Bank of America (NYSE: BAC) has agreed to a $335 million settlement in a widespread investigation by the Department of Justice that finds discriminatory lending practices in its Countrywide Financial mortgage unit. The settlement represents the largest residential lending settlement in history.
The investigation found that 200,000 African American and Hispanic borrowers were held to unfair mortgage lending standards and in some cases were steered into sub-prime mortgage loans when they qualified for prime loans.
“We will not hesitate to hold lenders accountable,” said U.S. Attorney General Eric Holder during a press conference on Wednesday. “We are committed to protecting rights and the best interest of American people.”
The lawsuit uncovered widespread violations of fair housing including hundreds of thousands of borrowers of color who were charged higher rates than white borrowers. Holder said the conduct was “alarming.”
Previously, the largest residential lending settlement totaled $6.1 million for violations committed by subsidiaries of AIG.
Bank of America acquired Countrywide in 2008 and has since spent billions of dollars in an effort to remove some of the liabilities it inherited through the acquisition.
The Bank, formerly the second-largest reverse mortgage lender, exited the business in February stating the need to focus on its core mortgage business.
Written by Elizabeth Ecker