$1 Billion Foreclosure Relief for Countrywide Borrowers in Florida

18 10 2008

Relief is on the way for some Floridians in foreclosure or at risk for it.

Bank of America is to provide $1 billion for Floridians who are recipients of Countrywide home loans considered troubled or risky.

Bank of America, which acquired Countrywide last year, is expecting about 58,000 Floridians to be eligible for its home retention program that begins Dec. 1.

The program is to give Countrywide borrowers restructured loans, foreclosure relief or relocation assistance after 11 states settled a lawsuit with the company that claimed lenders misled borrowers.

Florida residents who went into foreclosure with a Countrywide-issued loan because of early payment defaults or after adjustments to interest rates will be eligible for a share of the $20 million that Bank of America is allocating in foreclosure relief for Floridians.

Under that program, Floridians are expected to receive money from Bank of America as compensation for loans that were not written correctly.

Rick Simon, spokesman for Bank of America, said the foreclosure relief and relocation assistance component of Bank of America’s home retention program are expected to go to about 8,000 Floridians.

Simon said the bank is working to identify eligible Countrywide borrowers who will be contacted via mail or phone by Dec. 1.

“Between now and then, the time is needed to get the system set up,” Simon said. “Some of those letters could start before December.”

Relocation assistance is to include about $4 million for Floridians, who could receive money if they voluntarily agree to leave their home after a foreclosure sale.

Simon said the most expensive portion of the home retention program in Florida will be the rewriting and restructuring of an estimated 50,000 loans.

Bank of America is expected to use a majority of the $1 billion to help Floridians get fixed-rate loans.

“Florida is the second largest state in this program in both the potential amount of customers and payment relief,” Simon said.

Bank of America is to allocate $3.5 billion to California, which is estimated to have 125,000 Countrywide borrowers in need of assistance.

Nationwide, it is a $9 billion program projected to relieve 400,000 Countrywide customers.

Ken Wieand, a finance professor at the University of South Florida, said the home retention portion of the program has the potential for success.

“In the overall meltdown that we’re having in terms of reducing the number of mortgage defaults, certainly that would be helpful, Wieand said.

“This program would in a sense keep some people who would have had to default on their loans from defaulting in the future. And certainly that would benefit the economy right now.”

Source: Florida Association of Realtors


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