Justice Department Settles Lending Discrimination Suit Against Countrywide

Posted on December 21, 2011 by Fred Rivera

On December 21, 2011 the U.S. Department of Justice announced it had reached a $335 million settlement with Countrywide, now owned by Bank of America, to resolve allegations of lending discrimination.  The settlement resolves claims that Countrywide charged Hispanics and African-American borrowers higher prices for credit compared to similarly situated non-Hispanic and white borrowers.  The Justice Department announced that the settlement is the largest fair lending settlement in the Department's history. 

The settlement, which is subject to court approval, was filed today in the U.S. District Court for the Central District of California in conjunction with the department’s complaint which alleges that Countrywide discriminated by charging more than 200,000 African-American and Hispanic borrowers higher fees and interest rates than non-Hispanic white borrowers in both its retail and wholesale lending.  The complaint alleges that these borrowers were charged higher fees and interest rates because of their race or national origin, and not because of the borrowers’ creditworthiness or other objective criteria related to borrower risk.  

According to the DOJ press release, the settlement also resolves allegations that Countrywide violated the Equal Credit Opportunity Act by discriminating on the basis of marital status against non-applicant spouses of borrowers by encouraging them to sign away their home ownership rights. 

For the last three years, the Civil Rights Division has warned of its stepped-up enforcement efforts in the fair lending arena.  While case filings were slow to come, the Countrywide settlement, along with recent fair lending activity out of the Division and by members of the interagency Financial Fraud Enforcement Task Force, suggests that government enforcement of fair lending laws may continue to impact the consumer finance industry during 2012.

Read the DOJ's Press Release here; the Complaint here; and the proposed Consent Order here. 

Read MarketWatch's article here and Bloomberg's article here.

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Poll finds that majority willing to "blow whistle" following Dodd-Frank

Posted on December 12, 2011 by Fred Rivera

A December 12, 2011 Reuters report states that a recent poll found that three-quarters of Americans are willing to blow the whistle under the protections and incentives offered by the Dodd-Frank Wall Street Reform and Consumer Act.

"According to the poll released on Monday, 78 percent of Americans said they would report wrongdoing in the workplace as long as they could do it anonymously, without retaliation, and claim a monetary report" the article stated.

Under the Dodd-Frank whistleblower provisions, individuals who provide original information that leads to an SEC enforcement action with penalties of more than $1 million are eligible to receive a 10%-30% cut of the penalties.   In its November 15, 2011 Annual Report on Dodd-Frank Whistleblower Program, the SEC stated that it had received 334 whistleblower tips in the seven weeks immediately following the August 12 effective date of the whistleblower bounty rules.

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