The Department of Justice (DOJ) has announced a $335 million settlement against Countrywide Financial Corp. and its subsidiaries stemming from allegations of discrimination in mortgage lending between 2004 and 2008. The DOJ calls the settlement its ‘largest residential fair lending settlement in history’ and notes that this is the first time it has ‘alleged and obtained relief for borrowers who were steered into loans based on race or national origin.’
The settlement, which required the approval of the U.S. District Court for the Central District of California, provides financial compensation for African American and Hispanic borrowers that were steered into subprime mortgages when non-Hispanic white borrowers with similar credit profiles received prime loans. All the borrowers who were discriminated against were qualified for Countrywide mortgage loans according to Countrywide's own underwriting criteria.
‘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,’ says U.S. Attorney General Eric Holder. ‘These institutions should make judgments based on applicants' creditworthiness, not on the color of their skin. 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.’
Countrywide was acquired by Bank of America in 2008. The Los Angeles Times reports that Bank of America, in agreeing to the settlement, does not take responsibility for the actions of its acquired unit.
‘I want to make it very clear this pertains to Countrywide activities prior to Bank of America's acquisition,’ says Dan Frahm, the bank's spokesperson. ‘Bank of America practices were never in question. 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. 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.’