Countrywide Home Loans, who used to be the largest home mortgage lender before being acquired by Bank of America, reached a settlement agreement with several state’s Attorneys General regarding their huge pool of subprime loans.
One of the tenets of that agreement is that Countrywide will proactively modify 400,000 loans to more “reasonable” terms.
But that’s easier said than done. According to my research, many of the loans Countrywide made are owned by outside investors who were not party to the agreement Countrywide made and are balking at taking less money than they are owed.
In fact, Mr. William Frey is suing to prevent Bank of America (owner of Countrywide) from performing the loan modifications since, according to Frey, doing so is in violation of the contracts that investors hold with Countrywide.
So who is right? Mr. Frey, who advocates that contract law should be followed in this and every case? Or BOA/Countrywide/Attorneys General whose agreement requires that this circumstance be judged as an exception to contract law?
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