Justice Department Reaches Settlement for Discriminatory Lending

The Justice Department announced Wednesday a $335 million agreement to settle allegations against Countrywide of discriminatory lending from 2004 to 2008. This settlement is the largest the department has ever reached regarding fair lending.
[IMAGE] Countrywide allegedly discriminated against 200,000 African-American and Hispanic borrowers by charging them higher interest rates than non-Hispanic white borrowers with matching creditworthiness and financial status.

Many of these borrowers were steered into subprime loans.

Countrywide allegedly allowed for discrepancies in lending between borrowers of similar creditworthiness, according to the Justice Department, which also alleges Countrywide was aware of the discrimination but did nothing to address it.

""Countrywide's actions contributed to the housing crisis, hurt entire communities, and denied families access to the American dream,"" said Thomas E. Perez, assistant attorney general for the Civil Rights Division.

""We are using every tool in our law enforcement arsenal, including some that were dormant for years, to go after

[COLUMN_BREAK]

institutions of all sizes that discriminated against families solely because of their race or national origin,"" Perez said.

The $335 million will go to borrowers harmed by Countrywide's unfair lending practices, and Countrywide will also be required to adopt new policies to prevent discrimination.

""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,"" said the Justice Department's Attorney General Eric Holder.

Bank of America, which acquired Countrywide in 2008 clarified in a statement to DSNews.com that ""Bank of America's practices are not at issue.""

""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,"" said Dan Frahm, a Bank of American spokesman.

The president of the National Council of La Raza, a Hispanic civil rights organization, called the settlement a ""welcome and much-deserved Christmas present.""

""To its credit, Bank of America-which was not named in the investigation-immediately shut down Countrywide's harmful practices when it acquired the company in 2008,"" the council said in a statement.

In addition, the National Association for the Advancement of Colored People issued a statement commending both the Justice Department and Bank of America for reaching the settlement.

The settlement, filed in a U.S. District court for the Central District of California, is still subject to court approval.