The Department of Justice (DOJ) announced yesterday that it has reached a settlement with Bank of America (BofA) over charges that Countrywide Financial, which BofA purchased in 2008, discriminated against certain borrowers during the housing boom. The $335 million agreement marks the largest fair-lending settlement in the country’s history, the DOJ said.
“The Department of Justice today filed its largest residential fair lending settlement in history to resolve allegations that Countrywide Financial Corporation and its subsidiaries engaged in a widespread pattern or practice of discrimination against qualified African-American and Hispanic borrowers in their mortgage lending from 2004 through 2008,” the Justice Department said in a Dec. 21 statement.
The DOJ said Countrywide’s business practice of giving loan officers and brokers the discretion to alter the terms for which a particular applicant qualified for a loan without setting up any system to comply with fair-lending rules led to more than 200,000 minority borrowers paying higher fees and rates. Additionally, more than 10,000 minority borrowers were advised to take sub-prime loans even though they qualified for less costly traditional loans.
BofA maintains that the discriminatory practices took place at Countrywide before BofA purchased the bank. “We are committed to fair and equal treatment of all our customers, and will continue to focus on doing what’s right for our customers, clients and communities,” BofA Spokesman Dan Frahm said in an email statement to the New York Times and NPR yesterday. “We discontinued Countrywide products and practices that were not in keeping with our commitment and will continue to resolve and put behind us the remaining Countrywide issues.”
The National Council of La Raza (NCLR), an Hispanic civil rights and advocacy organization, lauds the settlement agreement.
“This historic settlement sends a powerful message that financial institutions will be held accountable for targeting communities of color with unfair practices that have led to needless foreclosures,” Janis Bowdler, director of the Wealth-Building Policy Project at NCLR, said in a statement yesterday. “The findings in DOJ’s investigation echo what we’ve been saying for years—deceptive lenders willfully preyed on Latinos and other minority borrowers, steering them to subprime mortgages even when they had good credit. Without a doubt, Countrywide and other predatory lenders share a great deal of the blame for the financial meltdown and the ensuing foreclosure crisis.”