* Some folks out there have been trying to convince Americans that institutional racism is a thing of the distant past. Well, tell that to the folks who got mortgages through Countrywide…
The Justice Department on Wednesday announced the largest residential fair-lending settlement in history, saying that Bank of America had agreed to pay $335 million to settle allegations that its Countrywide Financial unit discriminated against black and Hispanic borrowers during the housing boom.
A department investigation 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 also steered more than 10,000 minority borrowers into costly subprime mortgages when white borrowers with similar credit profiles received regular loans, it found.
* Illinois Attorney General Lisa Madigan deserves lots of credit for this settlement. Madigan filed suit last year against Bank of America, which had earlier bought Countrywide. Her suit was settled as part of the record-breaking deal…
The Illinois lawsuit followed years of investigation into Countrywide’s lending practices.
Madigan issued a subpoena to Countrywide in March 2008. That followed a 2007 study by the Chicago Reporter of federally collected mortgage-lending data for the Chicago area. The study found that in 2006, Countrywide Financial Corp. sold higher-cost loans to 50.9 percent of its African-American borrowers and 33.8 percent of its Latino borrowers, while 19.5 percent of the company’s white borrowers received high-cost loans.
* The result for Illinoisans who were essentially robbed of their money…
Either the borrowers were charged higher fees associated with obtaining a mortgage or they were steered into costlier, riskier subprime mortgages when they would have qualified for lower-cost, prime mortgages, Madigan said.
In the first case, Illinois borrowers could be eligible for a settlement ranging from several hundred dollars to more than $1,000, she said. In the second, borrowers qualifying for a settlement could receive about $10,000, she said.
Money can compensate, but shouldn’t somebody go to jail over this? I mean, you rob a bank and you’ll spend years in prison. But when a financial conglomerate robs you it throws money around and walks away.
Most banks, like the one I use, are actually doing what they’re supposed to be doing and following the law and helping build the economy. But some of these crooked banksters should be forced to do more than write a big check and deny they did anything wrong…
The settlement agreement was filed in U.S. District Court for the Central District of California. It calls for no punitive damages, Madigan said. In the agreement, the defendants deny claims of discrimination.
* Other business-related news…
* Illinois: The land of leavin’?
* Editorial: Illinois needs new tack on biz breaks
* Jerry Roper: Illinois deserves an A for economic-development assistance
* Lawsuit seeks to block Children’s heliport
* Chicago-based investment group purchases Sun-Times Media
* New Sun-Times will ramp up specialized content online