Colo. announces $7.7M settlement with Countrywide
DENVER Mortgage lender Countrywide Financial Corp. has agreed to provide $7.7 million to Colorado borrowers and to state government to settle claims that the company put home buyers in high-cost, high-risk loans.Attorney General John Suthers said the settlement, announced Monday, will allow about 6,800 borrowers to renegotiate loans with rates as low as 3.5 percent for five years.Borrowers who have already lost their homes could get compensation.Suthers said Countrywide will also give the state $500,000 to expand its Foreclosure Hot Line.A Countrywide spokeswoman said the company would have a statement later.Suthers said the agreement settles a civil suit filed by the state accusing Countrywide of deceptive trade practices. The suit claimed Countrywide used loose underwriting standards to make loans with monthly payments that soared when the introductory interest rate expired.The suit said the practices caused delinquencies and foreclosures and reduced property values in Colorado.Suthers said the settlement includes $3.9 million to compensate 1,180 borrowers who couldnt afford their loans after six or fewer payments; $2.1 million to waive certain late fees and prepayment penalties; and $1.2 million for relocation expenses of eligible borrowers.California-based Countrywide, once the nations largest mortgage lender, was acquired last year by Bank of America. The Charlotte, N.C.-based bank has received $45 billion in government aid from the financial bailout bill, including $20 billion to help it absorb losses from its acquisition of brokerage Merrill Lynch & Co.Separately, Colorado lawmakers introduced a bill in the Legislature Monday offering qualified homeowners a 90-day time-out in foreclosure procedures to renegotiate loans.Sen. Morgan Carroll, D-Aurora, said some neighborhoods in her district have foreclosure rates as high as 78 percent.Carroll said the bill will help people avoid foreclosure and stay in their homes.Foreclosures dont just affect the people losing their homes, it affects their children, their neighbors and their entire community, she said.Gov. Bill Ritter the legislation and the Countrywide settlement together will help keep families from losing their homes and the American dream.
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