AG Madigan Sues Countrywide

Posted by Orb Staff on June 30, 2010 No Comments
Categories : Residential Mortgage

is Attorney General Lisa Madigan has filed a lawsuit against Bank of America subsidiary Countrywide for unlawfully discriminating against African American and Latino borrowers in home mortgage sales, in violation of the Illinois Human Rights Act and the Illinois Fairness in Lending Act. Madigan issued her complaint in Cook County Circuit Court against Countrywide Financial Corp., Countrywide Home Loans Inc. and Full Spectrum Lending Inc., an arm of Countrywide that mostly sold subprime loans. Madigan's complaint alleges that the former mortgage giant steered African American and Latino borrowers into risky subprime mortgages more often than similarly situated white borrowers. The complaint also alleges that minority borrowers paid more for mortgages across Countrywide's product line, including its prime loans. Madigan's analysis of Countrywide loan data found that the racial disparities could not be explained by objective factors, such as borrowers' credit scores or debt-to-income ratios. At the height of the housing bubble, Countrywide was the largest mortgage lender in the country and in Illinois. Countrywide was also the state's top seller of subprime loans. Bank of America bought Countrywide in 2008. "Countrywide's illegal discriminatory lending practices destroyed the wealth and dreams of thousands of African American and Latino homeowners," Madigan says. "Bank of America needs to be held accountable by taking financial responsibility for cleaning up the devastation of the predatory company that it chose to take over." Madigan's lawsuit is the result of a two-year investigation of Countrywide's lending policies and practices that were in place during the years directly preceding the collapse of the housing market. Her investigation included a statistical analysis of data from over 83,000 Countrywide mortgages originated in Illinois from 2005 through 2007. Madigan's office also interviewed former Countrywide employees and mortgage brokers, and spoke with Countrywide borrowers about their home loans. As outlined in the complaint, Madigan's analysis of Countrywide's loan data found that the odds that African American and Latino borrowers would receive a higher-cost subprime mortgage from Countrywide were three times greater than those of white borrowers. "It's disturbingly clear that if you were an African American or Latino borrower who walked into a Countrywide store, you likely paid more for your mortgage than a white borrower," Madigan says. "Countrywide effectively imposed a surcharge on mortgage loans based on race and ethnicity." Her lawsuit asks the court to find that Countrywide engaged in a pattern and practice of discrimination, enter an injunction against Countrywide to permanently prohibit the company from discriminatory acts as described in the complaint, make restitution to all victims of Countrywide's discrimination, pay civil penalties of $25,000 for each violation of the Illinois Human Rights Act and order any other relief that the court deems equitable. This most recent filing is the second lawsuit Madigan has brought against Countrywide. In 2008, she filed a consumer fraud lawsuit against the lender for its role in driving the foreclosure crisis, and in November 2008, she led negotiations that resulted in an $8.7 billion settlement of that lawsuit with Bank of America. SOURCE: [link=http://www.illinoisattorneygeneral.gov/pressroom/2010_06/20100629b.html]Office of Illinois Attorney General Lisa Madigan

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