Bank pays biggest settlement ever in mortgage rip-off

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The Bank of America, just before Christmas, agreed to pay a $335 million settlement on behalf of its Countrywide financial unit for steering Black and Latino homeowners toward sub-prime loans.

 Countrywide Financial Services was one of the main architects of the predatory lending that led to the financial crisis and the "Great Recession." The Bank of America acquired Countrywide at the height of the banking meltdown.

The settlement, resulting from a suit against Bank of America by the Department of Justice, is the largest on record.

Commenting on the deal, which is subject to approval by a California federal judge, Attorney General Eric Holder said, "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." 

Notwithstanding the importance of the settlement, to date, no banking official has faced criminal charges for the financial swindle.

Countrywide was accused of disproportionately giving sub-prime loans to minority borrowers as opposed to white borrowers with similar credit histories.

The New York Times writes that the Department of Justice "concluded that Countrywide loan officers and brokers charged higher fees and rates to more than 200,000 minority borrowers across the country than to white borrowers who posed the same credit risk."

"Countrywide's actions contributed to the housing crisis, hurt entire communities, and denied families access to the American dream," remarked Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.

Approximately two-thirds of those affected by Countrywide's discriminatory practices were Latinos, the other third African American. Should the settlement be approved, reimbursements will range from several hundred to a few thousand dollars .

According to the New York Times, "The odds of a minority applicant being steered into such a loan were more than twice as high as those for a non-Hispanic white borrower with a similar credit rating."

Countrywide's once lucrative sub prime financial strategy quickly became standard policy in the banking and mortgage industry. Millions of homeowners were affected.

President George Bush's administration, which trumpeted home ownership as a ticket to freedom, ignored early warnings of an emerging crisis.

Earlier, Citibank with its widely touted "Live Richly" marketing strategy encouraged homeowners to take out second mortgages on their homes. Former Treasury Secretary Robert Rubin was one of the main champions of these policies.

Countrywide had earnings of $674 billion between 2004 and 2007, the period in which the sub-prime loans were at their height, says the Grio.com.

Countrywide's stock has lost two thirds of its value over the last two years, according to the New York Times.

Photo: Adam Pieniazek   

 

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  • Thank you for this very imformative and interesting article. Every day we learn why we are Socialists.

    It is as though the Capitalist/Bank system is eating upon its own creation, the property owners. When only a minority of people are "allowed" (able) to own property that system becomes obviously becomes less and less appealing. Our daily news is like a Marxist-Leninist blueprint for action.

    We live in amazing times.

    Dr. Don Noyes-More Ph.D.
    Editor in Chief
    Downtown LA Life Magazine International

    Posted by Dr. Don Noyes-More Ph.D., 01/09/2012 5:46pm (3 years ago)

  • I believe the statement of “Nobody gets a house for free” is a negative PR driven bank campaign, as the other arms of this campaign are phrases like, “MORAL HAZARD” and “DEADBEAT BORROWER,” but are meant to deflect you from what the real issue is, which is that Wall Street has blown up our economy, while the banks have committed potentially irregular, fraudulent and simply unsafe mortgage practices.
    .
    Countrywide and Bank of Defrauding America might have already been paid back by several unidentified investors, multiple times, and by credit default swaps and insurance! A potential insurance fraud! Then the taxpayer had to bailout AIG! Now they want the homeowner to pay them again?”
    .
    It is in the possibility that your loan had been concurrently sold into multiple Trusts at the same time. In other words, it would be equivalent to selling the same car over and over to several different people using a copy of the pink slip or title of the car. IT IS ILLEAGAL! Unfortunately, MERS provided the perfect environment for these banks to do this. Thanks Courts who allowed MERS to be used! Great effort in protecting the public! What is next? Are they going to approve a criminally started company that allows the copy of our driver’s license to be shown to the police officer who pulls over drivers, just so the criminal can escape? Anyway, the question is how do you prove there has been a break in the chain of title? The answer is to have a mortgage investigation Title and Securitization search done, so that you or your attorney are armed with proof that there has been a break in the chain of title in your situation.
    .
    You can find more information at my blog at: http://piggybankblog.com/2011/12/30/break-in-chain-of-title/
    .
    Please also read along John’s Daily Blog at piggybankblog.com!
    .
    Divided we may have fell America! But United We Shall Stand!
    .
    My name John Wright AND I AM FIGHTING BACK!
    .
    John Wright
    Piggybankblog.com

    Posted by Piggybankblog, 01/05/2012 3:14pm (3 years ago)

  • Capitalism works in very strange ways....

    Posted by Gabriel Falsetta, 01/03/2012 5:12pm (3 years ago)

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