A huge $8.4 billion homeowner rescue plan announced Monday by the Bank of America will provide some relief for an estimated 125,000 Californians who are having trouble making payments on sub-prime loans and other risky mortgages from Countrywide Home Loans.
The bank’s “Home Ownership Retention Program for Countrywide Customers” was devised by California and 10 other states to settle predatory lending lawsuits filed against Countrywide. The plan could also set a precedent for other banks whose books are weighed down by defaulting mortgages.
“This is going to help some families,” said California Attorney General Jerry Brown, “but the overall economy is in hands of God at this point.” Brown helped lead the settlement negotiations.
The program allocates up to $3.5 billion to help California Countrywide borrowers lower their interest rates, a figure that assumes every borrower participates. Nearly 400,000 customers of Countrywide will be eligible nationwide.
The bank said the program is for borrowers who are, or who are likely to fall seriously behind on their loans as the result of loan features such as interest rate resets or payment changes. For some borrowers, interest rates could go as low as 2.5 percent. The program includes suspension of foreclosures, reduced interest payments and for select borrowers, reduction of principal balances.
Filed under: Home loan, Home loan rates | Tagged: Home loan rates, home loans, homeowner, mortgages, sub-prime loans
