Predatory lending, the mortgage meltdown and a $335 million settlement

Here's yet another example of why investigative reporting matters.

Today, Illinois Attorney General Lisa Madigan credited The Chicago Reporter for spurring a lawsuit that led to a $335 million settlement by Countrywide, a subsidiary of Bank of America, which deliberately steered well-heeled Latino and African-American homebuyers into subprime loans even though they qualified for better terms. The investigations were written by the Reporter's Kimbriell Kelly and Alden Loury.

Here's more from a press release put out by Madigan's office:

The Attorney General’s lawsuit and subsequent settlement follows years of investigation by her office into Countrywide’s lending policies and practices during the years leading up to the market’s collapse. Madigan issued a fair lending subpoena to Countrywide in March 2008, after a study by the Chicago Reporter of federally collected mortgage lending data for the Chicago area found that, in 2006, Countrywide Financial Corporation sold higher-cost loans to 50.9 percent of its African American borrowers and 33.8 percent of its Latino borrowers, while only 19.5 percent of the company’s white borrowers received high-cost loans.

Madigan’s analysis of Countrywide’s loan data found that African-American and Latino borrowers were three times more likely to receive a higher-cost subprime mortgage than white borrowers, and that Countrywide charged African-American and Latino borrowers higher interest rates and fees on loans spanning the company’s range of products, including its prime products, as compared with similarly-situated white borrowers.

The latest settlement is the second that Madigan has won against Countrywide, which was bought out by Bank of America. In 2008, she also won an $8.7 billion nationwide settlement against the mortgage giant, which was also touched off by the Reporter's investigation. Read the original story that started it all; and subsequent reporting/analysis. A similar lawsuit against Wells Fargo is ongoing.

 

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