Published on Monday, October 13, 2008
By Pasadena Star Staff Writer
NOW that the federal government has begun cleaning up Wall Street's mortgage-backed-securities mess to the tune of $700 billion, it's about time the taxpayers got something back.
And thanks to a deal with Bank of America made by attorneys general in 11 states - including Jerry Brown of California - 400,000 actual homeowners with Countrywide Financial mortgages will get a bailout of their own.
Under pressure from the states suing Countrywide, Bank of America (which owns Countrywide) offered $8.4 billion in direct mortgage relief for homeowners at the edge. It includes waiving late fees and prepayment penalties to converting predatory adjustable loans into fixed-rate mortgages and even reducing the balances of the loans themselves.
Among the worst Countrywide loans covered in the settlement are "pay-option" mortgages, which allowed borrowers to pay a fraction of the interest and principal, allowing the loan balance to steadily increase with each additional month
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