The issue with Countrywide Financial Corp. is that it has been suspected of deceiving borrowers by giving loans with high risks of default or delinquency. In other words, borrowers have been victims of predatory loans.

With the settlement, Countrywide Financial Corp. has to pay $5.6 million and it has to help borrowers through loan modifications including dropping interest rates for as low as 3.5 percent in 5 years and creating loans interest-only up to 10 years. Also, it has to waive prepayment penalties and late fees on modified loans.

About $4.4 million of the settlement payment could compensate roughly 1,180 Colorado homeowners who have made six or less payments before defaulting, and this could prevent the increasing number of Colorado foreclosures.

$500,000 from the settlement goes to the Colorado Division of Housing foreclosure hotline, 1-877-601-HOPE, which keeps troubled homeowners in touch with several foreclosure counselors and other resources that can aid in foreclosure prevention.

All in all, the said settlement could benefit about 6,800 Colorado borrowers.

On the other hand, the 90-day foreclosure-timeout bill sponsored by several legislators will give the distressed homeowners another 90 days to fix things with their lender, but it is not filed yet.

Also, the said bill allows a troubled homeowner to get in touch with a foreclosure counselor within 20 days of foreclosure. Once the counselor finds the borrower is eligible, then the borrower would be given an additional of 90 days to negotiate with a lender so not to lose the house. So far, there have been no oppositions from lenders and banks towards this bill given almost a year of discussions, which is good.

The bill does not force renegotiations, but it is a help for banks by pre-screening candidates and connecting them with the most responsible candidates.

Foreclosures are in every part of the state so the approval of the foreclosure-deferment bill and the implementation of the Countrywide Financial Corp. settlement are of great help in preventing increase in the number of Colorado foreclosures.