The Foreclosure Crisis Spells Nemesis for Countrywide in New Jersey
The lenders have had their day and now the administration is baring it teeth. The foreclosure crisis spells nemesis for Countrywide Financial Corporation in New Jersey.
As part of an agreement New Jersey will be apportioned $3.6 million from Countrywide. The latter has been blamed for having preyed on gullible borrowers, said Governor Jon Corzine on 2nd April 2009.
Half of the funds would be utilized to finance the foreclosure prevention measures of the state. The other half would compensate those who had lost their homes after making six or less number of mortgage payments. It has been estimated that 8,200 residents would benefit from these steps.
Last year Countrywide was taken over by Bank of America. It did not admit to having done anything wrong. But it agreed to modifying loans, monitor the borrowers facing trouble and give to those having to move out of homes they could not have afforded an amount of $2,000. Corzine said, “These are homeowners who, through aggressive sales and marketing of inappropriate or bad loans, have lost their homes or are in danger of losing their homes.”
New Jersey State had accused Countrywide of following irregular marketing techniques by selling costly mortgages with initial low teaser interest rates to people who could not afford it right from the beginning. It was inevitable they would default.
Countrywide declined to comment when asked to do so.
The money would be used by the state to continue with measures that had been given the green signal by the legislature in 2008 – free and occasionally mandatory mediation steps. By resorting to mediation it has been possible to persuade banks to modify the mortgages.
Phyllis Salowe-Kaye, of New Jersey Citizen Action (non-profit body working on behalf of the state) said, “Countrywide was our biggest predatory lender. They would refinance people into loans that had no tangible benefit to the borrower. They had every form of bad lending.”
To be eligible for loan modifications there are certain conditions – taking of certain kinds of sub-prime mortgages during 1st January 2004 to 31st December 2007 and whose loan amount is more than 75% of the current worth of their homes. They would also have to be delinquent or about to do so. The target is to see that borrowers do not have to spend more than 42% of their income on expenses related to property matters.
Countrywide has agreed to bring down the principal without charging interest for those borrowers who owe over 95% of the current value of their homes.
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