Countrywide accused of discriminatory lending practices
The charges, which allege violation of the Illinois Human Rights Act and the Illinois Fairness in Lending Act, were filled against Countrywide Financial Corporation; Countrywide Home Loans, Inc.; and Full Spectrum Lending, Inc.
The attorney general's office conducted a two-year investigation into the company's 83,000 mortgages issued in Illinois between 2005-2007 before Bank of America purchased the company in 2008. In addition to statistical analysis, the attorney general's office interviewed former Countrywide employees and borrowers. Interviews found that employees were given the ability to sell loans with higher interest rates than those outlined on the rate sheets.
The results of the investigation found that the company was more likely to lead African American and Latino borrowers into risky mortgages than white borrowers whose financial situation was similar. The complaint alleges that in 2006, 50.9% of African Americans and 33.8% of Latinos were sold higher cost loans. In comparison, only 19.5% of white consumers received similar high cost loans.
African American and Latino consumers were also found to have paid more for mortgages. An analysis of consumers credit scores or debt-to-income ratios found these objective factors were not sufficient to explain the racial differences.
Bank of America is being held responsible for Countrywide's actions and civil penalties and consumer restitution are sought in the case.
Spokesman for Bank of America, Rick Simon told Consumer Ally in an email, "These charges relate to Countrywide practices well before Bank of America acquired the company. We are disappointed with the attorney general's decision to pursue litigation. We have fully cooperated with the investigation and have pointed out significant flaws in the methodology on which these claims are based."
In 2008, Countrywide was the subject of another lawsuit from the attorney general for consumer fraud. The suit resulted in an $8.7 billion settlement with Bank of America.
Consumers who think they were victim to Countrywide's alleged discriminatory practices can email complaints to the attorney general's office: CountrywideDiscrimination@atg.state.il.us.