As part of the settlement, Countrywide, which is now owned by Bank of America, will re-negotiate mortgages so they do not exceed 32 percent of a family's household income.
The deal helps more the 11,000 people in Illinois.
Illinois and 10 other states who sued Countrywide will receive $8.7 billion in mortgage relief funds.
Illinois Attorney General Lisa Madigan says the settlement should serve as a model to the federal government on how to help struggling homeowners survive the country's mortgage crisis.
In June, several attorneys general went after Countrywide. Bank of America began negotiating with the attorneys general and on Monday, the first mandatory loan modification program in the country, giving some hope to those fighting foreclosure in a Countrywide loan.
In June, several attorneys general went after Countrywide. Bank of America began negotiating with the attorneys general and on Monday, the first mandatory loan modification program in the country, giving some hope to those fighting foreclosure in a Countrywide loan.
Also as part of the deal, Countrywide foreclosures will be suspended. A foreclosure relief fund will be created to modify some of the riskiest loans. A relocation fund will assist those who don't qualify for loan modification.
The president of Bank of America's mortgage services, Barbara Desoer, said, "This bold new program makes it clear that Bank of America is committed to be the leader in responsible mortgage lending practices."
Homeowner Hilario Castro went to Brighton Park's neighborhood council for help. He said he kept up with his two Countrywide mortgages until one of his two jobs was cut.
Castro said he feels the settlement will help. He and his wife are both working but are now behind five months. He said he wants to find a way to modify his mortgage to keep his home for him and his family.
The suspension of foreclosure of risky mortgages takes effect immediately.
In December, Bank of America will begin modifying loans. The Bank of America also set up a phone number: 1-800-669-6607.
http://my.countrywide.com/media/FinancialAssistance1.html
http://my.countrywide.com/media/FinancialAssistanceEN.html
http://my.countrywide.com/media/FinancialAssistance2.html
http://www.illinoisattorneygeneral.gov/pressroom/2008_10/20081006.html
