Projo Biz Blog

Providence, RI - Atty. General Patrick C. Lynch said that a national settlement with Countrywide Financial Corp. will benefit as many as 1,000 Rhode Island borrowers who were foreclosed on or otherwise affected by the giant mortgage lender's business practices.

Lynch said that he has begun notifying 267 families that they have qualified for a portion of the $564,000 in foreclosure relief funds that the settlement provides for. They were foreclosed on, had their property sold short or had their property transferred by deed instead of foreclosure, Lynch said.

Each of the qualifying families will receive a check for $2,045 from Rust Consulting, a Minnesota firm that is the settlement administrator. Countrywide will also forgive $600,000 in penalties and late fees to some borrowers, he said.

He said the company used deceptive practices that led home-buyers to agree to mortgages they could not afford.

"There is no question that this lender is partly responsible for the credit and housing crises that we are still experiencing here in Rhode Island and across the country," Lynch said.

He said that about 1,000 of Countrywide's 24,000 borrowers in Rhode Island may qualify for some type of foreclosure relief or loan modification, which the Bank of America is funding.

Lynch said that a key part of the settlement is a streamlined loan modification program for borrowers who are stuck in loans with high default rates and in sub-prime loans that include a variety of "structural features of concern."

Lynch said that no settlement will fully reimburse all the dollars that the affected customers have lost. However, he said, "It is extremely important that this does deliver some tangible relief for some Countrywide borrowers in Rhode Island who have already lost their homes."

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