The Justice Department announced Wednesday that it has reached a $335 million settlement with Countrywide Financial Corp., now owned by Bank of America, in the largest fair lending action in history.
The settlement resolves allegations that Countrywide engaged in a widespread pattern of discrimination against qualified African-American and Hispanic borrowers in their mortgage lending from 2004 to 2008.
The settlement, which is still subject to court approval, alleges that Countrywide charged minority borrowers higher fees and interest rates than non-Hispanic white borrowers in both its retail and wholesale lending. The Justice Department said that the borrowers were charged higher rates because of their race or national origin, not because of borrowers' credit worthiness.
The complaint also alleges that Countrywide steered thousands of minority borrowers into subprime loans when white borrowers with similar credit histories received prime loans.
"The department's action against Countrywide makes clear that we will not hesitate to hold financial institutions accountable, including one of the nation's largest, for lending discrimination," said Attorney General Eric Holder, in a press release. "These institutions should make judgments based on applicants' creditworthiness, not on the color of their skin. With today's settlement, the federal government will ensure that the more than 200,000 African-American and Hispanic borrowers who were discriminated against by Countrywide will be entitled to compensation."