The media is still abuzz about the massive, controversial and headline-grabbing Wall Street bailout plan put in the books just last week and now there is another important financial development that is trying to elbow itself some room on the headlines. Bank of America just settled a lawsuit with 11 states over predatory lending practices Countrywide Financial, a mortgage lender Bank of America took over this summer, had allegedly committed.

Although only 11 states originally filed the complaint, all 50 states can take part in the loan modification program that was the result of the settlement. Homeowners who obtained mortgage loans from Countrywide between January 1, 2004 and December 31, 2007, are eligible. According to the bank's estimate up to 400,000 distressed borrowers can get their loans worked out under the plan's guidelines. 

Many hail this new initiative as the most sweeping thus far out there. The loan programs it covers are subprime ARMs, option ARMs of course, fixed-rate subprimes and also prime and Alt-A paper where the borrower didn't document his income, in other words the stated variety. What it aims to do is bring down the total monthly payment to under 34% of gross income, inclusive of property taxes and insurance. Getting there could even mean lowering the principal balance and freezing, or even dropping, the interest rate. Keeping all that in mind, many homeowners could get a substantial reduction to their current payments.

According to the plan, Countrywide will supposedly go through its files, select those who qualify and then get in touch with them to suggest a workout scenario. That's nice but don't count on it. If you have a Countrywide mortgage activated within those dates and have difficulties with it, call them so you don't fall between the cracks.

This program is clear evidence of a slowly-changing attitude among home loan providers toward helping struggling borrowers. Now they are increasingly ready to offer modifications, not only because of fear of legal action, but also because they realize that it's less costly than going through the time-consuming foreclosure process. The sheer volume of foreclosures is certainly starting to get its message across. The foot dragging is slowing down and seemingly going to help everyone involved.