BofA Settles for $335M on Lending Bias Charges
December 22, 2011
Bank of America has agreed to pay a record $335 million in a settlement over charges that its Countrywide Financial unit discriminated against Hispanic- and African-American borrowers from 2004 to 2008. The settlement marks the largest residential fair-lending settlement on record, the Justice Department said.
Bank of America, which purchased the struggling Countrywide in 2008, has continued to face costly lawsuits over the former bank’s lending practices.
According to Justice Department investigators, the latest allegations against Countrywide involve the company's loan officers charging more than 200,000 minority borrowers higher fees and rates than they did to white borrowers who had similar credit histories. Countrywide was also accused of steering more than 10,000 minority borrowers into risky subprime loans when white borrowers with similar credit backgrounds received fixed, less risky loans.
For example, in 2007, investigators say Countrywide officers charged Hispanic loan applicants in Los Angeles $545 more, on average, in fees for a $200,000 loan than white applicants. What’s more, independent brokers were accused of charging Hispanics $1,195 more on Countrywide loans, according to the Justice Department’s investigation.
Countrywide denied the Justice Department’s allegations and any wrongdoing. Bank of America said the allegations were prior to Bank of America’s purchase of Countrywide in 2008.
“We are committed to fair and equal treatment of all our customers, and will continue to focus on doing what’s right for our customers, clients and communities,” Dan Frahm, Bank of America spokesman, told The New York Times. “We discontinued Countrywide products and practices that were not in keeping with our commitment and will continue to resolve and put behind us the remaining Countrywide issues.”
The settlement still must be approved by a federal judge in California before it’s final.
Source: “Countrywide Will Settle a Bias Suit,” The New York Times (Dec. 21, 2011)
Updated: August 11, 2020