Bank of America to Pay $335 Million Settlement Over Discriminatory Loans

The settlement with the Justice Department will compensate African-American and Latino borrowers victimized  by inflated fees and interest rates.

Posted: 12/21/2011 04:10 PM EST

In a settlement with the U.S. Justice Department, Bank of America  has agreed to pay $335 million to resolve allegations that its Countrywide unit had discriminated against qualified African-American and Latino borrowers between 2004 and 2008.

 

The settlement, which is subject to court approval, was filed Tuesday in U.S. District Court for the Central District of California in conjunction with the department’s complaint that alleges Countrywide discriminated by charging more than 200,000 African-American and Hispanic 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.  

 

“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 DOJ claimed the bank violated the Fair Housing Act and the Equal Credit Opportunity Act. The bank also scored a “low satisfactory” rating in two out of three areas of its fair lending review.

 

Separately, in June, Midwest BankCenter agreed to a settlement with the DOJ that it had discriminated against African-American residential mortgage customers in St. Louis, Missouri, from 2006 to 2008.

 

Of the Midwest BankCenter settlement, Thomas Perez, assistant attorney general for the DOJ’s civil rights division, said: "This type of discrimination is part of the web of intolerable practices that stripped vast amounts of wealth from communities of color in the last decade.”

 

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(Photo: Sacramento Bee/MCT/Landov)

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