Bank of America and a number of U.S. states reached an $8.4 billion accord under which the banking giant will modify troubled mortgages and enable nearly 400,000 Countrywide Financial Corp. clients to keep their homes.Bank of America acquired Countrywide on July 1. The program is designed to resolve claims that several state attorneys general had filed against the Calabasas, Calif., mortgage firm.
The program's goal, Bank of America said in a statement, is to enable borrowers who financed their homes with subprime loans or pay-option adjustable-rate mortgages to hang on to those homes.
For B of A, "the cost of restructuring these loans is within the range of losses we estimated when we acquired Countrywide," Bank of America Chief Financial Officer Joe Price said in a statement.
The plan will reduce interest and principal on the mortgages by $8.4 billion, the Charlotte, N.C., banking giant said.
The program applies to mortgages serviced by Countrywide and originated before Dec. 31, 2007.
The target borrowers are those who occupy their homes as their principal residences and "who are seriously delinquent or are likely to become seriously delinquent as a result of loan features, such as rate resets or payment recasts," Bank of America said.
