State officials urge more loan modifications

October 08, 2008 08:55AM

Attorney general and banking regulators from 11 states sent a letter yesterday to 16 of the largest mortgage servicers, urging them to follow Bank of America and begin broad-based loan modification programs of subprime loans, to help delinquent homeowners pay off their mortgage and avoid foreclosure. As part of a settlement with the state attorney general, Bank of America agreed Monday to modify the terms of as many as 390,000 subprime mortgages and option adjustable-rate mortgages that were serviced by Countrywide Financial, which it acquired July 1. The $8.6 billion deal aims to initially reduce borrowers’ mortgage-related payments to 34 percent of their monthly income by refinancing borrowers into government-backed loans and reducing borrowers’ interest rate or principal.

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