CHARLOTTE, N.C. -- Bank of America has agreed to settle predatory lending charges against subsidiary Countrywide Financial Corp. at an estimated cost of about $8 billion.
The agreement stems from a series of lawsuits alleging predatory lending filed in several states against the mortgage company.
The bank has agreed to rework the mortgages of nearly 400,000 people who took out loans with Countrywide to settle multistate lawsuits against Countrywide alleging predatory lending. The bank said the cost of settling the legal charges could go as high as $8.4 billion.
Borrowers who took out loans with Countrywide before Dec. 31, 2007 and who occupy the property as their primary residence are eligible. First-year payments of principal, interest, taxes and insurance will be targeted to equal to 34% of the borrower's income. Later payments will be adjusted using increases that present minimal risk of payment shock and default, according to a statement issued by the bank.
The settlement was developed with the cooperation of several state attorney generals.
Bank of America acquired the lender in July 2008.
The bank did not admit to any wrongdoing and was not required to pay any fines.
