Video: Settlement to help Wash. Countrywide mortgage customers

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SEATTLE – Nearly 10,000 Washington homeowners will split about $200 million as part of a settlement between 11 states and sub-prime lender Countrywide Financial Corp over deceptive mortgage practices.

"The last couple of weeks, certainly including today, there's been a great deal of depressing news about our economy, and about the mortgage foreclosure crisis," said Washington State Attorney General Rob McKenna. "Today we're able to offer a substantial ray of sunshine cutting through that gloom. Because today we announce the largest consumer protection settlement in history."

McKenna says eligible borrowers will be able to modify the terms of their loans to make monthly payments more affordable. Modified terms will vary according to the circumstances of each borrower. They may include an automatic freeze or reduction in interest rates, conversion to fixed-term loans and refinancing or reduction of principal owed. 

Eligible Countrywide customers who already lost their homes will be entitled to a lump sum of roughly $2,000 to help cover some of their relocation costs.

Some customers may end up paying nothing but interest for a decade. And those who can't afford to keep their homes even with the changes will still be able to get help moving to a new home.

Tammy Simmerman and her husband jumped at the opportunity to buy their craftsman home in Tukwila in 2004. They knew it would stretch them financially but they felt it was worth it.

They re-financed two years later, but this April, those payments became almost impossible when a medical crisis began drawing down their finances.

"The house payment is so much that if we get away from it even a little bit, it gets out of control," said Simmerman.

Tammy says Countrywide told them they qualified for a loan modification program, but more than a month later the company changed course and said the Simmermans would have to pay an additional $800 a month if they wanted to keep their home.

"It was devastating because we didn't want to lose our house. And here we were, up against this large company," said Simmerman.

With the attorney general’s help, the Simmermans are able to stay in their home and are waiting to see if they qualify for more assistance under the settlement. Even if she doesn't Tammy is thrilled for other families who will.

"I think that's great and I'm glad that our state took some action," said Simmerman.

Countrywide is the largest provider of sub-prime mortgages in the U.S. Bank of America purchased Countrywide in June, at the same time Illinois and California sued the company.

Officials from the two states negotiated the settlement and nine more states joined. Even more states could sign on.