The Illinois Attorney General filed the lawsuit claiming that Countrywide encouraged minority borrowers to choose subprime mortgages. The allegations also include that minorities were often charged higher mortgage interest rates more frequently than Caucasians seeking similar loan opportunities. Countrywide Financial Corp., Countrywide Home Loans Inc., and Full Spectrum Lending, Inc., (a division of Countrywide.) were officially being charged with violating the Illinois Human Rights Act and the Illinois Fairness in Lending Act.
Bank of America has stated "These charges relate to Countrywide practices well before Bank of America acquired the company." Bank of America was not included as a defendant in the suit.
The Attorney General originally subpoenaed Countrywide in 2008. Hours were spent interviewing employees, borrowers and reviewing statistical data from more than 83,000 Countrywide mortgages issued in Illinois from 2005 to 2007. The research conducted by the attorney general's office identified that the chances of black and Latino borrowers getting a more expensive subprime mortgage was three times larger than white mortgage seekers.
Minorities Clobbered by Mortgage Meltdown
The suit initially developed as it was reported that minorities were hardest hit by the foreclosure crisis. Earlier this year, The Center for Responsible Lending released a report indicating that African-Americans and Latinos have been hit harder by the mortgage crisis than their Caucasian counterparts. The study indicated nearly a double foreclosure rate of both minority groups over their Caucasian counterparts. The most likely cause of the problem is the disproportionate amount of minority homeowners that opted into contracting for a subprime loan.
Settlement Terms for Countrywide Discrimination Lawsuit
Although Countrywide has admitted no wrongdoing in the way they handled subprime mortgages in relation to race, the corporation must pay a substantial $600 million settlement to resolve the suit. Under the terms of the agreement, Countrywide, former executives and financial firms that underwrote Countrywide stock and would officially be cleared of any legal wrong-doing in the matter.
Housing discrimination and encouraging borrowers to choose a certain type of home loan because of their skin color is illegal and immoral. Unfortunately there are still cases of the behavior being conducted by predatory lenders and bad folks worldwide. Those concerned about securing a great mortgage rate regardless of their color may benefit by comparison-shopping online. Online mortgage rates are based on hard, quantitative information such as your credit history, credit score, income level and asset level. Ethnicity is never an issue, ensuring that your online mortgage provider can never actively discriminate and break the law.
