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 countrywide.settlement@usdoj.gov
PREVIOUSLY:
Countrywide Made Racist Sub-Prime Loans?
Countrywide Sued For Discriminating Against Black And Latino Mortgage Buyers
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Is that Snookies Dad?
He’s just like the honey badger, he doesnt give a shiat.
$335 million from corporate hands to government hands. None of those people will see any of that money. Isn’t that fruitless? At least we don’t have to worry about tax dollars being wasted, unless you mean letting the government actually SPEND that money.
Read the article. It says it WILL be going to those borrowers.
“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.”
Yeah, notice how it doesn’t say how much. Not even a range.
Yeah keep your eye out for that $50 check they’ll send you in the mail as “compensation.”
On another note: that man is a terrifying human being. Or perhaps he’s half human, half orange and I’m being citrist.
Nicely done.
Mozilo should be in prison. The guy made hundreds of millions of dollars and when the curtain was pulled away almost everything he did was found to be illegal or unethical. Sure he had to pay some fines – but they were a mere fraction of what he “earned”, and in the end his former employer basically paid them for him anyway.
I bet BOA is REALLY regretting buying Countrywide now. Every time you turn around they are having to clean up another mess left behind by Mozilo and friends.
Mozilo and his crooked ways has Bank of America on permanent life support. Those turds at Golden West altogether destroyed Wachovia. Corporations, for all their omniscient evil, seem to be always one bad decision away from disaster.
It’s what you get when you do your M&A Due Diligence over a weekend and go up and buy a bad mortgage originator. Ironically it was the Merrill Lynch decision that caught all the shareholder flak and that’s the only thing keeping the bank afloat.
That’s $1,675 per family.
Justice?
Exactly. And you know some of these people lost their homes to foreclosure. Ugh…
You know what’d be even better than dividing $335 million between a bunch of people till they only get, like, $1000 each? *Reissuing the loans!*
That’s right, how about they give these people low interest, hassle free, regular loans that they originally qualified for. I know I know, crazy idea! How about the bank take the initiative, since they have all that paperwork anyway (enough so that they lost in court) and seek these people out instead of waiting for them to contact the bank. How about a letter of apology to the affected customers?
I mean, gosh, wouldn’t that be the sensible *practical* thing to do? FIX the error? >_
Hear, hear.
This is BoA… do you really think it would get done right.. or at all…
Its not just Mozilo who made money off of this. There are a ton of people who worked as reps who wrote those docs up for these people who got paid commissions on loans they were doing.
Not to mention the docs that were doctored by these loan officers.
“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,”
No, Mr Holder, actually holding them accountable and not settling would make that clear.
One of the interesting things about lending to “sub-prime” borrowers is that many credit unions and community banks have done it for decades without imploding.
Really?
When I was doing sub-prime loans my borrowers had usually been turned down everywhere else.
How much did the B of A executives get in bonuses over these last 8 years?! Remember during calculation, 1 Billion = 1,000 Million!
This can’t be true. Only reverse racism exists now. That, and people buying too much house. Fox News told me so.
+1
You mean people like the bus driver who whined that she needed to renegotiate the terms of her $800,000 home loan?
Which begs the question: How much Aqua Net would you have to huff to give a bus driver a loan for nearly a million dollars?
Well it must be a lie because its CNN.
http://www.cnn.com/video/#/video/us/2009/03/05/acosta.foreclosure.outrage.cnn
BTW, the answer to the question below? About half as much as it would take for the bus driver to actually believe they could afford it.
Good job government! When can the American people victimized by this company expect their payments?
Wait, what?
Mozilo left Countrywide with $400 million in his pocket. That’s $65 million more than the settlement.
I don’t like math but had to plug these figures into a calculator… let’s see, 200,000 potential claimants getting $335 million. That comes out to $1675 per person.
That would represent one or two month’s rent. Not much compensation for what probably amounted to having to pay (or default) on several hundreds of thousands more if they had been offered a fair loan with reasonable terms.
Did they give favorable loans to ‘Orange’ customers?
If you are looking for someone to convict and put in jail because of the financial meltdown, Mozillo should be #1 on that list – even for the bad spray-on tan!
The laundry list of Countrywide’s questionable practices under his “keadersgip” os long and well-documented. Yet, he gets off with a slap on the wrist, $400 million, and a promise to not work in the financial sector again. Really?!? This guy cost EVERY American taxpayer money and yet he is allowed to walk around scot-free?
Someone arrest and convict this douchebag.
BofA paid $335 million. Gave their CEO $400 million bonus.
Nice to see that one of Wonka’s Oompa Loompas went on to greatness. I wonder if he still has his little hat?
Many business’ do this. I worked as a car salesman for a few months. Didn’t like like it. But I understand getting top dollar possible on each car. But one day I sold a young couple (minority) with two children, a new Toyota Tercel. It was what they could afford, and what they asked about. We negotiated the price, and got it to where the payments fit their budget, they got a good price, I got an ok commision. Two days later, this customer came in to see me very upset. The finance manager, had not only raised the interest a bit, he also sold them undercoating, paint sealant, pin-stripes, fabric guard etc. She was in tears, and there was nothing I could do. I hated the situation. I soon quit. No car needs any of these add-ons, waste of money. But people can be talked into things. The services were all performed on their car. So they were stuck.
This settlement is obscene. This wasn’t discrimination this was outright fraud and extortion committed on tens of thousands of people. How do you think they get the borrowers to agree to the sub-prime loans? Sure some of them just didn’t understand but many where baited and switched. They show up at closing the the documents laid in front of them are not what they applied for or what they where given term sheets for, that is fraud not discrimination. Then those who did have the gall to call them out on it where usually threatened that by not accepting the loan they where canceling the sale, would lose their earnest money and could be sued by the sell, this is extortion. Then they where told just sign the papers, you can always refinance into a “prime” loan, again fraud.
The fact not a single countrywide employee or executive is being charged with felony fraud and extortion is a perversion of justice and goes to show that the government isn’t just OK with mortgage fraud (as long is it is commuted by the banks) it is actually complicit in the fraud.
$1,600 per family is not even close to a disgorgement of the profits that countrywide received from committing this massive fraud, it is a slap on the wrist.
Countrywide Financial was one of the biggest mortgage lenders until 2008, when the lender almost went belly-up. Bank of America acquired the lender, and is now liable for $335 million. Source for this article: Bank of America to pay $335 million to settle unfair lending suit . When Bank of America took over Countrywide, it significantly altered the lending practices within Countrywide. Perhaps this is worst.