Some homeowners with Countrywide mortgages are eligible for a special loan modification that actually permanently reduces their principal balance. So many homeowners today are struggling with a mortgage payment that they can't afford and owe more than the value of their home. Just imagine, simply erasing your negative equity! But how do you know if you qualify? Countrywide is offering this provision because of their settlement of an $8.6 billion predatory lending suit, so one of the biggest factors is what state you live in.
These are the states which were included on the Countrywide lawsuit:
Arizona, California, Connecticut, Florida, Illinois, Iowa, Michigan, North Carolina, Ohio, Texas, and Washington.
If you live in one of these eleven states and originated your loan between Jan. 1, 2004 and Dec. 31, 2007 then you may be eligible for principal reduction as a provision of your loan modification. Countrywide also agreed to offer qualified borrowers in these states waivers of their late fees and penalties with new interest rates as low as 2.5%
Who is a qualified borrower?
It's been estimated that 400,000 homeowners qualify for this program. If your mortgage has a pay-option ARM rate notorious for the principal going up with every payment, you are very likely to qualify. You may also qualify if the value of your home has dropped below what you still owe on your mortgage.
Tennessee, Mississippi and Pennsylvania also have settled lawsuits with Countrywide, so borrowers in those states should also check into what special loan modification terms they may qualify for.
Keep in mind that even if you don't live in one of those states, or your situation doesn't qualify you for a principal reduction, you may still be eligible for a regular Countrywide loan modification. In a loan modification without special provisions, the payment terms and interest are adjusted to make your mortgage payment manageable. These things are decided on a case-by-case basis, so if you have an unaffordable Countrywide mortgage, you owe it to yourself to find out what kind of a loan modification you qualify for.
It could make all the difference in saving your home from foreclosure.
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