| Countrywide Settlement
Attorney General Peter J. Nickles announced on September 8, 2009 that the District has agreed to join a settlement with Countrywide Financial Corporation resolving claims by the District and other states that Countrywide engaged in unfair and deceptive practices in its home mortgage lending.
The following is a list of Frequently Asked Questions of the Settlement with Countrywide:
1. What types of loans qualify for modifications?
The following types of mortgages may qualify for the National Home Ownership Retention Program:
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Subprime Hybrid 2, 3, 5, 7 and 10 Adjustable Rate Mortgages – these are mortgages that require payment at a fixed interest rate for a set period (2, 3, 5, 7, or 10 years) followed by an adjustable interest rate for the remaining loan term.
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Pay Option Adjustable Rate Mortgages – these are mortgages with an adjustable interest rate and which permit the borrower to select a payment level from several options, including a minimum payment that is less than the monthly interest.
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Other Subprime First Mortgage Loans – these are first-lien mortgages that combine features such as low or no documentation, low equity, adjustable rates, prepayment penalties, or cash-out financing, with higher credit-risk borrower profiles, such as low credit scores or recent bankruptcies or foreclosures.
2. Am I eligible for a loan modification?
In order to be eligible, a borrower must meet the following criteria:
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The borrower received a qualifying subprime or pay option mortgage on or before December 31, 2007;
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The property is a 1-4 unit, owner-occupied, residential property; and
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Either:
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The borrower is 60 days or more delinquent and the current loan-to-value ratio is 75% or above;
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The borrower becomes 60 days or more delinquent at any time prior to June 30, 2012, and the loan-to-value ratio at the time of the modification is 75% or above; or
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The borrower is current on the mortgage but is likely to become 60 days or more delinquent as a consequence of a rate reset or contractual payment recast based on negative amortization triggers, and the loan-to-value ratio at the time of the modification is 75% or above.
Loans that meet the above criteria will be subject to further review to determine whether the borrower can afford a modification within the Foreclosure Avoidance Budget.
The Foreclosure Avoidance Budget is the difference between the likelihood and severity of the investor’s projected loss in a foreclosure sale and the likelihood and severity of the investor’s projected loss in the event the borrower were to receive a loan modification and later experience a foreclosure sale.
To the extent permitted by the Foreclosure Avoidance Budget, borrowers will be offered a loan modification that produces a first-year payment of principal (if applicable), interest, taxes and insurance equal to 34% of the borrower’s income or as close to 34% of the borrower’s income as the Foreclosure Avoidance Budget permits without exceeding 42% of the borrower’s income. Borrowers who do not escrow taxes and insurance will be offered a loan modification that produces a first-year payment of principal (if applicable) and interest equal to 25% of the borrower’s income, or as close to 25% of the borrower’s income as the Foreclosure Avoidance Budget permits without exceeding 34% of the borrower’s income.
Borrowers can contact Bank of America at 1-800-669-6607 for more information on eligibility for the National Home Ownership Retention Program.
3. What types of modifications are available if I qualify?
Modification offers depend on the type of loan and other information, including income verification, provided by the borrower. For borrowers who qualify, modifications may include FHA refinancing under the HOPE for Homeowners Program, interest rate reductions, and principal reductions on pay option adjustable rate mortgages. A modification through the federal Making Home Affordable program is acceptable.
4. Why is Countrywide or Bank of America proceeding with foreclosure on my property?
As part of the settlement, Countrywide has agreed not to initiate or advance foreclosures before it determines whether a borrower is interested in and can be qualified for a modification. This applies only to the types of mortgages and borrowers that may be eligible for the National Home Ownership Retention Program. If you are not eligible for the program, or if Countrywide has been unable to contact you, they may proceed with foreclosure.
Borrowers who are in default or facing foreclosure can get free assistance from a counseling agency certified by the US Department of Housing and Urban Development by calling 1-888-995-HOPE or find a list of local HUD-certified counselors at www.hopenow.com. Borrowers should avoid companies who promise to prevent foreclosure or get a loan modification and charge a fee in advance of completing the services.
5. Am I eligible for a foreclosure relief payment under the settlement?
The Attorney General is still determining how foreclosure relief funds will be used and distributed to borrowers. |
