Bank of America has agreed to pay $335 million to settle charges that Countrywide Financial Corp. and its subsidiary discriminated against more than 200,000 African-American and Hispanic borrowers by charging them higher fees and interest rates on mortgage loans made from 2004 through 2008.

In a complaint filed Wednesday in conjunction with the proposed settlement, the U.S. Department of Justice alleged that Countrywide allowed its loan officers and mortgage brokers to vary a loan’s interest rate and other fees.

Bank of America has agreed to pay $335 million to settle charges that Countrywide Financial Corp. and its subsidiary discriminated against more than 200,000 African-American and Hispanic borrowers by charging them higher fees and interest rates on mortgage loans made from 2004 through 2008.

In a complaint filed Wednesday in conjunction with the proposed settlement, the U.S. Department of Justice alleged that Countrywide allowed its loan officers and mortgage brokers to vary a loan’s interest rate and other fees.

This "subjective and unguided pricing discretion" resulted in minority borrowers paying more, the Justice Department said in announcing the settlement agreement — its largest ever involving fair lending.

In 2007, for example, a qualified African-American borrower in Los Angeles taking out a $200,000 mortgage paid an average of roughly $1,200 more in fees than a similarly qualified white borrower, Attorney General Eric Holder said at a press conference.

Countrywide was aware that the fees and interest rates it was charging discriminated against African-American and Hispanic borrowers, but failed to impose meaningful limits or guidelines to stop it, the complaint alleged.

Countrywide originated 4.4 million home loans between 2004 and 2008, the Department of Justice noted, and alleged that part of its business strategy "was to target local Hispanic and African-American markets in order to expand its lending and ultimately gain market dominance" in those communities.

The complaint also alleged that Countrywide discriminated against married couples by requiring borrowers applying for loans in one spouse’s name have the spouse not applying for the loan give up all rights and interests in the property securing the loan.

Bank of America, which acquired Countrywide in 2008, said it discontinued Countrywide products and practices that were not in keeping with its own commitment to "fair and equal treatment of all our customers."

"We reached this settlement to resolve issues about Countrywide’s alleged historic practices that occurred before Bank of America acquired the company," Bank of America spokesman Dan Frahm said in an email.

The New York Times reported that regulators with the Federal Reserve had uncovered evidence in 2004 loan data of disparities in Countrywide’s treatment of minorities, and referred the matter to the Justice Department’s civil rights division in 2007.

The Wall Street Journal blog "Deal Journal" noted that the consent agreement with the Department of Justice is the latest of a string of costly settlements Bank of America has entered into since acquiring Countrywide.

This summer Bank of America agreed to pay $8.5 billion to settle claims by private investors who lost money on mortgage-backed securities, and in 2008 agreed to provide $8.4 billion in loan modifications to resolve charges by state attorneys general that Countrywide employed unfair and deceptive lending practices.

That settlement with state attorneys general was supposed to provide interest rate and principal reductions for nearly 400,000 Countrywide customers nationwide.

If the latest settlement is approved by the U.S. District Court for the Central District of California, Bank of America will be required to deposit $335 million into a settlement fund and hire an administrator to help identify aggrieved borrowers and pay out claims.

Borrowers will be required to release Countrywide from further lending discrimination claims in order to receive a payout from the settlement fund.

Any money not paid out to Countrywide borrowers must be distributed to organizations providing credit and housing counseling, financial literacy, and other related programs targeted at minority borrowers.

The Center for Responsible Lending issued a statement lauding the settlement, calling Countrywide "the largest of the rogue mortgage lenders that caused the current crisis" in housing markets and the economy.

Lax lending rules and loose oversight allowed lenders to pay kickbacks to loan originators for steering borrowers into higher-priced mortgages than they qualified for, the group said.

"If basic rules of fairness had been enforced when the subprime Wild West was gaining traction in 2000, we would have prevented a world of misery," the Center for Responsible Lending said. "Even so, the DOJ’s action to address pricing discrimination and the steering of borrowers into bad loan products will benefit everyone in the home lending marketplace."

Last month, the Center for Responsible Lending issued a report, based on an analysis of 27 million loans made between 2004 and 2008, concluding that although the majority of people affected by foreclosures have been white families, borrowers of color were more than twice as likely to lose their home as white households.

The National Council of La Raza called the settlement "historic," saying it "sends a powerful message that financial institutions will be held accountable for targeting communities of color with unfair practices that have led to needless foreclosures."

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