Bank of America has modified more than 50,000 mortgages under a legal settlement, the Wall Street Journal reported May 26. The loan workouts are required under a settlement the bank reached with multiple state attorneys general, who filed a predatory lending lawsuit against Countrywide Financial over its marketing of high-risk subprime and option adjustable-rate mortgage (ARM) loans. Bank of America bought Countrywide in 2008. The article says homeowners involved in the program have saved as much as $823 million, an average of $195 each.
The settlement covers 390,000 homeowners with option ARM and subprime mortgages in 42 states. The lawsuit said Countrywide misled them when they originally bought their homes. Bank of America admitted no wrongdoing by its acquisition, but agreed to change up to $8.4 billion worth of principal and interest owed on the loans. The biggest savings went to buyers with option ARM mortgages, who are saving an average of $311 a month. People who didn't qualify for a loan modification, including tenants whose landlords went into default, have also received $22.4 million in financial assistance with relocation.
Not everyone is happy with the settlement. Bank of America has already been sued by investors in securities backed by the modified mortgages, who allege they're paying for the settlement with a reduced value of their investments. Consumer advocates also expressed concerns that not all of the loan modifications resulted in lowered monthly mortgage payments, which is widely considered the best indicator of whether a loan modification is sustainable in the long term. The article mentioned one San Diego County homeowner whose monthly payments actually went up after a modification, thanks to the addition of late payments and fees. This was despite the fact that the interest rate on his option ARM mortgage dropped.
Our Riverside loan modification lawyers are pleased to see that loan modifications under this settlement are helping at least some homeowners who may have been exploited. It's well established by now that subprime and option ARM mortgages are two of the most commonly defaulted types of home loan, and they were also specialties of Countrywide before they got it into financial trouble. However, for this settlement to do real good, Bank of America must not just go through the motions of loan modifications, but make them sustainable -- which means lower monthly payments for homeowners who need them. A loan modification that results in a higher mortgage payment, like the one in San Diego, is unlikely to help financially struggling families stay in their homes.
Based in Anaheim, Howard Law LLP has an active practice helping homeowners throughout California negotiate for meaningful loan modifications. As Montebello loan modification lawyers, we are professional negotiators with a thorough understanding of mortgage and real estate law. Banks listen when we call, because they know that we know your rights -- and we're willing to sue, if necessary, to protect those rights. And unlike fly-by-night loan modification companies, we are established, licensed Orange County loan modification lawyers subject to discipline and lawsuits if we take advantage of our clients.
If you're fighting to keep your home and you're ready to enlist an experienced, aggressive advocate, you should call Howard Law. To learn more at a free, confidential consultation, please contact us online or call us toll-free at 1-800-872-5925.