Bank of America to Pay $335M Settlement

Kristen Vale Pittman and Andrew Dunn, Charlotte Observer, December 22, 2011

Bank of America Corp. has agreed to pay $335 million to settle allegations that its Countrywide Financial Corp. unit discriminated against minority homebuyers, the U.S. Department of Justice announced Wednesday. It’s the largest residential fair-lending settlement in history.

The agreement resolves a civil complaint that the mortgage lender charged black and Hispanic borrowers higher fees and steered them into costlier mortgages than other buyers from 2004 to 2008, a period when the company originated millions of home loans.

It also marks Charlotte-based Bank of America’s latest step to move past the mortgage-related troubles that have pummeled its bottom line and stock price since acquiring Countrywide in 2008.

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

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In the proposed settlement order, the bank’s Countrywide arm denies a pattern of discrimination.

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The Justice Department’s complaint said Countrywide–once one of the nation’s largest single-family mortgage lenders–discriminated against more than 200,000 minority borrowers, charging them higher fees and interest rates than white homebuyers because of their race or national origin, not their creditworthiness.

Countrywide also steered minority buyers into subprime mortgages, which came with higher costs and unpredictable adjustable interest rates and left those borrowers with a higher risk of foreclosure, the department said.

The Justice Department alleged that black or Hispanic borrowers who obtained loans through mortgage brokers were more than twice as likely to be placed in a subprime loan than white borrowers with similar credit.

The settlement Wednesday, which is subject to court approval, provides $335 million in compensation to those borrowers, the Justice Department said. It’s the latest in a string of fair-lending cases in recent months, most involving smaller mortgage companies, and one of Bank of America’s larger payouts related to the mortgage crisis.

“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,” U.S. Attorney General Eric Holder said in a prepared statement. “These institutions should make judgments based on applicants’ creditworthiness, not on the color of their skin.”

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  • Seek

    What the BoA really did is make available mortgage loans to these clowns who otherwise wouldn’t have qualified. Then, when the inevitable tsunami of defaults and foreclosures came, these black “homeowners” could sue the bank.

    See how ghetto lottery lawsuits work? They have a root assumption: Heads, blacks win; tails, whites lose. Yes, our legal system could use some fixing.

  • Anonymous

    I am so sick of blacks and browns suing and getting billions from us! Any bank or corporation they sue, the costs come back to us and then if it is a government agency they sue WE pay for it all. When do we get our share? When are we going to sue the blacks and browns for what they have cost US?

    If we do not deport nonwhites from our land, at the rate they are growing in population, we can kiss this country and our race goodbye forever. Some say we should get our own States, yet we would still have to pay all the taxes to support all these nonwhites in their own states, through the Federal government. So we will always be on the losing end, just as we are now.

  • sbuffalonative

    “These institutions should make judgments based on applicants’ creditworthiness, not on the color of their skin.”

    However, institutions are forbidden from asking persons of color about their creditworthiness.

    You see, you can’t win. Damned if you do, damned if you don’t.

    Don’t give blacks loans, you’re redlining and discriminating. Ask blacks about their credit history and you’re a racist and you’re profiling.

  • Anonymous

    “Countrywide also steered minority buyers into subprime mortgages, which came with higher costs and unpredictable adjustable interest rates and left those borrowers with a higher risk of foreclosure, the department said”

    I’ve dealt with Countrywide. It was nothing personal against minorities, they try to steer (screw) everybody. I think before minorities are able to sue over this they have to admit to being stupider than all the whites who were smart enough not to get suckered into these kind of loans

  • Webspin

    This is so ridiculous it’s beyond comprehension. What A.G. Holder and his cronies succeeded in doing is convince Americas not that banks were charging blacks more, but that they were charging whites less than they could have. I’ve yet to find a business that feels it needs or even can afford to give away money just because your white. What was Holders and Obamas qualification for office again? Oh…yea.

  • Snowhitey

    Blacks were given the mortgages in an attempt to redistribute wealth. It backfired because everything the Feds do, when it comes to diversity and the undeserved advancement of minorities, backfires! And who ends up paying? That’s right, gold old whitey!

  • shaunantijihad

    Is it not the very purpose of a bank manager to discriminate between those who can and cannot repay loans? Guess what not discriminating leads to? Systemic failure aka Fannie and Freddy.

    What if the blacks as a race are less capable of repaying loans? Does it mean the whole secular religion of multiculturalism is exposed as a fraud and that “racists” are and always were right?

  • Anonymous

    Shakedown time. Damn if you do and damn if you dont.

    Reparation time again. Higher fees are standard for low income unqualified buyers.

    Bush and his neocons get the blame too with his hord of illegals he flooded in,

  • Anonymous

    The feds threatened to go after the banks for “discriminatory lending practices” if they didn’t start relaxing their standards.

    The banks then tried to hedge their exposure to all of these toxic loans they were making by creating a massive derivatives casino.

    The casino went bust, the global economy went bust and now the banks are being bailed out (with fiat currency–inflating the dollar in the process) and sued at the same time for discriminatory lending practices!

    This makes me laugh. It really does. The US is so completely and totally absurd. And don’t feel sorry for the banks. Believe me,they deserve everything they get.

