North Carolina is one of 11 states to settle with mortgage lender Countrywide Financial Corporation, giving some homeowners a break on loans.

"Hopefully, we're going to avoid a number of foreclosures in North Carolina with this settlement," North Carolina Attorney General Roy Cooper said.

Cooper's office said the settlement resolves allegations that the company used "unfair and deceptive" tactics to make and service home loans.

"What they would do is to go to families and talk them into loans that often times would have a low teaser rate, but would end up ballooning in a few years to sometimes 50 percent of that family's income," Cooper said.

The agreement should give about $71 million in reduced mortgage payments to more than 5,000 North Carolina families.

"What we want to try to do is to hold these lenders' feet to the fire if they've committed these unfair practices. We want them to pay up," Cooper said. "With this settlement, Countrywide has done that."

Cooper says the modifications may include:

• An automatic freeze or reduction in interest rates
• Conversion to fixed-rate loans
• Refinancing or reduction of the principal owed
• First-year payments of principal, interest, taxes and insurance target to equal 34 percent of the borrower's income
• Countrywide to stop making problematic high-cost mortgages and payment option adjustable rate mortgages

"There's a certain amount of personal responsibility I think people need to have," Raleigh homeowner Kevin Anderson said. "But at the same time, I think the powers that be need to have certain responsibilities, too ... knowing that, 'hey, we give them a certain amount of leash, we don't want them to hang themselves.'"

Homeowner Virginia Riley agrees that liability falls on lenders and homeowners.

"Of course it's fault on both sides, but I think they took people who all of a sudden said, ‘oh, my neighbor got a house and we ought to be able to get one,'" she said

"They all bought houses beyond their means. It's always been upsize instead of downsize and they don't need all that space."

According to realtytrac.com, one of largest real estate sites in the country, there were more than 700 foreclosed homes in the Triangle as of August, 2008:

• Durham County: 1 in every 523 housing units
• Orange County: 1 in every 1754
• Wake County: 1 in every 712

Countrywide is expected to start the loan modification program by Dec. 1 of this year. The company has also promised to halt foreclosure proceedings against homeowners who likely qualify for loan modifications under this agreement.

Related Links

1. Countrywide Financial Corporation