Surprise! Mortgage lenders treat minorities unfairly!
At least one bank is now being forced to own up to that well known fact and pay for their race-based shadiness.
Bank of America Corp. agreed to pay a record $335 million to resolve a government claim that its Countrywide Financial unit discriminated against minority home buyers during the frenzied days of the mortgage boom.
The Justice Department alleged that Countrywide charged higher interest rates and fees to African American and Latino home buyers than to white applicants with similar income levels and credit scores. It marks the largest residential fair-lending settlement in history.
California, one of the worst-hit states when the housing market buckled, was considered by investigators to be the epicenter for the alleged abuses by Countrywide. In one example given in the Justice Department’s report, an African American in Los Angeles who borrowed $200,000 in 2007 paid an average of $1,200 more in fees than a comparable white customer.
“Chances are the victims had no idea whatsoever they were being victimized. They were thrilled to have gotten the loan and realized the American Dream,” said Thomas E. Perez, head of the Justice Department’s civil rights division. “They had no idea they could have and should have gotten a better deal. This is discrimination with a smile.”
The $335 million will be distributed to more than 200,000 victims, nearly one-third of them from California, who took out home loans from Countrywide between 2004 and 2008.
A Bank of America spokesman said the alleged abuses occurred before the company bought Countrywide at the peak of the financial crisis in 2008.
“We reached this settlement to resolve issues about Countrywide’s alleged historic practices that occurred before Bank of America acquired the company,” spokesman Dan Frahm said in a statement. “Bank of America’s practices are not at issue.”