Virginia homeowners to receive mortgage loan modifications
RICHMOND, Va. (Legal Newsline) -- Virginia has joined a nationwide settlement agreement with Countrywide Financial Corp. that will provide about $212.8 million in home loan and foreclosure relief to more than 8,9000 Virginia homeowners.
The agreement also provides for modifications to existing mortgage loans, the attorney general's office said.
"This settlement will provide crucial financial relief to thousands of Virginians who are struggling each month to pay their mortgages and keep their homes," Attorney General Bob McDonnell said. "I hope this settlement will serve as a model for other mortgage lenders to follow as they develop plans to help homeowners facing foreclosure."
Countrywide, which was acquired in July by Bank of America Corp., will pay a total of $150 million nationwide under a Foreclosure Relief Payment Program for borrowers who have already lost their homes or are more than 120 days delinquent.
Virginia will receive approximately $2.5 million, under the agreement.
An additional $70 million will be paid nationwide for relocation assistance to borrowers who face foreclosure because they do not qualify for a loan modification. Virginia is expected to receive $2.3 million of this amount.
Countrywide and its affiliates have also agreed under the settlement to modify loans for eligible borrowers to allow them to be better able to keep their homes.
Eligible homeowners include those who were granted a qualifying subprime adjustable rate mortgage or pay option adjustable rate mortgage prior to December 31, 2007 or who meet specific requirements.
Modifications to the loans will include an automatic freeze or reduction to interest rates, conversion to fixed-rate loans, or refinancing or reduction of the principal owed. First-year payments of principal, interest, taxes and insurance will be targeted to equal 34 percent of the borrower's income under the modifications.
Eligible borrowers will also have payment penalties, late or delinquent fees, and default fees waived by Countrywide for an estimated total of $4.4 million in waivers for Virginia homeowners.
The settlement comes from consumer protection claims that the attorney general could have filed stemming from deceptive practices from Countrywide of Virginia's mortgage origination and servicing activities.