From WILL - News Headlines -

Bank of America Settlement Stems from Ill. AG Lawsuit

(With additional reporting from The Associated Press)

Bank of America will pay a multimillion dollar settlement to resolve allegations of discriminatory loans by its subsidiary, Countrywide that took place between 2004 and 2007. The case stems from a lawsuit filed by the Illinois attorney general's office.

Back in March 2008, Attorney General Lisa Madigan issued a fair lending subpoena to Countrywide after a report found that the company sold higher-cost loans in the Chicago area to more African Americans and Hispanics compared to white borrowers.

Bank of America's decision to pay a $335 million dollar settlement signals the largest settlement of its kind over residential fair lending practices.

The settlement with the U.S. Justice Department was filed Wednesday with the Central District court of California and is subject to court approval. According to the DOJ's complaint, Countrywide charged over 200,000 African-American and Hispanic borrowers higher fees and interest rates than non-Hispanic white borrowers with a similar credit profile.

Natalie Bauer, who's a spokeswoman in the Illinois attorney general's office, said approximately 15,000 people in the state may be eligible for restitution under the settlement.

"The settlement is one of those ways that we will be able to help homeowners on the ground who are struggling right now as a result of the illegal practices that banked used in the lead up to the crash of the economy back in 2008," Bauer said.

Dan Frahm, a Bank of America spokesman, said in a statement that the bank does not practice lending based on race.

"We discontinued Countrywide products and practices that were not in keeping with our commitment and will continue to resolve and put behind us the remaining Countrywide issues," Frahm said.

The United States' complaint said that Countrywide was aware that the fees and interest rates that its loan officers were charging discriminated against African-American and Hispanic borrowers, but failed to impose meaningful limits or guidelines to stop it.

People who believe they were victims of lending discrimination should e-mail the U.S. Department of Justice at countrywide.settlement@usdoj.gov

Bauer said a settlement administrator will review those claims.

Meanwhile, the Illinois attorney general's office has filed a similar lawsuit against Wells Fargo for discriminatory lending practices.

Categories: Business, Economics