Pa. joins settlement with Countrywide

January 29, 2009 at 12:00a.m.

HARRISBURG, Pa. (AP) — Pennsylvania has joined a settlement with Countrywide Financial Corp. that makes available as much as $155 million to help keep thousands of state residents in their homes.

Thirty other states have signed agreements with Bank of America Corp., which acquired Countrywide last year and announced in October that it would pay more than $8 billion for interest rate and principal reductions for nearly 400,000 customers nationwide.

The Pennsylvania deal was announced Wednesday by state Attorney General Tom Corbett, whose office spent several months investigating alleged deceptive mortgage practices by Countrywide and its affiliates. The agreement filed in Commonwealth Court extinguishes the state’s right to prosecute most claims involving those allegations.

Most of the Pennsylvania money — about $150 million — is earmarked for as many as 10,200 subprime and pay-option borrowers with adjustable-rate mortgages sold through Countrywide.

Countrywide has agreed to freeze foreclosures until the borrowers’ financial status can be verified.

A Bank of America spokesman said the $8 billion-plus in mortgage aid is available to qualified borrowers in all 50 states regardless of whether they join the settlement.

“The program itself isn’t new,” said the bank spokesman, Rick Simon.

A Corbett spokesman countered that the Pennsylvania agreement formalizes the company’s commitment.

Until that agreement was filed, “there was no legal binding there,” said Eric Shirk.

The state’s participation in the settlement does free up some additional money from Countrywide — about $5 million — for cash payments and relocation assistance for some borrowers.

California-based Countrywide, once the nation’s largest mortgage lender, was among the companies whose risky lending habits led to the nation’s financial meltdown. Charlotte, N.C.-based Bank of America acquired the company in an all-stock deal valued at about $4 billion.

Consumers can call Countrywide’s hot line, (800) 669-6607, for more information.