Bank of America Corp. has agreed to pay $335 million to settle allegations that Countrywide Financial, which it now owns, systematically discriminated against minority home-buyers at the peak of the U.S. housing boom.
The Justice Department and the Illinois attorney general had alleged that Countrywide charged higher interest rates and other housing-related fees to African American and Latino home buyers than to white applicants with comparable income levels and credit scores.
The company frequently pushed minorities into risky subprime loans rather than into safer prime loans. The collapse of the subprime market beginning in 2007 sparked the U.S. mortgage bust and the brutal recession whose lingering effects continue to reverberate nationwide.
The $335 million will be distributed to alleged Countrywide victims. An independent monitor will be appointed to contact potential recipients and distribute the proceeds to them. People who think they may qualify for compensation can seek information by emailing [email protected].
A Bank of America spokesman would not discuss specifics of the settlement but said the alleged wrongdoing occurred before the giant bank bought Calabasas-based Countrywide.
“I want to make it very clear this pertains to Countrywide activities prior to Bank of America's acquisition,” said the spokesman, Dan Frahm. “Bank of America practices were never in question.”
[Updated at 12:19 p.m. Dec. 21: Frahm also issued this statement on behalf of Bank of America: “We reached this settlement to resolve issues about Countrywide’s alleged historic practices that occurred before Bank of America acquired the company. Bank of America’s practices are not at issue.
"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."]
-- Walter Hamilton
Photo credit: Los Angeles Times