The Virginian-Pilot
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Countrywide Financial Corp. has agreed to cut interest rates and provide relief to more than 8,900 troubled Virginia homeowners to help prevent them from going into foreclosure, the state attorney general's office announced Monday.
Virginia joined a nationwide settlement between state attorneys general and the home loan giant, which was acquired in July by Bank of America. Designed to help those most at risk of defaulting on their mortgages, the settlement will provide as much as $212.8 million of relief in Virginia, mostly in the form of loan modifications.
Homeowners with subprime and "pay-option" adjustable rate mortgages from Countrywide are eligible for modifications to their loans that include freezing or reducing the interest rate, converting them to fixed-rate mortgages, or refinancing.
Subprime mortgages include those to people who did not qualify for conventional mortgages. Pay-option mortgages, also known as option-ARM, allow borrowers to pay only a portion of the interest and principal owed each month, resulting in a loan balance that perpetually increases.
Virginia is the 32nd state to join the settlement, which was announced with 11 states in October, said Jumana Bauwens, a Countrywide spokeswoman.
Some of those states had sued Countrywide for deceptive business practices, alleging the lender had misled consumers on the escalating nature of the loans. The institution agreed to provide $8.4 billion in loan modifications to as many as 397,000 homeowners across the country.
The bank will initially focus on homeowners most at risk of foreclosure, including those already in default, Bauwens said. Countrywide also will waive fees to homeowners late in paying their mortgages.
She did not have specific figures on how many homeowners in Hampton Roads are eligible. She said qualifying homeowners will receive notices in the mail.
"I hope this settlement will serve as a model for other mortgage lenders to follow as they develop plans to help homeowners facing foreclosure," Virginia Attorney General Bob McDonnell said in a news release.
Borrowers who financed their homes with Countrywide before Dec. 31, 2007, are eligible.
Countrywide will attempt to modify mortgages so the first-year payment of principal, interest, taxes and insurance will equal 34 percent of the borrower's income.
The program also will provide reimbursement for relocation expenses for more than 1,000 Virginians who already have lost their homes. The bank is working with the attorney general's office to locate those people, Bauwens said.
Vinod B. Agarwal, an economist with Old Dominion University, said the move could help many homeowners in Hampton Roads avoid foreclosure.
"I think this is a step in the right direction," he said.
Keeping individuals in their homes also is good for the bank, Agarwal said.
"They know that when these loans reset, there are going to be a lot of people who cannot pay their mortgages, and they're going to have to foreclose," he said. "They want to avoid that."
Foreclosure-related notices throughout Hampton Roads are up 2-1/2 times from year-ago levels, according to RealtyTrac, an online foreclosure-monitoring service based in Irvine, Calif. Those include notices of default, trustee sales and bank-owned properties.
Last year, 7,522 adjustable-rate mortgages in Hampton Roads reset to higher rates, according to mortgage-data tracker First American CoreLogic. This year, the firm predicts 4,728 more such loans in the region will reset.
"Our message is, whether or not you have subprime, if a Virginia homeowner is in trouble, they should call Bank of America right away," Bauwens said.
Josh Brown, (757) 446-2318, josh.brown@pilotonline.com
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so grumpy,
I suppose you have no college tuitions to pay, no elderly parents needing financial assistance & ins. that pays all costs of treatment, including multiple surgeries, if you or yours have the misfortune to fall ill or suffer major injuries caused by a serious accident. I suppose you have ins. that replaces your entire income, if injured & unable to work, due to said injuries. If you have all these things in place, good for you. Yet you should understand every one's situations is different. I personally know 10 families affected by foreclosures. Not 1 was living above their means. None of them had ARMs or any other type shyster loans. They're all solid middle class, educated people who were earning over 150,000/yr. 1 may be surprised at how quickly a lifetime of savings is gone when 1 is confronted by the cost of major illnesses, in middle age, while being downsized & unable to sell your home due to the downturn in the economy.
We all saw this one comming...
I applied for one of their mortgages (Country Wide) in 2004. I asked for a 30 year fixed. They told me that is what I got in the paperwork they asked me to sign. Upon further review of the paperwork, I found a sentence blended into a paragraph which stated something to the effect of...at year 2 your rate will adjust to 3 points over the Lipor average....I looked into this and found my rates by year 5 would be just about double the rate offered (which was about even with the going 30 yr. conventional rate) ...finally once I confronted them about this....they said "we regret we cannot provide you a loan based on the rates you requested" ...so they blame the consumers???
...During this home buying process I have concluded from the Agent to the Apraiser, to the Lender....they are ALL Crooks! The industry needs a complete overhaul and strict oversight that allows consumers to sue the crooks when they Dupe us....fair is fair :)
Howdareu, your rant is nothing but negative
speculation. You provide zero facts. Folks that have lost their jobs/income have nothing to do with the greedy that bought above their means. The majority of those defaulting are employed but their payments are now to high to make....sayz them!
