The U.S. Justice Department announced on December 21, 2011 that Bank of America agreed to a $335 million settlement for racial bias allegations in connection with Countrywide Financial mortgage loans. This is the largest residential fair lending settlement in history, according to the New York Times. Bank of America was under investigation by the Justice Department over allegations of racial bias against African American and Hispanic mortgage lenders by Countrywide Financial between 2004 and 2008, before it was acquired by Bank of America in 2008.
The investigation by the Justice Department revealed that loan officers and brokers from Countrywide charged higher fees and rates to over 200,000 minority borrowers across the country than to white borrowers who posed the same credit risk. According to the New York Times article from December 21, 2011, “Countrywide also steered more than 10,000 minority borrowers into costly subprime mortgages when white borrowers with similar credit profiles received regular loans.”
This settlement is the latest in a series of costly agreements by Bank of America related to improper mortgage lending practices by its predecessor, Countrywide. In June 2010, the company agreed to pay $108 million to settle charges that Countrywide imposed inflated fees on homeowners struggling to stay in their homes. Just two months later in August 2010, Bank of America agreed to settle lawsuits by shareholders for their mortgage losses for $600 million.
Additionally, an investigation is currently underway against several mortgage lenders in connection with improper foreclosure practices. That investigation could spell another costly settlement for Bank of America.
The foreclosure and bankruptcy attorneys at PERENICH The Law Firm have decades of experience representing distressed homeowners and helping them stay in their homes or discharging any deficiency judgment liability to the banks following foreclosure.