WASHINGTON — Bank of America has agreed to rework the mortgages of nearly 400,000 people who took out loans with Countrywide Financial. The agreement could lead to a modification of loans in excess of $8 billion, according to a statement by the bank.
The agreement stems from a series of lawsuits alleging predatory lending brought in several states against the formerly high-flying subprime mortgage firm.
Borrowers who took out loans with Countrywide before Dec. 31 and 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 the bank.
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The settlement was developed by the bank working with several state Attorney Generals.
Bank of America acquired the lender in July 2008.
The bank did not admit any wrongdoing and was not required to pay any fines.
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