  • white is right, black is whack

    Once again, proof you can’t win with blacks and hispanics. You are racist for ignorning them and not giving them what they want, but then they’ll bellyache about the way you did it. Worse than children.

  • Dan

    What a sick, deadly sick, country America has become. Here we have a situation where the government forces these banks, by way of outrageous regulations, to lend money to people who cannot repay them and then when they inevitably default are allowed to sue – successfully – for “discrimination”. This is like a Gilbert and Sullivan musical comedy.

    Don’t get me wrong: I hate the banks with a passion, but that doesn’t stop me from wanting to vomit over this outrage.

  • Mr.White

    I wonder of B of A “charged higher interest rates” to minorities to cover for the defalts resulting from their aggressive eforts to provide bank services to hispanic illegal aliens. You know, the ones that only needed a mexican matricular consular card to open an account. No habla English required! How many defaults are this segment of their business responsible for I wonder?

    In any event, what a deal! Give loans to people who cannot pay them back and then have the Attorney General come in and render justice for “his people” when they default; under the guise Whites with similiar credit scores received lower interest rates. Looks like a win/win for the minorites and a lose/lose for B of A!

    As far as I’m concerned, B of A got everything they deserved when they started pandering to illegal invading hispanics for their business. When will these people ever learn that doing business with illegal invaders and is always a losing propositon!

  • Anonymous

    If you don’t give loans to Minorities, you are racist.

    If you give loans to Minorities you are racists.

  • Anonymous

    “What if the blacks as a race are less capable of repaying loans”?

    Citizens must be treated as individuals and not based upon their race. That’s the bases of the morality involved in the situation. That’s the law, unless the citizens happen to be white folks. Because then it’s Ok to say they are all guilty and to discriminate against them.

  • Anonymous

    “Is it not the very purpose of a bank manager to discriminate between those who can and cannot repay loans”?

    Citizens must be treated as individuals. That’s the bases of the morality involved here. Unless the citizens involved are white folks. Then it’s Ok to suggest say are all guilty and to discriminate against them. And then say the ones we are openly discriminating against are in fact the evil ones who are discriminating.

  • Question Diversity

    Mr. White:

    That’s precisely why. The higher interest rates, fees, penalties and points were tacked on to these contracts because the lenders knew these were obviously not qualified borrowers. However, the banks lost a lot more (and we lost a lot more) than they gained with these extra tack-ons.

    As an aside the “sub” in “subprime” paradoxically didn’t mean an interest rate below the prime rate, it meant above prime. “Subprime” wasn’t a quantitative term, it was a qualitative term, in that the borrower was considered “less worthy” than a prime borrower.

  • Anonymous

    If BofA, Wachovia, Kroger’s and other billion dollar businesses would start donating money to anti affirmative action legal foundations like Pacific Foundation and Rutherford Foundation they would end these problems.

    Instead, for 50 years all the biggest businesses in the country donated hundred of billions of Foxman, Dees, Jackson, Sharpton, NOW, ACLU and all the organizations that did nothing but overwhelm the country with disfunctional affirmative action employees and sue the big businesses that gave them the money in the first place.

    Before National Review became just another propaganda outlet for a certain 60 mile wide middle eastern country it used to publish the lists of donors to NAACP, NOW, ACLU, ACLU and all the rest of the anti White anti America anti business organizations.

    NRO also published names of trustees and Boards of Directors of the anti White organizations. Most were CEO’s, VPs etc of America’s largest companies, like GM, Monsato, General Foods, BofA, Chase Manhattan.

    The major companies have funded minority preferences for 50 years. Let them suffer a bit of what we suffer when it doesn’t work out.

  • patthemick

    What’s sad to me is that the lawyers will take all the money.

  • Super Dave

    If a bank doesn’t grant a minority a mortgage due to bad credit that is racism. If they provide a mortgage with riskier terms owing to the risk the bank is assuming then that is predatory lending. What is a bank to do in this day and age in Obama and Holder’s America?

    This appears to be nothing more than a cunning redistribution of wealth from white to non-white. It’s time to end the charade and rename the Justice Dept. to “Eric Holder’s Dept. of Social Justice and Stick it to Whitey”.

  • Mr.White

    19 — Super Dave wrote at 11:22 AM on December 24:

    If a bank doesn’t grant a minority a mortgage due to bad credit that is racism. If they provide a mortgage with riskier terms owing to the risk the bank is assuming then that is predatory lending. What is a bank to do in this day and age in Obama and Holder’s America?

    This appears to be nothing more than a cunning redistribution of wealth from white to non-white. It’s time to end the charade and rename the Justice Dept. to “Eric Holder’s Dept. of Social Justice and Stick it to Whitey”.

    ————————————————————-

    You are on to something Super Dave. This might be one of the reasons banks are making very few loans while this administration is in charge. Any loan they make can be construed as racist against Eric Holder’s “my people.” Eric Holder would love to loot every bank in America, under the guise of combating fabricated racism charges against “his people.”

    With this lunatic in charge, racism is just around every corner and the banks have caught on to the game. Banks are damned if they do and damned if they do not, so the only safe bet is to make very few loans. Banks are paralyzed with fear and have decided to sit on the money until this corrupted administration leaves town.