Bank of America Fined $335m for Mortgage Lending Discrimination
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The Bank of America has reached a settlement with the U.S. Justice Department to pay $335 million over allegations that it engaged in minority lending discrimination against qualified African-Americans and Hispanic mortgage-borrowers.
According to Attorney General Eric Holder, the record settlement was “the largest fair-lending settlement in the history of our nation.”
[quote] These institutions should make judgements based on applicants’ creditworthiness, not on the colour of their skin, Holder added[/quote]
The Bank of America has reached a settlement with the U.S. Justice Department to pay $335 million over allegations that it engaged in minority lending discrimination against qualified African-Americans and Hispanic mortgage-borrowers.
According to Attorney General Eric Holder, the record settlement was “the largest fair-lending settlement in the history of our nation.”
[quote] These institutions should make judgements based on applicants’ creditworthiness, not on the colour of their skin, Holder added[/quote]The Justice Department had alleged that the Bank’s Countrywide Financial mortgage unit engaged in a pattern of discriminatory lending practices in which more than 200,000 qualified minority borrowers from 2004 through 2008.
The discriminatory acts allegedly include charging applicants higher interest rates solely because of their race, and steering applicants who qualified for prime loans into subprime loans.
Countrywide specialised in subprime mortgages – mortgages often approved without proper checks on the credit worthiness of borrowers.
The fine of $335m will be used to compensate the victims of the alleged discrimination.
“The victims had no idea they were being victimized. They were thrilled to have gotten a loan and realize the American dream,” Thomas Perez, head of the Justice Department’s civil rights division, told reporters.
[quote]This is discrimination with a smile, he said.[/quote]Related Story: Takeover turmoil: Problems pile up for the Bank of America
Bank of America neither admitted nor denied the allegations in the settlement. The Bank said it settled to resolve issues tied to Countrywide’s practices before Bank of America’s July 2008 purchase of the lender, adding that it is “committed to fair and equal treatment of all our customers.”
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