Good afternoon. Today, I’m proud to join with these critical partners – Assistant Attorney General for the Civil Rights Division, Tom Perez; the United States Attorney for the Central District of California, Andre Birotte; Illinois Attorney General, Lisa Madigan; the Secretary for the U.S. Department of Housing and Urban Development, Shaun Donovan; and Governor Sarah Bloom Raskin of the Federal Reserve – in announcing the largest residential fair lending settlement ever reached in the history of our nation’s Department of Justice.
In today’s settlement with Countrywide Financial Corporation, we resolved the government’s allegations that Countrywide and its subsidiaries – which are now owned by Bank of America – engaged in discriminatory mortgage lending practices against more than 200,000 qualified African-American and Hispanic borrowers from 2004 through 2008. The settlement provides $335 million in compensation to victims of Countrywide’s discrimination during a period when Countrywide served as one of the nation’s largest single-family mortgage lenders and originated more than 4 million residential mortgage loans.
In this thorough investigation, the Department uncovered a pattern or practice of discrimination involving victims in more than 180 geographic markets across 41 states and the District of Columbia. These discriminatory acts allegedly included widespread violations of the Fair Housing Act and the Equal Credit Opportunity Act, and resulted in African-American and Hispanic borrowers being charged higher rates for mortgage loans – solely because of their race or national origin.
These allegations represent alarming conduct – by one of the largest mortgage lenders in this country, during the height of the housing market boom. For example, in 2007, a qualified African American customer in Los Angeles borrowing $200,000 paid an average of roughly $1200 more in fees than a similarly qualified white borrower.
This settlement will compensate the more than 200,000 African-American and Hispanic borrowers who were victims of discriminatory conduct, including more than 10,000 African-American or Hispanic borrowers who – despite the fact that they qualified for prime loans – were steered into subprime loans.
Subprime borrowers are often subjected to penalties and higher interest rates, and have a greater likelihood of default and foreclosure than those who have prime loans. Often, the impact of discriminatory lending practices can reach even farther – potentially harming borrowers’ credit; inhibiting their ability to find quality housing, employment, or access to higher education; and depriving entire communities of economic opportunities.
Today’s settlement makes clear that today’s Justice Department – and our law enforcement and government partners – will not hesitate to move aggressively in holding lenders – including the nation’s largest – accountable for discrimination and financial misconduct. We are committed to protecting the sacred rights, and best interests, of the American people – and to ensuring equal opportunity through the vigorous enforcement of our civil rights laws.
Nowhere is this commitment more evident than in the work of the Civil Rights Division’s Fair Lending Unit, which has filed or resolved 10 fair lending matters since its formation last February. An additional seven lawsuits, and more than 10 open investigations, are currently pending – and the Department stands ready to hold financial institutions accountable to remedy and prevent discriminatory conduct.
Through critical interagency partnerships like the Financial Fraud Enforcement Task Force – and particularly its Non-Discrimination Working Group; through the diverse network of relationships we have forged with the Department of Housing and Urban Development, the Federal Reserve Board, the Consumer Financial Protection Bureau, state and local officials, and our law enforcement and regulatory partners – the Justice Department will continue to vigorously pursue those who would take advantage of certain Americans because of their race, national origin, gender, or disability.
Such conduct undercuts the notion of a level playing field for all consumers. It betrays the promise of equal opportunity that is enshrined in our Constitution and our legal framework. And, under this Administration, these harmful and discriminatory practices will not be tolerated. As we have done through this settlement, the Department will pursue remedies and reforms that preserve and protect equal opportunity for all.
I’d like to thank the many professionals, attorneys, and support staff whose hard work has made today’s announcement possible – and whose dedicated efforts help to advance the core missions of this Department every single day. And, now, I’d like to turn things over to another key leader in this work – Assistant Attorney General Tom Perez.