Cox announces Michigan settlement with mortgage lender CountrywideContact: John Sellek, Media Contact 517-373-8060Agency: Attorney General
October 6, 2008
Mike Cox today announced a major settlement between the State of Michigan and
Countrywide Financial, the nation's largest mortgage lender, resulting from
allegations of predatory lending. The settlement will provide relief for more
than 10,000 current and former Michigan homeowners who are struggling with the
national home foreclosure crisis.
"Through our negotiations,
we have provided a helping hand to thousands of Michigan families who are
struggling with the foreclosure crisis," said Cox. "And, unlike the Wall Street
mess, this was no bailout. Countrywide is paying, not the taxpayers."
Cox conducted national
negotiations with Countrywide and other state attorneys general due to
allegations of questionable lending practices. Those lending practices included
misleading marketing techniques and incentives for selling loans with risky
features, which may have contributed to the national increase in foreclosures.
a result of the negotiations, Countrywide must offer to refinance thousands of
Michigan mortgages, provide millions in financial assistance and stop
questionable loan practices.
Under the terms of the
settlement, Countrywide will:
Refinance as many as 9,700 mortgages in Michigan, giving families an opportunity to keep their homes, and saving them approximately $129 million as a result of more favorable terms.
Pay more than $9.8 million to assist Michigan homeowners who lost their homes to foreclosure. These funds will also be used for borrower education programs and neighborhood rehabilitation efforts.
Pay relocation assistance payments to certain homeowners who go into foreclosure after the date of this settlement, costing Countrywide up to $70,000,000 nationally.
Stop selling subprime and option ARM loans in Michigan for two years, and impose new limits on the sale of low or no-documentation loans.
Cap the amount a broker can earn to 4% of the amount borrowed.
Stop an automatic foreclosure process until certain details regarding the mortgage holder's situation have been verified.
Report quarterly to the Attorney General on the status of its troubled mortgages and what it is doing to keep them from going into foreclosure.
Maintain a specified number of staff focused on helping troubled homeowners avoid foreclosure proceedings.
Homeowners who acquired a
loan from Countrywide Financial can call the
Countrywide hotline for more information at
Citizens who feel they are victims of questionable
lending practices can file a complaint with the State of Michigan Department of
Insurance and Financial Services at 1-877-999-6442 or the Attorney General's
Consumer Protection hotline at 1-877-765-8388.