Countrywide Financial Corp. will pay approximately $18 million to modify home loans in Massachusetts, $3 billion in loan modifications for homeowners nationwide and $4.1 million to the commonwealth as part of a settlement with Attorney General Martha Coakley’s office.
The settlement, filed today in Suffolk Superior Court, expands an earlier agreement that Countrywide reached with 43 other state attorneys general and the District of Columbia in 2008 for loan modifications for delinquent borrowers, and builds on standards set forth in the Home Affordable Modification Program (HAMP) administered by the U.S. Treasury.
"Over the last three years, our office has been committed to holding accountable those who are responsible for the foreclosure crisis that has ravaged Massachusetts and has led to one of our country’s worst economic recessions in decades," said Coakley. "With today’s action we have secured billions of dollars in relief to help keep thousands of families in Massachusetts and across the country in their homes. This settlement provides for principal loan reductions that will help put thousands of people back on the road to financial recovery."
Hundreds of Massachusetts homeowners are eligible for the expanded relief, which is expected to provide approximately $18 million of principal forgiveness in the Bay State and an estimated $3 billion in relief to consumers nationwide.
In addition to the loan modification program, Countrywide, now owned by Bank of America, will pay the commonwealth $4.1 million. Up to $2.4 million of those funds will be distributed to Massachusetts Countrywide borrowers who have already lost their homes to foreclosure. The remaining $1.7 million will be used to cover the costs of the attorney general’s investigation and the costs of implementing and monitoring today’s settlement.
Countrywide was the largest subprime lender in Massachusetts during 2006 and 2007, according to Coakley. The commonwealth’s complaint, also filed today in Suffolk Superior Court, alleged that Countrywide engaged in unfair lending practices by originating certain loan products without accounting for its borrowers’ abilities to pay beyond the introductory rate periods or at the loans’ origination.
