In the discriminatory lending practices case between the U.S. government and Countrywide Financial Corp.,Countrywide agreed to settle the claim for $335 million. This money will compensate over 200,000 African-American and Hispanic borrowers, who were subject to Countrywide’s allegedly discriminatory practices, from 2004 to 2008. Additionally, as part of the proposed settlement, Countrywide agreed to implement policies and practices to prevent future discrimination.
According to the U.S. Department of Justice, this is the first settlement where the DOJ has succeeded in providing relief for borrowers who were subject to discriminatory lending practices based on their race or national origin. The settlement agreement, which was filed in the U.S. District Court for the Central District of California, may be found here.
In its complaint, the Justice Department alleged that Countrywide, a subsidiary of the Bank of America N.A., and Countrywide’s subsidiaries encouraged African-American and Hispanic borrowers to take out subprime mortgage loans. These loans allegedly came with higher interest rates and fees than those given to non-Hispanic, white borrowers in both retail and wholesale lending. The DOJ alleged that the discrepancy was due to the borrowers’ race or national origin and not the borrowers’ credit scores. To read the complaint, (United States of America v. Countrywide Financial Corp., et al., No. CV11-10540, C.D. Calif.), go here.
For more on the settlement agreement, read “Countrywide Agrees To Pay $335 Million To Settle Government’s Discriminatory Lending Claims.”