Iowa Attorney General Tom Miller announced a settlement with Countrywide Financial today that will allow mortgage owners nationwide to modify the terms of their mortgage in an effort to hold off foreclosure. Miller says they will essentially modify most loans so that people pay 34% of their income toward principal, interest, taxes and insurance.
If the loan holders are not escrowing taxes and insurance, they would pay 25% of their income on the loan. Miller says this settlement could cover some 379,000 people nationwide, including 1,10 in Iowa. Miller says Countrywide called seeking an agreement after being sued by three other states, and this settlement was negotiated.
Miller says they hope to get other mortgage companies to follow suit. Miller has been involved with other Attorneys General trying to cut foreclosures and he says trying to individually deal with all the mortgages was not getting the job done.
“This has the potential of being a game changer in the loan modification area, in the area of keeping people in their own homes, and that’s so important,” Miller says. Miller says they believe that a program like this, in the first instance will cut the amount of money the company is entitled to under foreclosed mortgages, but in the long run will save money as “foreclosure is such an expensive process.” Countrywide is putting up 150-million dollars toward the relief program, with around 11-million coming to Iowa.
He says “this is an incredible development, to be able to streamline the modification effort” and could really accomplish what they’ve been trying to do. Miller says they will soon let mortgage owners know how they can qualify for the program.
The details are being worked out right now, and homeowners will either have to be behind in their loans, or their economic circumstances will have to be such that they can’t pay. Miller says Iowa isn’t in the worst shape of the states, but it isn’t in the best either.
Miller says Iowa is roughly in the middle of the “foreclosure avalanche.” Miller says Countrywide customers can call 1-800-669-6607 to get information on the types of records they will need to qualify for the loan modification program. Miller says those with mortgages with other companies can call the Iowa Mortgage Hotline at 877-622-4866 to get information and help. Miller says they will continue working to try and get the other mortgage companies to create settlement programs like Countrywide has done.