Predatory Mortgage Lending 

The Colorado Attorney General Office announces it has reached a settlement agreement with Countrywide Financial Corporation in response to allegations of marketing and issuing sub-prime mortgage products which ultimately contributed to lower home values in the state. Under the agreement, Countrywide will provide $500,000 to the Colorado Department of Local Affairs Division of Housing for the expansion of the Colorado Foreclosure Hotline, included in a total of $6 million for the State and Colorado borrowers.

Funds made available under the agreement are to be used to help defaulted borrowers achieve modified loan agreements with the company. Sub-prime and option-ARM borrowers may be eligible to lower interest rates to as low as 3.5% in order to make mortgage payments more affordable and help to prevent further increasing foreclosure rates. Loan modifications must be completed within a 60-day period for qualified borrowers, and foreclosure proceedings are suspended during this time. Late-fees and penalty charges will also be waived for these borrowers.

An estimated 6,800 homeowners in the state will benefit from the settlement, with a combined savings of $2.1 million. Compensation will also be paid to approximately 1,180 homeowners who were able to make six or fewer payments before being unable to afford them.

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