Vermont Attorney Gen. William H. Sorrell announced last week that Bank of America's Countrywide Financial Corporation has agreed to a settlement to resolve any claims that the State of Vermont may have concerning Countrywide's origination of home loans.
Countrywide will pay about $100,000 to Vermont for foreclosure relief, half of which will go to specific borrowers whose Countrywide loans were foreclosed upon, and the remainder for general foreclosure relief efforts. The settlement is similar to those entered into by other states, including states that alleged that Countrywide engaged in predatory lending practices.
The settlement confirms Countrywide's current commitment to offering loan modifications-reductions in interest rates, for instance-under certain circumstances to Vermonters with subprime "hybrid" adjustable rate mortgages, other subprime first mortgages, and "pay option" adjustable rate mortgages.
Hybrid loans have an interest rate that resets after a specified number of years; under pay option loans, the borrower has the choice of making one of several different kinds of monthly payments, such as a minimum payment, an interest-only payment, or a fully amortizing payment.
These types of loans have been associated with the national mortgage foreclosure crisis.