[credit provider=”Lisa Du, Business Insider”]
U.S. Attorney General Eric Holder just announced that Bank of America has agreed to pay out a $335 million settlement with the Justice Department for predatory mortgage lending practices.This will be the largest fair lending settlement in history, and, as Bank of America would like to point out, is a result of practices at Countrywide before the bank bought the lender.
Here is what the Department of Justice found at Countrywide: From 2004 to 2008, the height of the housing bubble, Countrywide purposely charged over 200,000 black and Latino qualified borrowers more for their mortgage loans than similarly qualified white borrowers.
The short story is that Countrywide steered those black and Latino borrowers toward riskier sub-prime loans, even when they qualified for prime loans, or simply charged them higher rates. These borrowers paid an average of tens of thousands of dollars more than they should have, that includes costs up front and throughout their mortgage.
Countrywide also illegally required spouses to surrender their claim to a mortgage as a condition of approval. So: in order for a man to qualify for a mortgage (for example) his wife would have to sign away her right to that mortgage.
Most of these cases took place in California, Countrywide’s headquarters, and 2/3 of the victims were Latinos — Countrywide knew how to market to them: “se habla espanol”, said their advertisements.
For this investigation, the Department of Justice and other agencies looked at 2.5 million loans. Officials are saying that victims that were steered to subprime loans (called “residential steering”) will be paid the most.
To put how widespread this was in perspective: Latino families across the U.S. lost 2/3 of their household wealth during the financial crises. A significant portion of that was because their houses lost value or because many families lost their houses, period.