Countrywide, the nation's largest mortgage lender during the housing boom, is settling a "predatory lending" lawsuit by giving $8.4-billion in loan relief to borrowers in Florida and beyond.

Acquired this year by Bank of America, Countrywide will adjust monthly payments for an estimated 400,000 borrowers. In most cases the relief will come in the form of moving homeowners with adjustable rate mortgages into fixed-rate loans. Countrywide will waive the fees normally associated with refinancing.

About $1-billion of the money could go to an estimated 57,000 qualified Countrywide customers in Florida, state attorney general Bill McCollum said. The company also promised to halt foreclosure proceedings, at least temporarily, on eligible loans in Florida.

There's a catch: The homeowner must be able to afford the newly lowered house payments. Makes sense to me. Why go through the hassle of loan modification when the person is still a prime foreclosure risk?

At the risk of sounding unsympathetic, a lot of people were packed into these less-than-stellar home financing deals because they were legitimately high risk borrowers (mediocre credit, too much consumer debt, spotty job history, etc).

They probably shouldn't have bought a home, but fell for the siren's song of "real estate always appreciates." If Countrywide fed the delusion, I suppose there's some justice in them fronting cash to clean up the mess.

More here.