In a settlement arrived at yesterday, Bank of America, the pending purchaser of Countrywide,announced that it will allow a combination of loan modifications and interest rate reductions for tens of thousands of mortgage holders in eleven states. The states are: California, Illinois, Arizona, Connecticut, Florida, Iowa, Michigan, North Carolina, Ohio, Texas and Washington.
Starting in December, the program will adjust the size of the loan payments so that they do not exceed 34% of the borrower's income. In some cases, loan principal will also be adjusted. No modification fees will be charged, and prepayment penalties are to be waived.
In the case of homeowners whio will be unable to keep their homes even with this assistance, the agreement also provides a vehicle to assist them in moving to new locations.
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