CNN--In 2006 Countrywide Financial Corporation financed 20 percent of all mortgages in the United States. In 2008 Bank of America completed the purchase of Countywide Financial Corporation (Countrywide) and merged the business of Countrywide into the mortgage unit of Bank of America, Bank of America Home Loans.
Bank of America has agreed to a $335 million settlement of litigation that alleges Countrywide exhibited systematic and blatant discrimination against minority borrowers during the time period of the housing boom.
Borrowers were charged higher fees and interest rates because of their race or national origin and not because of the worthiness of their credit or other objective criteria related to borrower risk. The borrowers were not aware of this practice at the time of completing their loan application. Higher fee and interest rate loans are generally classified as subprime loans. In comparison to conventional loans, subprime loans generally include costly terms, such as prepayment penalties and higher adjustable interest rates that significantly increase after a few years, making payments unaffordable and leaving borrowers at a much higher risk of foreclosure.
Posted By: Siebra Muhammad
Thursday, December 29th 2011 at 6:12PM
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