NC and 10 other states reach agreement with Countrywide to help nearly 400,000 homeowners facing foreclosure

North Carolina Attorney General Roy Cooper says agreement will offer help to more than 5,000 NC homeowners

Raleigh: Mortgage lender Countrywide Financial Corporation has agreed to provide approximately $8 billion in home loan and foreclosure relief to as many as 397,000 homeowners across the country including more than 5,000 in North Carolina, Attorney General Roy Cooper recently announced. Eleven states including North Carolina reached the agreement with Charlotte-based Bank of America, which acquired Countrywide in July of 2008. The agreement is expected to provide $71 million in reduced mortgage payments to more than 5,000 North Carolina borrowers.

“Thousands of North Carolinians who are struggling to pay their mortgages and keep their homes will get relief thanks to this agreement,” Cooper said. “Other mortgage companies need to step up to the plate with similar plans to help homeowners facing foreclosure.”

Under the settlement, Countrywide has agreed to modify loans for eligible borrowers so they will be better able to afford to keep their homes. Modifications may include an automatic freeze or reduction in interest rates, conversion to fixed-rate loans, and refinancing or reduction of the principal owed. Under the modifications, first-year payments of principal, interest, taxes and insurance will be targeted to equal 34 percent of the borrower’s income.

Countrywide has also agreed to stop making problematic high-cost mortgages and payment option adjustable rate mortgages. In addition, Bank of America and Countrywide will pay $150 million to participating states to help consumers who have already lost their homes to foreclosure.

Bank of America and Countrywide will also pay up to $70 million for relocation assistance to borrowers unable to stay in their homes, and will waive up to $60-$80 million in prepayment penalties and default fees.

The settlement resolves allegations that Countrywide used unfair and deceptive tactics in making and servicing home loans. As a result, homeowners were often stuck with unfair loans they couldn’t afford.

Countrywide is the largest provider of subprime mortgages in the United States. Countrywide is expected to start the loan modification program by December 1, 2008, and the company has said that it will reach out to eligible customers by that date. Countrywide has also said that it will halt foreclosure proceedings against homeowners who are likely to qualify for loan modifications under the agreement.

Countrywide customers can call 800-669-6607 toll-free for more information or visit the company’s
website at

North Carolina residents who are facing foreclosures and who are not Countrywide borrowers can get free help by calling the HOPE Hotline toll-free at 888-995-HOPE 24 hours a day, seven days a week.

“Families are hurting and they need help,” NC Attorney General Cooper said. “It’s in all of our interest to help homeowners find a way out of foreclosure when possible.”

Along with North Carolina, attorneys general in Arizona, California, Connecticut, Florida, Illinois, Iowa, Michigan, Ohio, Texas and Washington are participating in the agreement with Countrywide.