Countrywide Financial’s $335 million racial discrimination settlement

December 22, 2011

Countrywide Financial agreed to pay a $335 million settlement for allegedly engaging in a widespread practice of discrimination against qualified Hispanic and African-American  borrowers from 2004 through 2008.

The Department of Justice Wednesday filed its largest residential fair lending settlement in history to resolve allegations that Countrywide Financial Corporation and its subsidiaries discriminated by charging more than 200,000 Hispanic and African-American borrowers higher fees and interest rates than non-Hispanic white borrowers in both its retail and wholesale lending.

The complaint alleges that these borrowers were charged higher fees and interest rates because of their race or national origin, and not because of the borrowers’ creditworthiness or other objective criteria related to borrower risk.

Countrywide steering thousands of African-American and Hispanic borrowers into subprime mortgages when non-Hispanic white borrowers with similar credit profiles received prime loans. All the borrowers who were discriminated against were qualified for Countrywide mortgage loans according to Countrywide’s own underwriting criteria.

“The department’s action against Countrywide makes clear that we will not hesitate to hold financial institutions accountable, including one of the nation’s largest, for lending discrimination,” said Attorney General Eric Holder. “These institutions should make judgments based on applicants’ creditworthiness, not on the color of their skin. 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.”

The complaint alleges that African-American and Hispanic borrowers paid more than non-Hispanic white borrowers, not based on borrower risk, but because of their race or national origin. As a result of Countrywide’s policies and practices, qualified African-American and Hispanic borrowers were placed in subprime loans rather than prime loans even when similarly-qualified non-Hispanic white borrowers were placed in prime loans.

“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 institutions of all sizes that discriminated against families solely because of their race or national origin.”

Countrywide currently operates as a subsidiary of Bank of America but does not originate new loans.

Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF). President Obama established the interagency FFETF to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.

The proposed settlement provides for an independent administrator to contact and distribute payments of compensation at no cost to borrowers whom the Justice Department identifies as victims of Countrywide’s discrimination. Individuals who believe that they may have been victims of lending discrimination by Countrywide and have questions about the settlement may email the department at countrywide.settlement@usdoj.gov.


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5 Comments

  1. The Gimlet Eye says:

    That’s Amerika for ya, jackboots and all. BTW, thought you’d like to see this:

    US: SEC is suing six top executives from Fannie Mae and Freddie Mac for fraud. The SEC is suing in civil court – no criminal charges were filed. [If found guilty, these men will not serve prison time, and it is doubtful that they even will have to pay more than token damages from their own estates, because they are well-connected in government. Instead, prosecutors are talking only of barring them from future executive jobs in the finance industry.]
    Chicago Tribune Posted 2011 Dec 17

    http://www.chicagotribune.com/business/sns-rt-us-fannie-freddie-sectre7bf16f-20111216,0,2023567.story

    (-1) 1 Total Votes - 0 up - 1 down
    • easymoney says:

      Here’s another link to a complete listing of “Fed Once-Secret Loan Crisis Data Compiled by Bloomberg Released to Public”
      http://www.bloomberg.com/news/2011-12-23/fed-s-once-secret-data-compiled-by-bloomberg-released-to-public.html
      http://bit.ly/Bloomberg-Fed-Data

      “Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF). President Obama established the interagency FFETF to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.”
      This is an interesting quote by the government and the links above list all “407 banks and companies that tapped Federal Reserve emergency programs during the 2007 to 2009 financial crisis. It’s the first time such data have been publicly available in this form. ”
      Much to see and learn by the public about how our money was thrown around and to whom it went…

      (2) 2 Total Votes - 2 up - 0 down
  2. writewhatsright says:

    It is  irresponsible and bigoted for US Goverment to proliferate the bigoted concept that the political label “Hispanic” is, in some way, a racial or ethnic category distinguishable from white, black, or Asian. Relying on the words of Assistant Attorney General Thomas Perez–“These institutions should make judgments based on applicants’ creditworthiness, not on the color of their skin– the premise of this comment is clear: In the United States, if one is describe as “Hispanic” then one must have the same biological features and physical characteristics as everyone else described as “Hispanic”   

    Latin Americans are as diverse as non Latin Americans, and it is impossible to describe them as having similar features or physical characteristics.   Having a Spanish or Portuguese surname, or speaking Spanish has nothing to do with Latin Americans’ biology because in colonial Latin America a Spanish or Portuguese(christian) surname, was a pre condition to being baptized, and, more importantly, those languages are the official languages in Latin America. 

    So, if the Justice Department Assistant Attorney General Thomas Perez is proliferating such a bigoted concept then the Justice Department itself that is violating the civil rights of everyone politically labeled “Hispanic.”  

    (-3) 7 Total Votes - 2 up - 5 down
  3. easymoney says:

    Excuse me, but isn’t this the same countrywide that we taxpayers bailed out?
    http://www.npr.org/templates/story/story.php?storyId=14412368

    Isn’t this the same countrywide that that made loans to people without proper collateral and the means to repay those loans?
    http://en.wikipedia.org/wiki/Subprime_mortgage_crisis

    Just asking…

    (8) 8 Total Votes - 8 up - 0 down
    • danika says:

      And we will wind up paying for this settlement also. We always do.

      (3) 3 Total Votes - 3 up - 0 down

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