Bank of America, Countrywide settle discrimination case
Bank of America has reached a settlement in the Countrywide Financial discrimination suit.
Adriene Hill: There's been a huge settlement in a high-profile mortgage-discrimination case against Countrywide Financial, one of the nation's biggest subprime lenders. Bank of America's on the hook. They bought Countrywide back in 2008 and will pay $335 million to settle claims that Countrywide discriminated against African-American and Hispanic borrowers, by charging them higher fees and steering them into risk home loans.
And as Marketplace's Mitchell Hartman reports, for BofA, Countrywide is the acquisition that just keeps on taking, and taking, and taking...
Mitchell Hartman: Under the Justice Department settlement, Bank of America will send out checks ranging from several hundred to several thousand dollars. They'll go to minority homeowners, many of whom got sketchy and costly subprime loans from Countrywide. That's even though they qualified for less risky, traditional mortgages.
Attorney General Eric Holder: The settlement provides $335 million in compensation to victims of Countrywide's discrimination, during a period when Countrywide served as one of the nation's largest single-family lenders.
And that $335 million -- it's just a drop in the bucket of BofA's total cost. First, BofA paid $4 billion to buy Countrywide at the height of the financial crisis.
Now add $20 billion-or-so in settlements with investors that bought Countrywide's toxic mortgage securities; $8 billion for loan modifications to struggling homeowners. And the bank has bled another $13 billion in losses on subprime loans that went bad in the mortgage meltdown. Oh, and BofA got $45 billion in taxpayer bailout funds -- at least it's paid that money back already.
I'm Mitchell Hartman for Marketplace.