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Countrywide to pay 1/3 billion over racial discrimination in loans

Discussion in 'U.S. Politics' started by Little-Acorn, Dec 22, 2011.

  1. Little-Acorn

    Little-Acorn Well-Known Member

    Jan 23, 2009
    Likes Received:
    San Diego, CA
    Found this article saying that Bank of America's Countrywide unit will pay $335 million over loan-discrimination claims.

    But looking through the article, I haven't found where ANYONE identifies what Countrywide did that was discriminatory. Can someone help me out here? This is part of the article. The rest can be read at the URL cited.

    It says in a few places that they did racial discrimination, and then goes on about how terrible racial discrimination is for the country. But I don't see any examples, or even any attempts to provide any, or even say any actually exist. In one place it says Countrywide's officers were free "to differ a loan’s interest rates and other fees". And then it says this opens the door to discrimination. And that's the closest it comes to actually saying anybody did something wrong.

    Well, offering loans at all, "opens the door" to discrimination, doesn't it? Running a restaurant "opens the door to racial discrimination". Any service that anybody provides to the public, of any nature, "opens the door to racial discrimination". Even if the person doing it isn't doing any racial discrimination to anyone, never has, and never will. Of course the door is open. It's called "freedom", and any freedom can be abused. But was the freedom to set rates for loans, abused on racial grounds here?

    Where is the slightest evidence that ANYONE was steered to a sub-prime mortgage loan because he was black or Hispanic, instead of the fact that his income was lower than standard practices called for? Or his past repayment record too delinquent? Or his down payment was too low (or was zero)?

    Where is a study saying something like, "Of all the people with such-and-such marginal qualifications, 80% of the marginal white applicants received non-sub-prime loans while 70% of the marginal black applicants, with identical qualifications, were told that they could only get sub-prime loans with worse terms"?

    Maybe the evidence it there. If so, this article does an excellent job of hiding it. Wouldn't such evidence or studies be the FIRST thing the author made sure to bring out?



    Countrywide to Pay $335M Over Discrimination Case

    Written By Matt Egan
    Published December 21, 2011

    Bank of America’s (BAC: 5.23, +0.06, +1.16%) Countrywide Financial unit agreed on Wednesday to pay $335 million to settle allegations it discriminated against minority homebuyers by steering them toward dangerous subprime mortgages.

    According to the Department of Justice, it marks the largest residential fair lending settlement in history. Covering actions between 2004 and 2008, the settlement offers financial compensation to more than 200,000 qualified borrowers who were charged higher fees or given subprime loans because of their race, not because of their creditworthiness, the government said.

    "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 a statement. "These institutions should make judgments based on applicants' creditworthiness, not on the color of their skin.”

    After tumbling below the $5 threshold earlier this week for the first time since March 2009, BofA’s shares were recently up 0.68% at $5.21.

    BofA said it is committed to fair and equal treatment of all customers and it will continue resolving remaining Countrywide issues, Dow Jones Newswires reported.

    The DOJ said Countrywide’s business practices permitted its loan officers and mortgage brokers to differ a loan’s interest rates and other fees, opening the door to unfair pricing discretion based on race. The government accuses Countrywide of being aware of this discrimination, but failing to impose meaningful limits or guidelines to stop it.

    Subprime loans are considered more dangerous because they often include prepayment penalties and exploding adjustable interest rates. These mortgages are believed to have helped cause the mortgage crisis and ensuing recession.

    “Countrywide’s actions contributed to the housing crisis, hurt entire communities, and denied families access to the American dream,” said Thomas Perez, assistant Attorney General for the DOJ’s civil rights division. “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.”

    (Full text of the article can be read at the above URL)
  2. dogtowner

    dogtowner Moderator Staff Member

    Dec 24, 2009
    Likes Received:
    Wandering around
    this prevents detailed invesigation that MIGHT show a pattern and if it did the tab could go much higher. Since BofA can't know their true risk, its their best move in risk aversion.
  3. PLC1

    PLC1 Moderator Staff Member

    Apr 20, 2007
    Likes Received:
    The Golden State
    That article does seem a bit lacking in specifics.

    Here's another account, that says:

    In order to be awarded damages, the propensity of the evidence had to show that said allegation was correct. Since it isn't a criminal trial, the standard of proof beyond a reasonable doubt didn't have to be met.
  4. pocketfullofshells

    pocketfullofshells Well-Known Member

    Jan 17, 2008
    Likes Received:
    land of 10,000 lakes and 2 senators again
    without reading that one, the one I read said that they where charging more to Minorities with the same credit then they did whites...and also that it was known to be happening in the company and they made no efforts to fix it. One thing they did was take people with better credit, and give whites the normal credit rates for that level...and non whites pushed them into subprime loans even though they qualified for better...charging them higher interest and more penalties and fees.

    I mean ummm racism does not exist.....
  5. Gipper

    Gipper Well-Known Member

    Nov 17, 2009
    Likes Received:
    Winter Wonderland
    The old tired refrain from the left...racism is everywhere...America is racist...R and cons are ALWAYS racists. When will it ever stop?

    I do not doubt that there might be a very small aspect of racism with this issue. However, minorities as a whole are generally speaking less economically advantaged and as such, more likely to default on a mortgage. Do you think this might actually have played a part?

    Have you considered the banking regulations and laws pushed by many in your beloved D party, which forced banks to loan to low income minorities? Could it be that this caused most of the problem?

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