The right solution

If there's a bright side to the Countrywide Financial Corp. disaster for beleaguered subprime mortgage holders, it's this: Bank of America now owns the Countrywide portfolio and is moving to restructure loans as part of an $8.4 billion settlement with three states.

For all the talk of mortgage lenders working to help troubled borrowers keep up their payments and avoid foreclosure, very few homeowners in these high-cost, risky mortgages have benefited. Bank of America's agreement with the attorneys general of California, Illinois and Florida isn't a "we'll see what we can do" settlement. It's a must-do resolution of civil lawsuits that could affect 390,000 borrowers.


The Bank of America program would help homeowners through refinancing mortgages into a government-backed program, reduce interest rates on adjustable or fixed-rate mortgages or extend low introductory rates so that people aren't forced into foreclosure because of a rate reset. The goal is to keep mortgage payments to about 34 percent of a homeowner's monthly income. That's reasonable and, we hope, realistic.

A spokesman for Bank of America, which took control of Countrywide in July, says the bank will extend the program to all 50 states, beginning Dec. 1. An estimated 87,00 Marylanders could potentially benefit, the spokesman said, and state Attorney General Douglas F. Gansler should push to get Maryland involved if a program review shows it would benefit state residents.


As it is, there have been too few initiatives that have delivered real relief for homeowners facing foreclosure. The state's efforts, for example, have had limited impact despite increasing to 28 the number of housing organizations offering counseling on refinancing. So far, state-sponsored loan modification programs have led to 69 refinanced mortgages with 16 more pending. In the past 18 months, at least 8,100 homeowners took it upon themselves to refinance mortgages to get a better, more stable rate, according to state figures, and that's somewhat encouraging.

But the foreclosure picture here remains sobering. The Mortgage Bankers Association put the number of homes facing foreclosure just this spring at 18,000. Another 65,000 homeowners were late on their payments.

Promises to help homeowners avert foreclosure haven't amounted to much. The attorneys general of California, Florida and Illinois used the power of the law to go after alleged predatory lending practices, and the $8 billion settlement is an impressive return: It should offer victims a lifeline to hang on to their piece of the American dream.

For the record

The number of Maryland loans that could be included in a Bank of America restructuring program for former Countrywide Financial Corp. mortgage holders was misstated in an editorial Tuesday. The correct estimate is 7,000. The Baltimore Sun regrets the error.