Countrywide Plan May Cut Rates for 395,000 Borrowers

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With calls growing for stronger action to help troubled homeowners, consumer advocates are hailing a mortgage-modification program being implemented by Bank of America Corp.’s Countrywide unit as the most ambitious effort yet to avert foreclosures.

A key lawmaker is demanding that other mortgage lenders adopt the program, which was called for by a settlement of state lawsuits alleging that Countrywide borrowers were systematically tricked into taking out unaffordable loans.

The Countrywide plan, which is aimed at borrowers with subprime mortgages or pay-option adjustable-rate home loans, known as option ARMs, would temporarily cut interest rates on some loans to as low as 2.5%. Some borrowers who owe more than their homes are worth could even see their loan balances reduced, giving them equity once again in their properties.


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