Bank of America to pay $335 million to settle fair-lending complaint

By Los Angeles Times, Special to the BDN
Posted Dec. 21, 2011, at 8:52 p.m.

LOS ANGELES — Bank of America Corp. agreed to pay a record $335 million to resolve a government claim that its Countrywide Financial unit discriminated against minority homebuyers during the frenzied days of the mortgage boom.

The Justice Department alleged that Countrywide charged higher interest rates and fees to African American and Latino home buyers than to white applicants with similar income levels and credit scores. It marks the largest residential fair-lending settlement in history.

“Chances are the victims had no idea whatsoever they were being victimized. They were thrilled to have gotten the loan and realized the American Dream,” said Thomas E. Perez, head of the Justice Department’s civil rights division. “They had no idea they could have and should have gotten a better deal. This is discrimination with a smile.”

The $335 million will be distributed to more than 200,000 victims who took out home loans from Countrywide between 2004 and 2008.

A Bank of America spokesman said the alleged abuses occurred before the company bought Countrywide at the peak of the financial crisis in 2008.

“We reached this settlement to resolve issues about Countrywide’s alleged historic practices that occurred before Bank of America acquired the company,” spokesman Dan Frahm said in a statement. “Bank of America’s practices are not at issue.”

The case underscores the wrenching economic and personal toll of the subprime mortgage debacle.

The collapse of the housing market beginning in 2007 sparked the U.S. mortgage bust and the brutal recession whose lingering effects continue to reverberate nationwide. The crisis also upended millions of borrowers who lost their homes to foreclosure when they couldn’t keep up with the often-escalating monthly payments that were common on subprime loans.

Though Countrywide portrayed itself as expanding opportunities to people who traditionally couldn’t qualify for home ownership, critics say the lender systematically took advantage of underprivileged borrowers who didn’t know any better.

http://bangordailynews.com/2011/12/21/news/nation/bank-of-america-to-pay-335-million-to-settle-fair-lending-complaint/ printed on October 31, 2014