Bank of America Settlement Worth Over $8 Billion

Wall Street Journal (10/06/08) P. A3; Simon, Ruth
The $8.6 billion-plus settlement by Bank of America Corp. to settle predatory lending claims tied to subprime adjustable-rate mortgages and option ARMs originated by Countrywide Financial Corp. before Dec. 31, 2007, is the nation's first mandatory loan modification program and likely will be the biggest predatory lending settlement ever. Bank of America will work with investors to modify loans under the federal Hope for Homeowners program, lower interest rates to make payments more affordable and lower loan balances to raise equity levels; payments will not top 34 percent of the borrower's monthly income. The settlement includes $150 million in foreclosure relief, meaning refunded closing costs and fees; $70 million to assist borrowers who lose their homes to "get on their feet and leave the mortgage premises in good condition;" and $220 million in assistance to borrowers in states that sign an agreement with the company--which likely will include Arizona, California, Connecticut, Florida, Illinois, Iowa, Michigan, North Carolina, Texas and Washington.