In the largest residential fair lending settlement reached in the Justice Department’s history, Bank of America has agreed to provide a $335 million fund to compensate victims of what one top DOJ official called “discrimination with a smile.” DOJ alleged that Countrywide, before it was owned by Bank of America, engaged in a “widespread pattern or practice of discrimination against qualified African-American and Hispanic borrowers” in their mortgage lending practices from 2004 through 2008.
The complaint, filed in the Central District of California on Wednesday, alleges that African-American and Hispanic borrowers “were more than twice as likely to be placed in subprime loans than non-Hispanic White wholesale borrowers who had similar credit qualifications.” Subprime loans carry higher interest rates.
Attorney General Eric Holder stressed at a press conference that the over 200,000 African-American and Hispanic borrowers named in the suit were qualified for the loans.
“Countrywide’s actions contributed to the housing crisis, hurt entire communities, and denied families access to the American dream,” Thomas E. Perez, who heads DOJ’s Civil Rights Division, said in a press release. “We are using every tool in our law enforcement arsenal, including some that were dormant for years, to go after institutions of all sizes that discriminated against families solely because of their race or national origin.”
Perez said that two-thirds of the victims were Hispanic and that Countrywide targeted those communities in particular.