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At least there's some vindication for distressed homeowners who were duped by irresponsible mortgage companies. Countrywide Financial Corp., the first domino to fall, now has to pay several Florida borrowers pursuant to a settlement with the Florida Attorney General.
Why? Florida alleged that the former mortgage giant participated in deceptive and unfair business practices -- in this case, predatory lending. The concept of predatory lending is broad. Federal and state governments have enacted laws to deal with this issue and to define which practices are, in fact, deceptive. The Truth In Lending Act is one example of such laws.
In the Countrywide complaint, the attorney general claimed that Countrywide had misleading rates and penalties. In addition, the complaint alleges that the borrowers were put into loans they could not afford.
A total of 2,700 Floridians in the class action suit will receive $6,000 in the mail. Under the terms of the settlement, the Attorney General also received $4 million from Countrywide to help fund foreclosure defense programs.
The settlement also includes an agreement that Countrywide would temporarily halt some foreclosures, move homeowners from adjustable-rate mortgages to fixed-rate loans and waive refinancing fees and penalties.
Countrywide was acquired by Bank of America after the lawsuit had already been filed. Subsequent to the settlement, the Florida Attorney General is calling on Bank of America to be more responsive to consumers who want debt negotiation on their home loans.
The news of this settlement is music to the ears of thousands of Florida homeowners and thousands more across the nation. Last year, Countrywide paid $7.46 million to Texas borrowers who had already foreclosed or were facing foreclosure.