Countrywide OKs $8.68 billion settlement

LOS ANGELES, Oct. 5 (UPI) -- Countrywide Financial Corp. has agreed to modify home loans for 400,000 struggling homebuyers as part of a settlement, Legal Newsline reported Sunday.

Countrywide was sued by a handful state attorneys general, who alleged that the Calabasas, Calif., company engaged in predatory lending practices by misrepresenting loan terms and borrowers' ability to afford loans.

To settle those and other claims, Countrywide, which is now owned by Bank of America, has agreed to provide $8.68 billion in direct loan relief to homebuyers.

"With this settlement, homeowners will receive direct relief from the catastrophic damage caused by Countrywide," California Attorney General Jerry Brown said. "Countrywide's lending practices turned the American dream into a nightmare for tens of thousands of families by putting them into loans they couldn't understand and ultimately couldn't afford."

Officials said the settlement will allow eligible subprime and pay-option mortgage borrowers to obtain a modified and more affordable loan.

Bank of America has agreed to suspend offering, under its own name or through Countrywide, subprime loans or loans that can negatively amortize, Legal Newsline reported.

Participating in the multi-state settlement along with Brown are attorneys general in Arizona, Connecticut, Florida, Illinois, Iowa, Michigan, North Carolina, Ohio, Texas and Washington.