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PHOENIX / MESA, ARIZONA July 2, 2009 - Recently one of the nation's largest subprime lender, Countrywide, was forced to own up to some of its mistakes and relief is now available for Arizona homeowners facing possible foreclosures.
On March 5, 2009, the Superior Court of Maricopa County signed a consent judgment, ending litigation that resulted from consumer fraud claims filed by Arizona Attorney General Terry Goddard and by a number of other states against Countrywide for its predatory residential home lending practices.
The judgment is intended to address Countrywide's risky past, present and future lending practices. The judgment does not, however, involve Bank of America, N.A., which recently purchased Countrywide.
"The primary goal of the consent judgment, however, is to require early intervention for existing high risk loans - a ubiquitous problem of pandemic proportions among Arizonan homeowners," says attorney Charlotte Johnson of Gibson Ferrin & Riggs, PLC.
According to Johnson, in an effort to better identify those loans at risk of default, Countrywide has agreed to contact its borrowers with subprime loans or those adjustable rate mortgages which include a negative amortizing minimum payment option (pay option ARMs) 90 days before the loans are scheduled to change payment. This applies to those loans whose first payment began in 2004 through 2007.
"The lender typically identifies for the borrower the projected new payment amount," says Johnson. "Borrowers who believe they will not be able to afford the new payments are invited to contact their loan servicer in order to consider loan modification eligibility as provided under the consent judgment."
The good news is that, under the consent judgment, if homeowners holding subprime loans or pay option ARMs meet certain eligibility requirements, Countrywide will modify those high risk loans to more affordable payment terms, she explains, such as interest only periods, interest rate reductions, removal of the negative amortization feature, or in some cases, principal reduction or refinancing under the HOPE for Homeowners Program.
Countrywide also agreed to make reasonable efforts to complete the loan modification process within 60 days from the time the borrower has provided the needed information for the process, she says.
"With these demanding obligations, Countrywide is apparently hiring legions of customer service representatives to handle the deluge of phone calls clogging its phone lines and to review each on a case-by-case basis," she adds.
"A few years ago, action like this was unfathomable," she says. "Hard luck meant the borrower was out of luck. Now with the depressed market, lenders would prefer to ride out this storm and take less money through loan modification than add another property to their cache and take an even bigger loss."
As for certain homeowners who do not qualify for a loan modification, Countrywide is to provide some foreclosure relief and relocation assistance, based on need.
For future lending practices, Countrywide has agreed to enforce stricter guidelines and safeguards for subprime lending and has agreed to review and monitor its loan modification practices for other types of residential loans.
The requirements under the consent judgment will end on June 30, 2012.
Call attorney Charlotte Johnson at 480-633-8100 with any questions concerning programs available under this consent judgment or to schedule a confidential and comprehensive consultation. For more information, visit the Arizona Attorney General website at www.azag.gov/consumer/foreclosure/index.html#countrywide and click on the "Countrywide Customers" link or call Countrywide Loss Mitigation customer service representatives at (800) 669-6607.
The attorneys at Gibson Ferrin & Riggs, PLC concentrate their practice on serving individuals, families and small business owners with business-related issues, family law and estate planning. They can help identify and assess the interests that matter most to their clients and work to preserve, promote and protect them. Visit their website at www.gfrlegal.com and their blog at www.biziboom.com. The firm's expertise in commercial litigation and business, family and estate law is recognized throughout the Phoenix / Mesa area.
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