Mortgage lender Countrywide Financial Corporation has agreed to provide approximately $8 billion in home loan and foreclosure relief to as many as 397,000 homeowners across the country.

Along with Texas, attorneys general in Arizona, California, Connecticut, Florida, Illinois, Iowa, Kansas, Michigan, North Carolina, Ohio and Washington are participating in the agreement with Countrywide.  It was reached with the agreement with Bank of America, which acquired Countrywide in July of 2008.

The agreement is expected to provide millions in reduced mortgage payments to thousands of borrowers.

Under the settlement, Countrywide has agreed to modify loans for eligible borrowers so they will be better able to afford to keep their homes.  Modifications may include an automatic freeze or reduction in interest rates, conversion to fixed-rate loans, and refinancing or reduction of the principal owed.  Under the modifications, first-year payments of principal, interest, taxes and insurance will be targeted to approximately 34 percent of the borrower's income.

Countrywide has also agreed to stop making problematic high-cost mortgages and payment option adjustable rate mortgages. In addition, Bank of America and Countrywide will pay $150 million in foreclosure relief payments to participating states to help consumers who have already lost their home due to predatory lending.  Bank of America and Countrywide will also pay up to $70 million for relocation assistance to borrowers unable to stay in their homes, and will waive up to $60-$80 million in prepayment penalties and default fees.

The settlement resolves allegations that Countrywide used unconscionable and deceptive acts and practices in making and servicing home loans.  As a result, homeowners were often stuck with unfair loans they couldn't afford. Countrywide, the largest provider of subprime mortgages in the United States, is expected to start the loan modification program on December 1, 2008.

The company has said that it will reach out to eligible customers by hiring 3,900 new employees to administer the program.  Countrywide has also said that it will halt foreclosure proceedings against homeowners who are likely to qualify for loan modifications under the agreement.

Countrywide customers can call 1(800) 669-6607 toll-free after December 1, 2008 or for more information or visit the company's website at http://www.countrywide.com/.