Foreclosed homeowners could get restitution in Countrywide pact
February 12, 2009
Texans who had mortgages with Countrywide Financial and lost their homes to foreclosure may be eligible for restitution payments worth $2,300 under a program announced Wednesday.
Written by Dave Michaels and Brendan Case, The Dallas Morning News
Texans who had mortgages with Countrywide Financial and lost their homes to foreclosure may be eligible for restitution payments worth $2,300 under a program announced Wednesday.
The $7.5 million program is part of the largest predatory-lending lawsuit in history. The agreement called for Countrywide to use $8.4 billion to modify the terms of mortgages for 400,000 borrowers in Texas and 10 other states who got unaffordable loans from Countrywide.
The settlement reserved about $150 million to help borrowers who already lost their homes or were near foreclosure – 120 days or more delinquent on payments. Texas' share of the restitution amounts to about $7.5 million, according to Texas Attorney General Greg Abbott, who sued the mortgage company.
Jerry Strickland, a spokesman for Abbott, said about 3,260 Texans would be eligible for restitution. The attorney general's office said they could not yet provide details about eligible borrowers by areas of the state.
Under the settlement, borrowers could get the $2,300 payment if their first loan payment was due between Jan. 1, 2004, and Dec. 31, 2007, and they made six or fewer payments before losing their home.
"That amount of money is not going to save somebody's home or cure the violations that the attorney general prosecuted," said Robert Doggett, attorney for the Texas Low Income Housing Information Service.
"However, this is an example of why the Legislature needs to address some of these practices that are harmful to Texas homeowners," Doggett said.
Countrywide, which was sold last year to Bank of America Corp., was one of the largest originators of subprime loans in Texas.
Although the state has a lower foreclosure rate than other states where housing prices ballooned, the Dallas-Fort Worth area accounted for more securitized subprime loans than any other metropolitan area of Texas, according to a 2008 study by the Federal Reserve Bank of Dallas.
"That's not a bunch of money for a company like Bank of America, with such big operations in Texas," said Sam Garcia, publisher of an online publication called MortgageDaily.com in Dallas.
"It's pretty good PR – $7 million for being able to say that, 'Hey, we're helping people that have already been foreclosed by us.' "
For borrowers who can't afford to refinance their mortgage and have to leave their home through a foreclosure sale, the settlement provides relocation assistance of $2,000 per borrower.
The attorney general's office said about 1,400 Texans would qualify.
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