Countrywide Loans Discriminated Against Certain Minority Borrowers

Last week, the Attorney General announced that nearly 200,000 homeowners of African American or Latino descent would be entitled to partake in a $335,000 settlement from Countrywide Home Loans.  Countrywide was sued for discriminatory lending practices, and the Attorney General stated that between 2004 and 2008, Countrywide was charging African-American and Latino homebuyers  more fees and higher interest rates than similarly situated white applicants.  In other words, if a white applicant and a black or Latino applicant had identical income and credit scores, the black or Latino applicant paid a higher interest rate and incurred greater closing costs than the white applicant.

Countrywide was the largest mortgage lender in Illinois between 2004 and 2007.  Once the settlement is approved by a judge, almost 15,000 Illinois homebuyers of African-American and Latino heritgage will be entitled to compensation from Countywide.

How much compensation can they expect?  According to the Illinois Attorney General, that depends on their individual situation.  If Countrywide charged the buyer higher fees than a similarly situated white applicant, the buyer could receive anywhere from several hundred dollars to more than $1,000.  If, however, the Buyer was steered into purchasing a subprime loan even though he qualified for a prime loan, the Buyer could receive nearly $10,000.

Bank of America, which now owns Countrywide, denies any discriminatory practices and has stated that they have agreed to the settlement to resolve the allegations against Countrywide.