BofA Modifies 64,000 Home Loans as Part of Predatory Lending Settlement
After having settled predatory lending charges with 42 states, Bank of America has modified more than 64,000 home loans worth $823.5 million in principal and interest savings, with the intention of modifying loans and reducing interest rates for up to 100,300 borrowers, according to Bloomberg (â€śBank of America Revises 64,000 Loans After Pact With States,â€ť May 25, 2009).
The modifications, completed between December 2008 and March 2009, were part of an agreement with state attorneys general in California and Florida, among other states, over charges of predatory lending against Countrywide Financial Corp., which Bank of America acquired in July of last year.
The charges against Countrywide came in October after Bank of America had already taken over the countryâ€™s formerly largest home lender, resulting in a settlement that could ultimately end up saving almost 400,000 homeowners as much as $8.4 billion.
The settlement targeted subprime loans â€” typically offered to homeowners with the weakest credit â€” and adjustable rate mortgages, which allowed homeowners to make interest-only payments and defer payments on their loanâ€™s principal balance.
Investors, who own 88 percent of the loans that may be eligible for modification under the settlement and who are wary of huge potential losses that may result from these mortgage modifications, are suing Bank of America in U.S. District Court in New York over who should pay for the modifications.
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