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Thursday, December 22, 2011

DFI Commends Justice Department for their Settlement with Bank Of America/Countrywide

The Washington State Department of Financial Institutions (DFI) commends the United States Department of Justice for their fair-lending settlement with Bank of America regarding allegations of discriminatory lending practices in their Countrywide Financial unit.

Yesterday’s announcement by the Justice Department finding more than 200,000 minority borrowers nationwide were given loans with higher fees and rates than white borrowers with similar credit backgrounds reinforces DFI’s findings in Washington State.

On June 23, 2008 DFI became the first and only state regulator to file a Statement of Charges against Countrywide Home Loans alleging the company was discriminating against ethnic and racially protected classes by offering loan products that were less favorable than those offered to non-protected classes.

On July 1, 2008, Bank of America purchased Countrywide Home Loans. As a result, Countrywide Home Loans became a subsidiary of the national bank and DFI lost jurisdiction over any loans made after that time.

DFI's Investigation

The DFI Consumer Services unit conducted more than 2,400 hours of examination and investigation to determine the extent of the problem. DFI examiners evaluated more than 30,000 loans and discovered more than 100 alleged victims of predatory pricing based upon comparisons with statistically significant control group members.

In addition to the the complex nature of DFI’s allegations, the case was complicated with numerous changes in the Washington State Consumer Loan Act over the period of time our allegations covered.

Refunds to Consumers

In the settlement, DFI identified 123 victims of alleged discriminatory pricing. Each of these Washington residents received a settlement ranging from $997 to $26,176 depending on the type of loan, number of predatory features in the loan and whether or not the consumer was foreclosed upon. Consumers received the full $650,000 of the settlement. DFI did not retain any of the settlement.

Questions about Department of Justice Settlement

The proposed settlement provides for an independent administrator to contact and distribute payments of compensation at no cost to borrowers whom the Justice Department identifies as victims of Countrywide’s discrimination. The department will make a public announcement and post contact information on its website once an administrator is chosen. Borrowers who are eligible for compensation from the settlement will then be contacted by the administrator. Individuals who believe that they may have been victims of lending discrimination by Countrywide and have questions about the settlement may email the department at .