifying a loan or some other arrangement might benefit both the borrower and the lender and avoid foreclosure.
“Foreclosure is the enemy,” Miller said. “Most important, loan modifications can help homeowners avoid foreclosures and keep their homes. Avoiding foreclosures also helps the lenders, helps communities and neighborhoods, and helps our overall economy by stabilizing the housing market,” he said.