Bank of America has agreed to pay $335 million dollars to settle allegations that it’s Countrywide Financial unit discriminated against minority home buyers.
The Department of Justice asserted that between 2004 and 2008 Country Wide Financial charged over 200,000 minority borrowers higher mortgage rates and fees than Whites. Minority borrowers were also steered toward devastating sub-prime loans, even when their credit would have qualified them for conventional mortgages.
“Hispanic and African-American borrowers who were steered into subprime loans paid, on average, tens of thousands of dollars more for their loans and were subject to possible prepayment penalties, increased risk of credit problems, default, and foreclosure, and the emotional distress that accompanies such economic stress,” asserted Assistant Attorney General Thomas Perez.
Countywide was purchased by Bank of America in 2008. The acquisition has widely been touted as a disaster for Bank of America which has suffered heavy losses since. Many view the settlement as Bank of America’s latest attempt to put Countrywide’s tarnished reputation to rest.
$335 million represents the largest residential fair lending settlement in history. The money will be used to identify and compensate the victims of Countrywide’s discrimination.
“The department’s action against Countrywide makes clear that we will not hesitate to hold financial institutions accountable, including one of the nation’s largest, for lending discrimination,” said Attorney General Eric Holder.
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