Some 11,000 Nevadans will keep their homes and avoid foreclosure under a tentative agreement between state officials and Bank of America Corp. announced Monday.
The agreement was reached with attorneys general around the country and leaked to the media over the weekend, but state Attorney General Catherine Cortez Masto on Monday released information dealing specifically with Nevada.
"My office has been working with Countrywide and the larger settlement states to bring some immediate relief for Nevada homeowners," Cortez Masto said in a statement. "The proposed settlement is intended to help those eligible Nevadans stay in their homes during these pressing economic times."
Bank of America agreed to make loan modifications that would save Nevadans up to $219 million through reduced interest payments and, for some borrowers, reduced principal, according to the attorney general’s office. The agreement would reduce late fees up to $2.2 million and waive prepayment penalties up to $2.16 million.
Some mortgage loan rates would be cut to 3.5 percent, according to the attorney general.
The program is designed to help homeowners who obtained subprime or pay option-adjustable rate mortgages from Countrywide Financial Corp., which Bank of America acquired.
Subprime loans are those made to borrowers with less than prime credit. Pay option-ARM mortgages allow the loan balance to increase monthly if the borrower makes a minimum payment.
"The key is going to be the definition of eligible," said Brock Davis, president of U.S. Express Mortgage. "Many, many of these people can’t be qualified based on income."
Countrywide didn’t require many of these borrowers to prove their income, Davis said, and many will not have enough income to qualify for the loan modification program.
"This is good in the sense that some people will be helped," Davis said. The program may provide benefits if the public perceives it is alleviating the residential mortgage crisis, he added.
"Maybe it will help if everybody believes it will," Davis said.
The program is limited to mortgages for owner-occupied homes. It is for subprime and pay-option ARM mortgages for which the first payment was between Jan. 1, 2004, and Dec. 31, 2007.
Contact reporter John G. Edwards at email@example.com or 702-383-0420.ON THE WEB: www.ag.state.nv.us