Over 8,000 Ohio Borrowers Could See Relief from Countrywide Settlement

Monday, October 6, 2008
Topics: Economy, Other
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Ohioans with Countrywide mortgages may be eligible for interest rate freezes or cuts in their principal thanks to a settlement announced Monday. Countrywide Financial's new owner, Bank of America, announced the agreement with 11 state attorneys general, including Ohio's. More than 8,000 Ohioans with Countrywide mortgages could benefit from the program. ideastream®'s Mhari Saito reports.

You’ve heard all about the borrowers behind on mortgage payments because their initial low “teaser” interest rates are now going up, or they’ve taken out a loan that is worth more than their house is now worth. When these borrowers ask their lender to change the written terms of their loan, it’s called a loan modification. But often the loan servicer doesn’t have the right to say “yes” or “no,” that goes higher up the Wall Street food chain to the investor that bought the loan. And that’s why most financial institutions haven’t been willing to offer a blanket promise to rewrite loans. Bank of America says it now has that authority from its investors, and starting Dec. 1, it will offer loan modifications to more than 400,000 Countrywide borrowers, more than 8,000 of them in Ohio.

Andrea Seidt at the Ohio Attorney General’s office says other lenders could join suit.

Andrea Seidt: For over a year now, Ohio and other states have been asking servicers for these streamlined loan mods and there’s been a lot of resistance claiming that they don’t have the authority. Now that Bank of American has indeed done it, those excuses will no longer hold water.

In addition, Countrywide will pay the 11 states $150 million, with 4.5 million going to Ohio.  Seidt says half of that money could go to former Countrywide borrowers that have already lost their homes. The other half could go to cities looking to rebuild after the foreclosure crisis. Mhari Saito, 90.3.

More In This Series...

This feature is part of the series Mortgage Meltdown.