B of A Settles Countrywide dispute for $335 Million
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UPDATED: Dec 22, 2011
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Bank of America settled a lawsuit with the U.S. Department of Justice this week, agreeing to pay $335 million as compensation against allegations its recently purchased Countrywide unit engaged in discriminatory lending against African-Americans and Hispanics.
According to The Associated Press, the Department of Justice claimed Countrywide charged over 200,000 African-American and Hispanic borrowers higher fees and interest rates than it did for white borrowers with the same credit profiles.
“These institutions should make judgments based on applicants’ creditworthiness, not on the color of their skin,” said Attorney general Eric Holder in a report by the AP. “With today’s settlement, the federal government will ensure that more than 200,000 African-Americana and Hispanic borrowers who were discriminated against by Countrywide will be entitled to compensation.”
The assistant attorney general for the Civil Rights Division expanded on the impact the loan writer had on the nation by saying, “Countrywide’s actions contributed to the housing crisis, hurt entire communities, and denied families access to the American Dream,” in an AP interview.
Countrywide was the largest provider of home loans during the housing market boom. After the country’s economic collapse, however, Bank of America bought the lending giant out for $4.1 billion. Since then, Bank of America has been forced to deal with all of the problems Countrywide left behind.
Dan Frahm, a Bank of America spokesman, held firm that Bank of America does not take race into consideration when issuing loans. He said Bank of America “discontinued Countrywide products and practices that were not in keeping with our commitment and will continue to resolve and put behind us remaining Countrywide issues.”
The issues spawned from Countrywide are indeed numerous, as increasingly more lawsuits and settlements are being arranged on the company’s behalf.
Last week a letter from the House of Representatives Oversight and Government Reform Committee raised allegations of special low-interest loans being given to representatives and senators in an attempt to win their favor and advance the interests of Countrywide.
And in the recent past, $108 million went to the Federal Trade Commission (FTC) as a result of Countrywide’s excessive fees charged to homeowners trying to avoid foreclosure.