As if Countrywide Financial didn't have enough problems, Michigan Attorney General Michael Cox announced a settlement with Countrywide Financial Corp. over allegations the nation’s largest mortgage company participated in predatory lending.
The settlement means that Countrywide will renegotiate mortgages with more than 10,000 current and former homeowners in Michigan, saving them approximately $129 million in principal and interest payments.
“Through our negotiations, we have provided a helping hand to thousands of Michigan families who are struggling with the foreclosure crisis,” said Cox in a statement. “And, unlike the Wall Street mess, this was no bailout. Countrywide is paying, not the taxpayers.”
Countrywide also agreed to:
-- Pay more than $9.8 million to assist Michigan homeowners who lost their homes to foreclosure. These funds will also be used for borrower education programs and neighborhood rehabilitation efforts.
-- Refinance as many as 9,700 mortgages in Michigan, giving families an opportunity to keep their homes, and saving them approximately $129 million as a result of more favorable terms.
-- Cap the amount a broker can earn to 4% of the amount borrowed.
-- Pay relocation assistance payments to certain homeowners who go into foreclosure after the date of this settlement.
-- Stop selling subprime and option adjustable-rate mortgage loans in Michigan for two years and impose new limits on the sale of low- or no-documentation loans.
-- Stop an automatic foreclosure process until certain details regarding the mortgage holder’s situation have been verified.
-- Maintain a specified number of staff focused on helping troubled homeowners avoid foreclosure proceedings.
Homeowners who acquired a loan from Countrywide Financial can call the Countrywide hotline for more information at 1-800-669-6607.
Citizens who feel they are victims of questionable lending practices can file a complaint with the State of Michigan Office of Financial and Insurance Regulation at 1-877-999-6442 or the Attorney General's Consumer Protection hotline at 1-877-765-8388.