February 23rd, 2010 11:15 PM by Sherry Lee
A Countrywide loan modification that features a reduction in the principal balance is offered to some homeowners-but who qualifies for this very important feature and why? The $8.6 billion dollar predatory lending lawsuit that Countrywide agreed to included a provision that allowed for the reduction of the amount owed on certain loans and in certain geographical areas. Homeowners who are struggling with unaffordable mortgage payments and now owe more than their home is worth need to know if they qualify for this loan modification option. Here is some helpful information about who could qualify.
Countrywide agreed to offer eligible borrowers in 11 states loan modifications that featured:
400,000 borrowers in the 11 states originally included in the Countrywide lawsuit are eligible for this special loan modification outreach. If you live in one of these states and your loan was originated between January 1, 2004 and December 31, 2007 you may qualify for a principal reduction on your home loan. Here are the 11 states included in the original lawsuit settlement:
Arizona, California, Connecticut, Florida, Illinois, Iowa, Michigan, North Carolina, Ohio, Texas and Washington. Tennessee, Mississippi and Pennsylvania have also settled predatory lawsuits with Countrywide so that borrowers in those states may be eligible for special loan modification programs. If you do not live in one of these states, you may still be eligible for a Countrywide loan modification to lower your monthly loan payment and help you avoid foreclosure.
Homeowners stuck with Pay Option Arm loans where the loan balance can actually increase with every payment made are good candidates for a Countrywide loan modification featuring principal reduction. Borrowers who owe more than their home is currently worth may qualify for a reduction in the amount they owe the bank, as well as a lower interest rate to arrive a new affordable mortgage payment. Each case is reviewed individually, and the borrower still must meet certain criteria. Every homeowner stuck in an unaffordable Countrywide loan needs to take the time to learn how they could qualify for a loan modification to lower their mortgage payment.