I had the opportunity to purchase a nice new home above the one I'm 4 years from owning but declined because I'm fiscal responsible. Yes my investments and funds have declined but I have the reserve and resolve to stay the course.
I will never have compassion for the greedy. As I wrote previously, they signed a legal document. Ignorance is not a defense that holds up in any court.
Go ahead and help them out but first they need to file Chap. 11 so they can't go down the street and finance that nice new 60" flat screen.
I see the term "Homeowner"
I see the term "Homeowner" being used to describe people that are about to loose their home. I personally find it odd that people pride themselves for being "homeowners" when they have huge mortgages. Often times the mortgages are for 100% of the value or more. Some aren't even paying all the interest and go further in debt each month. None of these people are homeowners. They all are renting from the bank. No one who is in danger of loosing their home to foreclosure is a homeowner. Some craigslist Realtor challenged me the other day. I said I'm a renter, and I save a bunch of money. He said no, at the end of the month after I've paid my rent I have nothing to show for it. I simply replied, I have extra savings in the bank that otherwise would have gone to interest on a property loan on a place that most likely would be declining in value. In 2002, working at NASA, I didn't really make enough money to buy anything. Credit standards still existed then. So yea, you're not a homeowner unless you own your crib. Quit abusing the word, especially Realtors.
Economic woes, it is your fault too!
It is a sad day when you read comments from people who have no compassion. Escpecially when they seem educated, but yet ignorant. Just wait.... you are next. Do your reasearch..... the prime rate folks who refinanced their homes are next on the chopping block. Home values have fallen, lose your job, try to refinance? Good luck. The problem should have been fixed a long time ago. Do your research and I bet you will start losing sleep at night. The economy sucks world wide. I will certainly bet most of you had investments tied into these fraudulent banks.Lost most of your portfolio? Regulations were not passed by the folks we voted into office and look what we all have now. The Ford Plant closed, Military bases are closing and some are moving. What do you think would happen to Hampton Roads if a couple more are closed or moved? Your businesses will close, your bills will become late, you will lose your income, and kaboom.... you are in the same situation all the Poor Folks who have lost their home or about to. Sleep good tonight .... I would love to meet one of you for a face to face. Shame on you.
Mortgage giant offering relief
Are we suppose to bow down and thank Countrywide for fixing what they help create? Oh, please. Until all the predatory lenders are held criminally accountable, the rest of us will continue to pay. We should not let speculators profit either.
I also hope Secretary Paulson gets what he deserves for his irresposible actions and inactions, not just fade out of the picture by his replacement.
You Cannot Seperate the Wheat from the Shaft
the problem is just too massive! People who were greedy will get help, People who lost their jobs will get help, People who naively thought homeownership was just the mortgage payment will get help. The point is yes it will get alot of people angry, but too many people and businesses messed up as a whole that the ones who played by the rules, worked hard, saved and lived within their means, will have to chop it up for the 'greater good' of the economy.
This really burns me up.
We have entire industries, run by crooks and morons, and when they ge t themselves in trouble, MY taxes, without my consideration, go to pay for the executives who stole these companies blind, or whose stupidity caused bankruptcy all bail out with multimillion dollar options. Now on top of the government, who I am used to having run over me, I find out that my bank is going to reward the consumer end for stupid behavior. I think that I will begin to be a crook, not be responsible for anything I do, buy a house I can't afford and let the rest of you suckers pay for it. Why in the world would I want to do what I am supposed to do? It's like the Ant and the Grasshopper fable, but somebody on drugs rewrote it with an ending that favored the grasshopper. WTFO?
dharma41 wrote,
"Maybe if they weren’t so seemingly oblivious to what the negative impact a slew of foreclosures will likely have on the market value of their own home, they might change their tune."
Oblivious? Virginia ranks 10th in the foreclosure race, what is your definition of a "slew"?
Nice ride while it lasted.
A close friend and his wife have their big house up for sale. The wife has gotten not just one but two jobs to help pay bills. He has changed his career too. They had enjoyed a quite lavish life as a result of real estate investing which they have admitted would not have been possible any other way but they realize the party is over. They are not bitter. They are proactive and thankful for what they were able to do.
I talk to many homeowners who are having difficulty paying their mortgage, second mortgage, or credit cards. Most of the time, it is a combination of issues and not solely the interest rate adjustments. Many cases are divorces which tend to increase during hard economic times. Some cases are health related or estate issues. I believe the bulk of the new cases will be due to job loss.
Of course, we all feel compassion for those who suffer unforeseeable circumstances. I find it hard to feel that same compassion for someone who has obtained a second mortgage or equity line to pay off consumer debt and then has to come out of pocket at closing time. In this case, they have already spent their equity.
In the end, the blame does not fall on the loan officer or the real est