Countrywide Financial Corp. — one of the nation’s largest mortgage lenders — has agreed to reform its lending practices and pay approximately $3 million to Nevada borrowers victimized by its lending practices as part of a settlement agreement with the state’s attorney general.

As part of the agreement, which settles a predatory lending lawsuit filed against the company by Attorney General Catherine Cortez Masto, Countrywide will lower interest rates for some Nevada homeowners and pay settlement and relocation expenses for others, reports The Las Vegas Sun (“Countrywide to Lower Interest Rates in Settlement,” March 2, 2009).

To assist homeowners nationwide, Countrywide, as part of a settlement agreement with other states, will also spend about $70 million to reimburse approximately 35,000 homeowners for relocation expenses they incurred after Countrywide foreclosed on their homes, and it will begin offering mortgage loan modifications to about 50,000 homeowners by the end of the month.

In the lawsuit Masto alleges that Countrywide has in recent years illegally increased its market share in violation of the Nevada Deceptive Trade Practices Act by “engaging in unfair and deceptive business practices that place thousands of borrowers in risky, high-priced and ultimately unaffordable mortgage subprime loans.”

The suit also accused Countrywide of using misleading marketing and sales tactics and offering low teaser rates, no or low closing costs, and other savings incentives to attract potential homeowners and entice them into accepting subprime loans. The mortgage giant is also said to have offered financial enticements to employees and brokers to sell a high volume of these non-traditional subprime loans, even if the loan terms didn’t always adhere to underwriting guidelines.

Masto said that Countrywide’s mortgage practices in Nevada led to increased foreclosures and delinquencies in the state, which leads the nation in foreclosures.

Without admitting fault, Countrywide has said that in moving forward, its loan servicers “will maintain robust practices for early identification and contact with borrowers who are having, or are reasonably expected to have, trouble making their payments on Countrywide residential mortgage loans.”

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