From the Record:
Countrywide Financial Corp. will set up a $3.7 million foreclosure-relief fund in New Jersey to settle allegations that it wrote high-priced and unaffordable subprime mortgages, Governor Jon S. Corzine announced today.
Corzine said Countrywide, which is now a subsidiary of Bank of America, engaged in “aggressive sales and marketing of inappropriate or bad loans.”
The agreement is expected to help an estimated 8,200 New Jersey borrowers. Under the agreement, the state will receive half of the $3.7 million to fund mortgage modification programs sponsored by state agencies, including the statewide mortgage foreclosure mediation program administered by the state judiciary. The remaining half will be available to sub-prime borrowers who have lost their homes to foreclosure after making six or fewer payments.
The $3.7 million is New Jersey’s share of a $150-million nationwide settlement, which Countrywide agreed to Tuesday, without admitting any wrongdoing.
Under the agreement, Countrywide will offer loan modifications or relocation assistance to borrowers who are delinquent on their mortgages. Countrywide will not begin foreclosure proceedings until it can be determined whether a borrower’s loan can be modified.
Loans eligible for the program are Countrywide sub-prime adjustable rate mortgages (ARMs), pay-option ARMS or other sub-prime residential mortgages for owner-occupied properties serviced by Countrywide and which began between Jan. 1, 2004 and Dec. 31, 2007.
Loan modifications would be designed to bring monthly housing payments, including property taxes and insurance, to between 34 percent and 42 percent of a borrower’s monthly income. If homeowners cannot afford loans even after they are modified, they may receive relocation help, which Countrywide estimates will average around $2,000.