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Feb 23

Texans To Avoid Bank Foreclosure Under Settlement

A total of 30,000 homeowners in Texas who took out loans from Countrywide Financial Corporation from 2004 to 2007 are expected to avoid bank foreclosure under a settlement agreement between the Office of the Texas Attorney General and Countrywide, which is now owned and run by Bank of America.

The settlement agreement between Countrywide Financial and the state of Texas is part of the nationwide settlement agreement worked out by Countrywide with each of the attorneys general of 40 states where it operated and where it provided risky loans.

Aside from the loan modification agreement, Countrywide will send $7.46 million to Texas Attorney General Greg Abbott as restitution for its questionable lending practices during the housing boom. The bank has been accused of encouraging borrowers to take out risky loans they did not understand very well and to take out loan amounts beyond their capacity to pay.

Qualified Countrywide borrowers in Texas will receive mails containing forms to be filled out and returned for payment. Every eligible borrower is expected to receive approximately $1,400.

Only Countrywide borrowers who took out home loans between January 1, 20004 and December 31, 2007 and whose homes went into bank foreclosure are eligible to get a share in the restitution money. Borrowers who had been in default for over 120 days are also qualified to receive their share.

Another part of the settlement agreement is the Relocation Assistance Program. Under this program, Texans who have lost their capability to save their homes from bank foreclosure are granted up to $2,000 each to help them in their relocation if they voluntarily surrender their homes to Countrywide.

A total of $2.8 million has been allotted to this program in Texas, which is expected to help about 1,400 homeowners who are currently delinquent and who no longer have the needed level of income to save their homes from bank foreclosure.

In the 40 states where Countrywide Financial operated, Countrywide bank loan officers have been accused of providing predatory home loans, such as pay-option loans, subprime loans and adjustable-rate mortgage loans, to families trying to fulfill their dream of home ownership.

Eligibility requirements in all the 40 states are similar, but some states may have added some eligibility criteria.

In Texas, the 30,000 home loans of borrowers expecting to get modifications to avoid bank foreclosure have been estimated to have a total value of $335 million.

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