Thomas E. Perez , DOJ:
Bank of America to Pay $335M Discrimination Settlement Over Countrywide Loans
December 22, 2011
U.S. Justice Department says Bank of America has agreed to pay $335
million to resolve allegations that its Countrywide Financial unit
discriminated against qualified African-American and Hispanic borrowers
on home loans.
Officials say Countrywide charged over 200,000 African-American and
Hispanic borrowers higher fees and interest rates than white borrowers
with a similar credit profile. The alleged discrimination occurred
between 2004 and 2008, before the bank purchased Countrywide. A Bank of
America spokesman says the bank does not practice lending based on race.
U.S. Attorney General Eric Holder Wednesday said the settlement makes
clear that the Justice Department will not hesitate to aggressively hold
lenders, including the nation's largest, accountable for discrimination
and financial misconduct. He also said these institutions should make
judgments based on applicants' creditworthiness, not on the color of
Bank of America has lost billions of dollars, in part because of
problems associated with the 2008 takeover of Countrywide Financial.
Countrywide held a large number of mortgages that borrowers were unable
to repay, badly hurting the lender. Bank of America has faced lawsuits
connected with the mortgage business.
Attorney General Thomas E. Perez commented: "At the core of the
allegations in the complaint is a simple story: If you were
African-American or Hispanic and you went to Countrywide for a loan, and
you were qualified, you likely paid more simply because of the color of
your skin. You likely paid more than a similarly-qualified white
borrower if you were African-American or Hispanic and received your loan
from a Countrywide loan officer, or from Countrywide’s mortgage brokers.
And if you were African-American and Hispanic you were far more likely
to be steered into an expensive and risky subprime loan than a
similarly-qualified white borrower. More than 200,000 African-American
and Hispanic victims are identified in the complaint, which alleges that
they were charged higher prices or steered into more risky products
because of the color of their skin rather than the content of their
Countrywide built a business based, in large part, on the trust they
earned from families as they guided families through the most important
financial transaction of their lives. They understood marketing and how
to build trust. “Se habla espanol,” they said in Latino communities, and
two-thirds of our victims are Hispanic. But as our complaint outlines,
they exploited that trust. It was Countrywide’s business strategy, the
complaint alleges, to target local African-American and Hispanic markets
in order to expand its lending and ultimately gain market dominance in
making residential loans in those communities.
But once those borrowers walked in Countrywide’s door, they did not
receive fair and equal terms, they received discriminatory terms. And
chances are, the victims had no idea they were being victimized. They
were thrilled to have gotten a loan and realized the American dream.
They had no idea that they could have, and should have, gotten a better
deal. This is discrimination with a smile.
This was one of the most extensive investigations in our history. We
reviewed data on over 2.5 million loans, including data loan terms and
information on each borrower’s creditworthiness."