Nearly four years ago, we first reported on allegations that Countrywide Financial, the failed lender that was bought by Bank of America after it collapsed, had their system set up so that non-white loan applicants were steered toward subprime loans, even if they could have qualified for a standard mortgage. Well, the wheels of justice turn remarkably slowly in Washington, DC, but today the Justice Dept. finally announced a settlement with BofA for $335 million over these allegations.
The cash will be doled out as compensation to those borrowers who were victims of Countrywide’s systemic discrimination starting in 2004 and up through its implosion in 2008.
The DOJ allegations contend that Countrywide discriminated by charging more than 200,000 African-American and Hispanic borrowers higher fees and interest rates than non-Hispanic white borrowers in both its retail and wholesale lending. The only thing distinguishing the qualifications of this group versus those who qualified for friendlier loans is their race.
“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. “These institutions should make judgments based on applicants’ creditworthiness, not on the color of their skin. With today’s settlement, the federal government will ensure that the more than 200,000 African-American and Hispanic borrowers who were discriminated against by Countrywide will be entitled to compensation.”
“Countrywide’s actions contributed to the housing crisis, hurt entire communities, and denied families access to the American dream,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We are using every tool in our law enforcement arsenal, including some that were dormant for years, to go after institutions of all sizes that discriminated against families solely because of their race or national origin.”
As part of the settlement, the DOJ will name an as yet unnamed independent administrator to handle the distribution of payments to victims of Countrywide’s discrimination.
Individuals who believe that they may have been victims of lending discrimination by Countrywide and have questions about the settlement may email the department at firstname.lastname@example.org