NEW YORK (CNNMoney.com) -- A plan announced today by Bank of America will be the most aggressive foreclosure prevention effort ever undertaken by a U.S. bank.
The program, scheduled to start in December, will be open to borrowers who signed up with Countrywide Financial before it was acquired by Bank of America (BAC, Fortune 500), in July.
It came in a legal settlement that the company entered into with the attorney general offices of 11 states, who had sued Countrywide over predatory lending practices, but the initiative applies to borrowers in all 50 states.
"The Countrywide settlement is a watershed moment for loan modification programs," said Mark Pearce, North Carolina's Deputy Commissioner of Banks and a member of the State Foreclosure Prevention Working Group. "This is, by far, the best [program ever], even better than the FDIC program with IndyMac Bank."
Emphasis added by me.
More:
As part of the initiative, Bank of America will cut monthly housing payments, including mortgage, property taxes and insurance, to no more than 34% of gross income. The move is expected to help keep as many as 400,000 troubled borrowers in their homes.
The program targets holders of subprime adjustable rate mortgage (ARMs), subprime fixed rate loans and option ARMs, but prime and Alt-A borrowers, who did not document their income, will be eligible as well.
No other foreclosure prevention effort has aimed to keep borrowers' house payments so low.
Emphasis added by me.
Look at that. Not only wasn't I ever invited to this party, but I also missed the free hangover treatment too!
I didn't know he was now California Attorney General:
"This is the biggest mandatory modification of loans in U.S. history," said Jerry Brown, attorney general of California, the state with the largest number of borrowers who may benefit from the settlement. "Of course, we never saw such a big rip-off by any other company either."
Don't you wish now you had made him President years ago?
I'm glad to see real relief coming to people who feared winding up on the street. Too bad it had it had to come as a result of legal pressure from several states!
If other banks fall into line and also do this maybe it can put a floor under everything and stabilize the system -- at least here in the U.S..
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