Bank of America resolves discrimination lawsuit with $335 million payout
Countrywide branch accused of unfairly charging higher rates to African-Americans, Hispanics
Bank of America has agreed to pay $335 million to resolve allegations
that its Countrywide unit engaged in discrimination against qualified
African-American and Hispanic borrowers on home loans. The settlement
with the U.S. Justice Department was filed this week with the Central
District court of California and is subject to court approval. It's the
largest settlement in history over residential fair lending practices.
Housing discrimination remains a raw and omnipresent topic in contemporary American life.
According to the complaint, these borrowers were charged higher fees and rates due to their race or national origin rather than any other objective criteria.
"These institutions should make judgments based on applicants' creditworthiness, not on the color of their skin," Attorney General Eric Holder says. "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."
Bank of America Corp. bought the nation's largest subprime lender, Countrywide Financial Corp. in 2008.
"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," Dan Frahm, a Bank of America spokesman said.
The complaint states that Countrywide was aware that the fees and interest rates that its loan officers were charging discriminated against African-American and Hispanic borrowers, but failed to impose meaningful limits or guidelines to stop it.
"Our research shows that among borrowers with strong credit scores, African American households were more than three-times as likely to be pushed into one of these high-cost subprime loans than were white households," Mike Calhoun, head of the Center for Responsible Lending said.
"Such conduct undercuts the notion of a level playing field for all consumers," Attorney General Eric Holder said at a press conference. "Under this administration, these harmful and discriminatory practices simply will not be tolerated," said Holder.
A Bank of America spokesman is quick to emphasize the alleged discrimination happened before the company acquired Countrywide and adds Bank of America is committed to "fair and equal treatment" of all its customers.
The complaint alleges that by steering borrowers into subprime loans from 2004 to 2007, Countrywide harmed those qualified African-American and Hispanic borrowers. Subprime loans generally carried costlier terms, such as prepayment penalties and significantly higher adjustable interest rates that increased suddenly after two or three years. These practices made the payments unaffordable and left the borrowers at a much higher risk of foreclosure.
© 2011, Catholic Online. Distributed by NEWS CONSORTIUM.
- - -
Pope Benedict XVI's Prayer Intentions for January 2013
General Intention: The Faith of Christians. That in this Year of Faith Christians may deepen their knowledge of the mystery of Christ and witness joyfully to the gift of faith in him.
Missionary Intention: Middle Eastern Christians. That the Christian communities of the Middle East, often discriminated against, may receive from the Holy Spirit the strength of fidelity and perseverance.
Keywords: Discrimination, housing, Bank of America, Countrywide
Rate This Article
Leave a Comment
More Business & Economics News
- Unemployment in U.S. comes roaring back - in a big way
- Criminally unfair? Why disgraced Enron CEO Skilling could see freedom sooner than you think
- Berkshire Hathaway Inc. hits first quarter record profit at 51 percent
- China and Japan now hold record amounts of Obama debt
- Does shift to mobile mean Facebook's salad days are done? Not at all
- U.S. annual growth rate slowest since 1929, start of Great Depression
- Prosperity gap between races in U.S. widened during recession
- Here's what's wrong with the Koch brothers buying the Tribune
- Why should Americans play the banking game when the rules are so unfair?
- Fr. Paul Schenck: Finding Living Faith on Catechetical Sunday
- The Movie Yellow: Incest as 'Normal' and Cassavates's Slides Into the World of Woes
- The Chicago School Teachers Strike Reveals the Need For School Choice
- The Sexual Barbarians and the Dissolution of Culture
- The Happy Priest Challenges Us to Ask: Who is Jesus to Me?
- Michael Coren on Canadian Public Schools: Teachers, leave those kids alone
- We Cannot Ignore Our Consciences: Cardinal Dolan On Religious Liberty
- In the Face of Danger, Successor of Peter Travels to Lebanon as a Messenger of Peace
- Reflections on the Dignity and Vocation of Women: Who or What?
Disclaimer: The columns, articles, advertisers claims and any other features provided on Catholic Online Business & Economics are provided for personal finance and investment information and are not to be construed as investment advice. Under no circumstances does the information in this content represent a recommendation to buy, sell or hold any security. The views and opinions expressed in an article or column are the author's own and not necessarily those of Catholic Online and there is no implied endorsement by Catholic Online of any advice or trading strategy.