Tags: bofa | lending | settlement

BofA Agrees to Record $335 Million Fair-Lending Settlement

Wednesday, 21 Dec 2011 03:53 PM

Bank of America Corp. agreed to a record $335 million settlement of a U.S. Justice Department probe into fair-lending lapses at its Countrywide Financial Corp. mortgage unit.

Countrywide discriminated from 2004 to 2008 by charging higher fees and interest rates to more than 200,000 black and Hispanic borrowers and steered minority borrowers into subprime mortgages, the DOJ said in a statement today.

The Obama administration has increased scrutiny of banks to prevent redlining -- excluding borrowers in low-income or minority neighborhoods -- as well as pricing discrimination and steering customers to products based on race or national origin.

“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,” Attorney General Eric Holder said in the statement.

The accord is tied to an investigation into mortgages made by Countrywide, acquired in 2008 by Charlotte, North Carolina- based Bank of America. The second-biggest U.S. bank by deposits has spent billions of dollars to clean up liabilities inherited from Countrywide, which once ranked as the nation’s biggest home lender.

Bank of America has committed about $40 billion for mortgage refunds, lawsuits and foreclosures since 2007, with most of the sum tied to alleged defects in the loans that affected investors, rather than discrimination against customers.

“We reached this settlement to resolve issues about Countrywide’s alleged historic practices that occurred before Bank of America acquired the company,” said Dan Frahm, a company spokesman. “We are committed to fair and equal treatment of all our customers, and will continue to focus on doing what’s right for our customers, clients and communities. We discontinued Countrywide products and practices that were not in keeping with our commitment.”

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