January 28, 2009 / 9:27 PM / 10 years ago

UPDATE 1-Countrywide settles Pa. lawsuit for $150 million

(Adds details, background)

LOS ANGELES, Jan 28 (Reuters) - Countrywide Financial Corp has agreed to provide an estimated $150 million in mortgage relief and cash assistance for Pennsylvania homeowners to settle a state lawsuit over its lending practices, officials said on Wednesday.

Countrywide, once the nation’s largest mortgage lender and now part of Bank of America Corp (BAC.N), also agreed to freeze foreclosure proceedings until it determines whether borrowers are eligible to take part in the settlement.

State officials said as many as 10,200 borrowers who hold some of the riskiest and highest-defaulting loans written by Countrywide could be eligible for relief worth more than $150 million.

The settlement would provide them with loan modifications, relocation assistance and foreclosure relief as well as waivers of default or delinquency fees, Pennsylvania Attorney General Tom Corbett said.

A spokesman for Bank of America could not be reached for comment.

The lawsuit followed a state investigation that concluded that Countrywide relaxed its underwriting standards to sell risky loans to consumers who did not understand them and could not afford them, Corbett said in a statement.

The agreement covers loans originated by Countrywide Financial Corp, Countrywide Home Loans Inc and Full Spectrum Lending Inc. (Reporting by Gina Keating; Editing by Andre Grenon)

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