Bank of America to pay $335 million to settle discriminatory lending claims

[JURIST] The US Department of Justice (DOJ) [official website] announced Wednesday that Bank of America (BOA) [corporate website] has agreed to pay a record $335 million [press release] to settle claims that its subsidiary, Countrywide Financial, discriminated against Hispanic and African-American home buyers. According to the DOJ complaint [text, PDF], Countrywide engaged in a pattern of discriminatory conduct, charging minority borrowers higher fees and interest rates and steering them into sub-prime mortgages based not on their creditworthiness, but rather on their race or national origin. The proposed settlement [text, PDF], filed in the US District Court for the Central District of California and subject to court approval, will provide compensation to more than 200,000 minority borrowers. It will also require Countrywide to implement policies to prevent such discrimination in the future. The discrimination allegedly occurred between 2004 and 2008, before BOA acquired Countrywide in 2008. A BOA spokesperson pledged a commitment to "fair and equal treatment of all our customers."

This is the latest in a series of legal problems for BOA. Earlier this month BOA agreed to pay $315 million [JURIST report] in a settlement of claims brought by investors alleging they were misled with respect to mortgage-backed investments. Last month a senior judge for the US District Court for the Southern District of Florida [official website] gave final approval to a $410 million settlement [JURIST report] in a class action suit against BOA for overdraft fees that affected more than 13 million people. The settlement with BOA, which was reached in February, was given preliminary approval [JURIST reports] in May. In June, BOA agreed to pay $8.5 billion [JURIST report] to settle claims that it sold bad securities contributing to the housing market collapse.

 

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