The Illinois AG filed a lawsuit this week against Countrywide, alleging that the now imploded mortgage lender steered blacks and Latinos into riskier subprime loans more often than whites, even when they qualified for safer mortgages.

In addition, the suit accuses Countrywide of charging minorities higher fees than whites. If they lose, Bank of America, which bought Countrywide, would be fined $25,000 for each violation.

“These charges relate to Countrywide practices well before Bank of America acquired the company. We are disappointed with the attorney general’s decision to pursue litigation,” said Bank of America in a statement. “We have fully cooperated with their investigation and have pointed out significant flaws in the methodology which we believe has been used as the basis for these claims.”

According to the complaint, the discrimination was the result of in a failure of policy. (Emphasis ours.)

These policies allowed Countrywide’s employees and mortgage brokers wide discretion in choosing the type of mortgage products offered to borrowers and manipulating the information for loan applications entered into Countrywide’s automated underwriting system. As a result of these discretionary policies, Countrywide‘s employees and mortgage brokers could steer borrowers into sub-prime mortgages even if borrowers could have been qualified for prime mortgages.

These policies also gave Countrywide’s employees and mortgage brokers wide-ranging discretion to increase or decrease the pricing on mortgage products they sold.

This discretion allowed Countrywide‘s employees and mortgage brokers to charge minority borrowers higher rates of interest than similarly-situated white borrowers.

Further, Countrywide’s compensation structure incentivized its employees and brokers to steer prime-eligible borrowers into sub prime loans and to sell loans at as high an interest rate as possible.

Illinois homeowners who believe they may be victims of Countrywide’s discriminatory lending practices should contact the Attorney General’s office via a special e-mail address at CountrywideDiscrimination@atg.state.il.us or by calling the Attorney General’s Homeowners Helpline at 1-866-544-7151.

MADIGAN SUES COUNTRYWIDE FOR DISCRIMINATION AGAINST AFRICAN AMERICAN AND LATINO BORROWERS [Illinois Attorney General]

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