Former home lending giant Countrywide has settled with Colorado borrowers who fell victim to the company’s loose lending practices, according to Colorado Attorney General John Suthers.
The Calabasas, CA-based mortgage lender will provide roughly $6 million to eligible borrowers, including $500,000 to support the state’s foreclosure hotline.
Under the settlement, approximately 6,800 borrowers will benefit from some type of loan modification, in which mortgage rates may be lowered to as little as 3.5 percent for a period of five years; late fees and prepayment penalties will also be waived.
“Countrywide will help its borrowers who are in default or facing foreclosure save their homes through fast-track loan modification on subprime or option-ARM loans, resulting in reduced mortgage payments,” the release stated.
The lender has already begun contacting eligible borrowers, and has said it will provide a modification within 60 days of receiving income documentation. During that time, all foreclosure proceedings will be suspended.
Those who don’t qualify for a loan mod or who previously lost their homes may be eligible to receive compensation.
“A fund of $1.2 million has been set up for relocation payments to eligible Colorado borrowers. A separate fund of approximately $4.4 million will be used to compensate approximately 1,180 Colorado homeowners who could only make six or fewer payments before they could no longer afford their loans.”
Countrywide has faced a series of lawsuits from a number of U.S. states, including California, Connecticut, Florida, Illinois, Indiana, and West Virginia, along with the city of San Diego.
In December, the company settled with North Carolina Office of the Commissioner of Banks, pledging $11.5 million in cash to overcharged borrowers.
Funnily enough, Countrywide has also been sued over its loan modification program by angry investors, seems they just can’t win.