According to an article in the Star-Telegram, Bank of America has agreed to pay $7.46 million to over 3,000 Texans who lost their homes in foreclosure because of subprime mortgages issued by Countrywide Financial, which is now owned by Bank of America.
Each household will receive approximately $2,330 in restitution as part of the settlement. Just enough money for first and last month's rent on the rental they will never own no matter how long they pay. But if you thought the $7.46 million was small, you're right because that's only a fraction of the entire $345 million settlement made between Texas and Bank of America.
The remainder of the money will go towards "funding" loan modifications and the state's Relocation Assistance Program. I wonder exactly how this "funding" is going to be spent.
The article said:
Another 1,400 Texans who have defaulted, or will likely default, on subprime mortgages and turn over their home to the state's Relocation Assistance Program are eligible to receive up to $2,000. The payments are part of a $345 million agreement made in October between Texas and Countrywide.
Well, one thing is consistent with all of these programs, it doesn't look like the homeowner facing foreclosure gets to keep his/her home. The point of helping homeowners avoid foreclosure should not be to simply save banks money or fund "relocation" programs it should be to maintain the wealth/assets of individual Americans facing foreclosure.
Another problem is that suing banks after they issue toxic mortgages and then asking them to "please modify" their toxic mortgages doesn't make any sense. What incentive do banks have to voluntarily modify toxic mortgages? None.
They won't be punished if they don't, so that leaves us where we began. We need to empower the bankruptcy courts with the right to modify toxic mortgages during Chapter 13 bankruptcy . But just in case you've already lost your home to foreclosure or you are suffering under a toxic Countrywide mortgage below are the eligibility criteria as outlined in the article.
To be eligible, a borrower must have made six or fewer payments over the life of the loan, occupy the property and have either experienced a foreclosure sale or were 120 days or more delinquent as of Oct. 6, 2008.
Application forms for restitution payments will be distributed by Bank of America, Abbott's office said. For more information, go to www.Countrywide.com or call 800-669-6650.