The latest disastrous turn in Bank of America’s acquisition of Countrywide Financial has the nation’s second largest lender paying a record $335 million penalty for Countrywide charging more to lenders of certain races and origins.
The settlement is more than 10 times the total amount the U.S. Department of Justice has collected for all previous fair-lending settlements, according to Bloomberg News. Individual borrowers could collect more than $1,000 from the settlement, depending on the form of the loan.
Countrywide charged more than 200,000 black and Hispanic borrowers higher fees and interest rates and steered them towards pricey subprime mortgages from 2004 to 2007, according to the Justice Department. BofA distanced itself from Countrywide’s lending pattern, and said it discontinued Countrywide practices it disapproved after the 2008 acquisition.
“The bank is trying to dig its way out of a hole — there’s no bigger hole than its Countrywide assets,” said John Taylor, president of the National Community Reinvestment Coalition.
BofA has continued to be penalized for loans Countrywide, the largest U.S. provider of subprime mortgages, originated in the days leading up to the housing bust. Earlier this year, the bank agreed to pay investors $8.5 billion for bad mortgages stemming from Countrywide, and it could face separate Department of Housing and Urban Development fraud charges related to federally insured Countrywide mortgages. [Bloomberg]