Nevada homeowners could get help from lawsuit settlement
October 6, 2008
CARSON CITY ” More than 11,000 Nevadans could benefit from a settlement announced Monday by Bank of America to help some 400,000 struggling U.S. homeowners by cutting interest rates and principal on mortgages, the state attorney general’s office says.
Bank of America, facing a lawsuit over alleged deceptive mortgage practices, said it will modify the mortgages with up to $8.7 billion in interest and principal reductions for customers of Countrywide Financial Corp., the mortgage lender it acquired last summer.
The $8.7 billion estimate assumes that eligible borrowers in all 50 states participate and that investors in mortgage securities cooperate with the loan work-outs.
Attorney General Catherine Cortez Masto, noting that Nevada leads the nation in foreclosures, said her office has been working with Countrywide and attorneys general in 11 other states who have been pushing for the settlement.
According to preliminary Countrywide figures, the settlement could benefit more than 11,000 borrowers from Nevada who represent an unpaid mortgage balance of about $2.6 billion. Of those borrowers, nearly 10,400 are eligible for loan modifications.
The changes would include $219 million in total mortgage amount reductions for Nevada, including $70 million in principal write-downs and the rest in reduced interest. The goal would be to revise payments so they don’t exceed 34 percent of income, and to ensure borrowers don’t wind up actually losing equity.
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Also, nearly $2.2 million in total prepayment penalties would be waived, along with another $2.3 million in delinquency fees, under the program that Bank of America plans to launch in December.
About 800 other borrowers who have already been foreclosed upon may be eligible for some restitution. This includes a “cash-for-keys” program, with Nevada estimated to account for about $4.8 million in funds set aside for that purpose.
Gov. Jim Gibbons hailed the Bank of America announcement and said it could serve as an example for other lenders in dealing with troubled mortgages.