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AG discusses settlement of mortgage lender suit

May 15, 2009

A civil deceptive practices suit against the former Countrywide Home Loans has ended with a $2.83 million settlement, as well as other components designed to address the state and country's mortgage foreclosure crisis.

The Indiana Attorney General's Office announced the settlement on Thursday, about nine months after filing a suit against the mortgage lender in Steuben Circuit Court. The suit alleged that Countrywide and its parent company - bought out late last year and now called Bank of America Home Loans - engaged in deceptive and misleading practices that put borrowers in potentially risky and costly loans. Specifically, the AG's investigation found that homeowners were misled about some terms of their loans, including pre-payment penalties and the time period that interest rates would be recalculated.

Indiana was the fifth state to take action against the company, and brought actions under Indiana's Home Loan Practices Act in Indiana Code Section 24-9-8, and Indiana's Deceptive Consumer Sales Act in I.C. Section 24-5-0.5.

A comprehensive 38-page final judgment and consent decree was entered by Steuben Circuit Judge Allen N. Wheat on April 23, part of Bank of America's sweeping multi-state settlement announced late last year that could be worth more than $8.6 billion.

With this settlement, a National Homeownership Retention Program is created to help offer affordable mortgage payments to homeowners who financed their homes through subprime loans. Bank of America also expects to modify as many as 5,000 Indiana-based loans that could exceed $54 million in savings for Hoosier families, according to consumer protection spokeswoman Molly Butters in the Indiana AG's office.

Attorney General Greg Zoeller dedicated $50,000 of the settlement to the Indiana Foreclosure Prevention Network, part of a larger effort in which the Indiana Supreme Court has joined to prevent foreclosure, offer mortgage counseling, educate trial court judges about these issues, and train volunteer attorneys to help homeowners facing foreclosure.

Part of the settlement includes $200,000 to Indiana for attorney fees and costs, the decree states.

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