Payday Loans News Break: Mortgage pact may be worth $3.5 billion to California

Bank of America Corp. agrees to nation’s largest mortgage-workout program to settle charges of lending abuse. An estimated 125,000 Californians who are struggling with risky mortgages from Countrywide Financial Corp. may get their loans modified and payments reduced under a program to be announced today.

Quoted With Edits From: Countrywide mortgage pact may be worth $3.5 billion to California loan holders (Los Angeles Times)

The Largest Predatory Lending Settlement In History

$8.7 billion dollars. That’s the number for what is now the largest settlement in history against lenders.  Countrywide financial Corp, the company against whom the lawsuit was brought, was claimed to have taken advantage of hundreds of thousands of homeowners by raising fees, manipulating paperwork and giving access people access to loans of which they couldn’t possibly afford, which in some cases resulted in more people taking out payday loans.

The settlement is part of a plan to examine over 400,000 loans across the nation, 125,000 in California alone. Bank of America who recently purchased Countrywide has agreed to settle charges brought against Countrywide by several state, and no they won’t be using payday loans to handle the matter.

How will the settlement aid the victims?

The program will help restructure Countrywide’s mortgage portfolio, reworking loans to make them more affordable to the victims. This may include taking customers on variable rate loans and moving them to fixed rate loans or reducing their interest rate and or principal.

Bank of America who acquired Countrywide for $2.5 billion in stock last July has be very cooperative in it’s approach to handle the bad business practices of it’s new investment. The increased number of mortgage defaults that countrywide has had has left Bank of America with their first quarterly loss in twenty five years.

This just serves to remind us of the troubled state of our economy has been undergoing since the housing bubbled popped between 2005 -2006. Consumers can expect more difficulty in obtaining housing loans as banks tighten the qualification criteria for doing so. The so called “credit crunch” that we are currently undergoing has led many banks and other creditors to lower the credit lines of there current customers. Perhaps, to limit their liability as economic pressures force people to spend funds they don’t have and then rely on payday loans to make ends meet.