This agreement would reduce the principal and interest rates of homeowners, providing them with more affordable terms. Those who lost their homes due to foreclosure, and could not have made those payments in the first place, also stand to receive cash payments.The determining factor for this would be early default, generally within the first 6 months of receiving the home loan.

According to the Herald, “the settlement stems from a lawsuit by Attorney General Bill McCollum alleging that the mortgage giant used deceptive marketing tactics to sell risky, high-cost loans to Florida borrowers during boom years.”

Countrywide is said to have knowingly approved loans to homeowners who couldn’t afford the payments or were unaware of hidden payments or penalty fees.

As part of the agreement, Countrywide will have to suspend foreclosures on subprime and pay-option ARMS until they determine whether or not if they meet refinancing guidelines.

The attorney general’s office estimates that 52,000 borrowers will be eligible for the refinance program. A total of $17.7 million dollars in fees will be waived, the Herald said.

Countrywide Financial is now owned by Bank of America.

“The Citigroup deal would have been done with the help of the Federal Deposit Insurance Corp., but the Wells Fargo deal for Wachovia deal will be done without it”, the Sun-Sentinel said.

Wachovia Corporation stockholders will be receiving an almost 80% premium over the stock’s closing price yesterday. Shareholders will be awarded 0.1991 shares of Wells Fargo stock for every Wachovia share.

But although Wachovia’s board of directors approved the merger, they’re not out of the woods yet. According to the Sun-Sentinel, “The deal is still subject to Wachovia shareholder and other regulatory approvals.” As a result, the deal might not be completely finalized until the end of the year.

Merrill Lynch agreed to sell itself to Bank of America for about $50 billion dollars. “[This] would create the world’s second-largest bank by market value, after Industrial & Commercial Bank of China, and combine the largest U.S. consumer bank with one of the largest U.S. investment banks and the leading retail brokerage force,” Reuters said.

This agreement came as a result of Merrill Lynch’s financial issues due to the downward spiraling economy.

According to the Miami Herald, Bank of America will take Merrill’s 15,000 brokers under its wing and Merrill’s current head of global wealth management will lead the flagship.

Lehman, an almost 2 century old bank, was also on the auction block. Unlike Merrill-Lynch, the Federal Reserve had decided to divide it into profitable and non profitable parts and sell accordingly. But this past weekend, the decision fell through and the bank is now entering into bankruptcy the Herald said.

Only time will tell what major impact the dissolution of these two major Wall Street players will have on the already shaky economy. But one things for sure, several other mortgage powerhouses like American International Group (AIG) might be following suit.