The largest settlement in history over fair lending practices

December 21, 2011 4:12 PM

Bank of America agreed to pay $335 million to resolve allegations that Countrywide Financial engaged in widespread discrimination against African-American and Hispanic borrowers on home loans. The Department of Justice is calling this the largest settlement in history over fair residential lending practices. According to the DOJ’s complaint, Countrywide systematically charged more than 200,000 African-American and Hispanic borrowers higher fees and interest rates than white borrowers with similar credit profiles.

The suit also claims that Countrywide steered more than 10,000 minority borrowers into costly subprime mortgages when white borrowers with similar credit profiles received prime loans. The settlement will be used to compensate victims of Countrywide’s discriminatory mortgage loans from 2004 through 2008, prior to Countrywide's acquisition by Bank of America, when it originated millions of residential mortgage loans as the nation’s largest single-family mortgage lender. The settlement is subject to court approval.

Earlier this year Countrywide refunded $108 million in refunds to more than 450,000 homeowners who were overcharged for property inspections and other fees, which was at the time one of the largest mortgage-related settlements ever brought before the Federal Trade Commission. Last summer Countrywide agreed to pay out $600 million to settle shareholder lawsuits that the mortgage giant concealed mounting losses.

posted by 2bucksplus (31 comments total)

So... 335 million to be distributed to somewhere in the neighborhood of 200,000 people who were discriminated against, and 600 million to shareholders.

Don't get me wrong, I'm glad to see something done, but there's a pair of numbers with a message.
posted by Mooski at 4:18 PM on December 21, 2011 [7 favorites]

BUT REMEMBER YOU GUYS IT'S ALL THE FAULT OF PEOPLE WHO WANTED HOMES THEY COULDN'T AFFORD
posted by Sticherbeast at 4:19 PM on December 21, 2011 [5 favorites]

So, fined roughly $1600 for every borrower they discriminated against. Gee, why do I suspect that the extra fees and interest paid by those borrowers might just add up to more than $1600 each?
posted by Benjy at 4:22 PM on December 21, 2011 [10 favorites]

But this is post-racial America!
posted by Pogo_Fuzzybutt at 4:22 PM on December 21, 2011 [1 favorite]

Like the guy in the $3000 dollar suit is supposed to care. C'mon!
posted by isopraxis at 4:23 PM on December 21, 2011 [1 favorite]

So... 335 million to be distributed to somewhere in the neighborhood of 200,000 people who were discriminated against, and 600 million to shareholders.

Don't get me wrong, I'm glad to see something done, but there's a pair of numbers with a message.

One is run by the FTC, the other suits are private class-action suits consolidated by a judge. The settlement numbers are independent of one another and the FTC action has nothing to do with the first action, which is about information about losses not being available to shareholders in violation of securities laws.
posted by Ironmouth at 4:23 PM on December 21, 2011 [1 favorite]

the fine is always a hilariously small fraction of the amount in controversy...
posted by Fupped Duck at 4:24 PM on December 21, 2011 [2 favorites]

BUT REMEMBER YOU GUYS IT'S ALL THE FAULT OF PEOPLE WHO WANTED HOMES THEY COULDN'T AFFORD

That's always been the laugh line for me. Seriously, which party is the underinformed one, Joe Blow or the giant mortgage company who is in business in this line.

Such bullshit.
posted by Ironmouth at 4:25 PM on December 21, 2011 [5 favorites]

Please please please let one of these asswipe companies get their corporate charter revoked. Just one. One is all it will take. For fuck sake.
posted by Mister Fabulous at 4:27 PM on December 21, 2011 [3 favorites]

Man, that's chump change. That ought to double their stock price from $5 to $10. Nah, maybe $7. They have too many other legal liabilites. Still, not a bad day's work, Brian Moynihan. Bully for you. Maybe even take down the Angelo dartboard off the back of the bathroom door.
posted by Diablevert at 4:33 PM on December 21, 2011

"agrees to pay money to settle allegations"...

Feh.

They need to be brought up on charges, both as a corporation and as individuals, and have sentences handed down accordingly. This whole "I can buy my way out of being investigated/prosecuted for that illegal thing I did" is a 1% solution to something which fucks over the 99% nearly every time.
posted by hippybear at 4:37 PM on December 21, 2011 [12 favorites]

I'm confused. I thought the main problem with Countrywide was indiscriminatory lending.
posted by miyabo at 4:39 PM on December 21, 2011 [4 favorites]

Countrywide just can't catch a break. First, they get in trouble for making dumb loans, then they get in trouble for charging too much for loans (which is really the opposite of the first sin).
posted by planet at 4:59 PM on December 21, 2011

Vote Republican and get more of this when they ignore the common good as was the case during the most recent Bush administration when all of this happened.
posted by Sparkticus at 5:06 PM on December 21, 2011

No inconsistency. Countrywide had one god: maximize revenue per sales lead. Subprime mortgages paid more than prime mortgages for the overqualified, and much more than no mortgage at all for the unqualified.
posted by MattD at 5:12 PM on December 21, 2011 [1 favorite]

Countrywide just can't catch a break. First, they get in trouble for making dumb loans, then they get in trouble for charging too much for loans (which is really the opposite of the first sin).

