Countrywide Fine Is Largest in History for Loan Discrimination
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Jin Lee/Bloomberg via Getty Images(WASHINGTON) — Bank of America, which now owns Countrywide Financial, agreed to pay more than $300 million — the largest fine ever of its kind — to settle allegations of discrimination against African-American and Hispanic borrowers, the Justice Department announced Wednesday.
An investigation looked at 2.5 million loans made during the height of the housing boom in 2004 through 2007 and found, according to Attorney General Eric Holder, “widespread violations of the Fair Housing Act and the Equal Credit Opportunity Act and resulted in African-American and Hispanic borrowers being charged higher rates for mortgage loans solely because of their race or origin.”
Assistant Attorney General Tom Perez says black and Latino borrowers who qualified for prime loans were steered toward risky subprime mortgages.
“As a result of these policies and practices, the odds of an African-American or Latino borrower receiving a subprime loan instead of a prime loan were more than twice as high as those for similarly situated non-Hispanic white borrowers,” Perez said Wednesday.
The Justice Department said Wednesday what Countrywide did was not criminal, rather a violation of federal civil rights law. But many disagree and find it difficult to understand how loans ripe with fraud, applications forged and applicants lied to can not result in one elite person at Countrywide being prosecuted. This is the fifth time Countrywide has been targeted for fraud.
The $300 million settlement against the now defunct Countrywide Bank, once the largest home mortgage company in America, means at most the 200,000 discrimination victims in 41 states will get no more than a couple of thousand each in restitution.
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