Wednesday, December 21, 2011

Country Wide settles fraud complaint for $335 million


Justice Department Reaches $335 Million Settlement to Resolve Allegations of Lending Discrimination by Countrywide Financial Corporation
More than 200,000 African-American and Hispanic Borrowers who Qualified for Loans were Charged Higher Fees or Placed into Subprime Loans
The Department of Justice today filed its largest residential fair lending settlement in history to resolve allegations that Countrywide Financial Corporation and its subsidiaries engaged in a widespread pattern or practice of discrimination against qualified African-American and Hispanic borrowers in their mortgage lending from 2004 through 2008.  

The settlement provides $335 million in compensation for victims of Countrywide’s discrimination during a period when Countrywide originated millions of residential mortgage loans as one of the nation’s largest single-family mortgage lenders.

The settlement, which is subject to court approval, was filed today in the U.S. District Court for the Central District of California in conjunction with the department’s complaint which alleges that 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 United States also alleges that Countrywide discriminated by 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.”


Note:  House Concurrent Resolution  85. Dec. 2011.

Resolved by the House of Representatives (the Senate concurring), That it is the sense of the House of Representatives that any action taken by the Department of Justice should be consistent with the following goals:
(1) The mortgage servicers who engaged in fraudulent behavior should not be granted criminal or civil immunity for potential wrongdoing related to illegal mortgage and foreclosure practices.
(2) The Federal Government and State attorneys general should proceed with full investigations into claims of fraudulent behavior by mortgage servicers.
(3) Any financial settlement reached with mortgage servicers should appropriately compensate for, and accurately reflect, the extent of harm to all victims, including homeowners and State pension beneficiaries, caused by the mortgage servicers’ fraudulent behavior.

For more see:
http://www.iwatchnews.org/2011/12/21/7753/bank-america-pay-record-settlement-over-countrywide-abuses

No comments:

 
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 3.0 Unported License.