"What do you mean, I'm guilty of two counts of murder? I set one guy on fire, and I drowned the other! Doesn't that balance out?"
posted by FatherDagon at 5:22 PM on December 21, 2011 [8 favorites]

I'd really like to believe that some prosecuting attorney vastly more knowledgeable and savvier than I am (not that it'd be hard) did a lot of pro/con analysis before agreeing to this...but all I can think is that if BofA agreed to pay this out, then it didn't hurt them enough.

More importantly, people should go to jail. Punishment shouldn't be limited to corporate payouts. Real people made these decisions. Real people should go to real prison.
posted by scaryblackdeath at 5:23 PM on December 21, 2011 [2 favorites]

And there will be no criminal prosecutions! Steal $500 from a convenience store and you're a felon, steal $5,000,000 from your shareholders through control fraud, pay a fine!
posted by wuwei at 5:34 PM on December 21, 2011 [8 favorites]

"What do you mean, I'm guilty of two counts of murder? I set one guy on fire, and I drowned the other! Doesn't that balance out?"

I don't understand what you're trying to say, if anything.
posted by planet at 5:37 PM on December 21, 2011

The 'm' in that number needs to change to a 'b'. When someone ruins the lives of tens of thousands of people, you don't smack them gently with a tiny per victim restorative fine.

Fucking system...
posted by Slackermagee at 6:09 PM on December 21, 2011 [1 favorite]

I don't see why people are complaining about the amount. B of A only received $20 billion from the Targeted Investment Program, and a mere $7.5 billion from the Asset Guarantee Program. It's not like they're exponentially coming out on top or anything.
posted by evidenceofabsence at 6:56 PM on December 21, 2011 [5 favorites]

I thought Countrywide was on your side.
posted by hypersloth at 9:18 PM on December 21, 2011

I don't understand what you're trying to say, if anything.

You may have missed the previous commenter who seemed to say that this 'charging too much for loans' is the opposite of 'making dumb loans' and that it seems unfair ('can't catch a break') to be in trouble for both these things. He is using a humorous analogy to demonstrate that just because there are factors in the two cases that seem opposite, that does not make the practices overall opposite of each other, and in fact they may still both warrant punishment.
posted by jacalata at 12:16 AM on December 22, 2011

doh, you were the previous commenter. Rest of my explanation stands, happy to help
posted by jacalata at 12:17 AM on December 22, 2011

hypersloth: I thought Countrywide was on your side.

They were, standing right next to you….wearing an "I'm with Stupid ---->" t-shirt.
posted by wenestvedt at 6:55 AM on December 22, 2011

Just got my check from Countrywide/BofA for the "overcharge on fees" lawsuit. $48.13.

Woooo! Party!

What's super-annoying about all of this is that I can't decide NOT to do business with Bank of America. They bought my mortgage. GAH! It galls me that I'm one of their profitable investments.
posted by Ruthless Bunny at 7:16 AM on December 22, 2011

Ruthless Bunny, you can indeed decide not to do business with Bank of America, albeit for a cost in time and money:

Refinance your mortgage away from them.
posted by de void at 9:26 AM on December 22, 2011

Then the bastards go and buy it again and we're back at Square 1.
posted by Talez at 3:45 PM on December 22, 2011

Isn't it obvious to everyone that Bank of America is actually a criminal organization? If you did the shit they've done, just once, you'd be thrown in jail. At least Goldman Sachs has the decency to steal from other rich people.

And there will be no criminal prosecutions! Steal $500 from a convenience store and you're a felon, steal $5,000,000 from your shareholders through control fraud, pay a fine!

Thousands of Cops and millions of dollars to crack down on OWS, how many FBI agents and prosecutors and resources to crackdown on Wallstreet?
posted by delmoi at 11:43 PM on December 22, 2011 [1 favorite]

It's a Wonderful Lie: Bank of America and J.P. Morgan Chase's ad campaigns portray the institutions as your friendly neighborhood credit union.
posted by homunculus at 10:06 AM on December 23, 2011

Bank of America ATMs In San Francisco Turned Into Truth Machines
posted by homunculus at 9:21 AM on January 14, 2012