Texas sets aside $7.5 million to help Countrywide customers

Texas Attorney General Greg Abbott on Wednesday launched a restitution program that makes $7.46 million available to eligible Countrywide Financial Corp. mortgage customers who lost their homes due to foreclosure.

Last year, the state reached a $345 million settlement with Countrywide benefiting Texas homeowners. The attorney general’s office alleged that Countrywide encouraged homeowners to accept loans they could not afford, failed to fully disclose risky loan terms to borrowers, and wrote loans to unqualified borrowers in order to increase market share.

“Last year we investigated Countrywide and reached a sweeping agreement that included loan modification opportunities for nearly 30,000 Texas homeowners,” Abbott says. “With today’s announcement, we are implementing the final portion of our agreement and making restitution funds available to Texans whose homes were lost to foreclosure.”

Restitution money is available to Countrywide customers in Texas who lost their homes to foreclosure — or whose payments were 120 days behind as of Oct. 6, 2008.

Previously announced aspects of the 2008 settlement included $335 million in loan modifications for about 30,000 Texans. The company changed the terms of homeowners’ mortgages to make them more affordable to affected customers. Also, about 1,400 Texans who are either in default or likely in default on their subprime mortgages who “voluntarily and appropriately” turn over their homes are eligible to receive up to $2,000 each as part of a Relocation Assistance Program.

Charlotte, N.C.-based Bank of America (NYSE: BAC) — which bought Countrywide last year — will distribute application forms to eligible homeowners.