 African-American and Latino borrowers who obtained a mortgage from Countrywide,
now a subsidiary of Bank of America, and who have received a claim form packet
or letter are eligible for compensation if they mail a claim form to the
settlement administrator by Friday.
The settlement with Countrywide resolved allegations that the lender engaged
in widespread and illegal discrimination against minority borrowers in the years
before the financial crisis. Madigan and the U.S. Department of Justice alleged
the former mortgage giant steered African-American and Latino borrowers into
risky subprime loans more often than similarly situated white borrowers and
charged them more for their loans during the height of the nation's housing
boom.
"The relief obtained in this settlement is crucial for borrowers who've paid
far too high a price for the risky, discriminatory lending practices Countrywide
employed in the buildup to the housing collapse," Madigan said. "I encourage
anyone who has received information from the settlement administrator to act
quickly to submit their claim before the deadline."
The settlement's administrator sent initial claim form packets to eligible
Illinois borrowers directly. Madigan's office also recently sent a follow-up
letter to some eligible borrowers who had not yet sent in their claim form.
Borrowers who have questions, need a new claim form or need help filing their
claim should contact the settlement administrator at 1-800-842-5148, or send
questions by email to countrywide.settlement@usdoj.gov. Consumers may also
contact Madigan's Homeowner Helpline at 1-866-544-7151 for more information.
The settlement stems from Madigan's June 2010 lawsuit against Countrywide
Financial Corp., Countrywide Home Loans Inc. and Full Spectrum Lending Inc., an
arm of Countrywide that mostly sold subprime loans. The lawsuit alleged numerous
violations of the Illinois Fairness in Lending Act and the Illinois Human Rights
Act. The lawsuit included data showing minority borrowers paid more for
mortgages than white borrowers and that they were more often sold riskier
subprime home loans despite qualifying for prime rate, or lower-cost, loans.
Madigan's analysis of Countrywide loan data found that these disparities could
not be explained by objective factors, including borrowers' credit scores or
their debt-to-income ratios.
Madigan'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 real estate market's collapse. Madigan issued a fair lending
subpoena to Countrywide in March 2008 after a Chicago Reporter study of
federally collected mortgage lending data for the Chicago area found that, in
2006, Countrywide Financial 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.
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 Madigan's further 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 attorney general's analysis also found that these disparities in
Countrywide's subprime sales and loan pricing were the result of company
policies that gave employees and mortgage brokers almost unlimited discretion in
the selection and pricing of loans.
Countrywide was once the largest mortgage lender in the nation, including in
Illinois, and led the country in selling subprime loans. The failure of millions
of these higher-cost mortgages nationwide contributed to the nation's housing
crash, resulting economic recession and ongoing foreclosure crisis.
This is the second lawsuit Madigan has filed against Countrywide. In 2008,
the attorney general filed a consumer fraud lawsuit against the lender for over
its origination, marketing and servicing of unnecessarily risky and costly
mortgage loans for Illinois homeowners. In November 2008, Madigan led
negotiations that resulted in an $8.7 billion nationwide settlement of that
lawsuit with Bank of America.
Her case against Countrywide is also Madigan's second fair lending lawsuit
brought against a mortgage lender. In 2009, Madigan sued Wells Fargo for
violating the state's fair lending and civil rights laws, becoming the first
state attorney general in the nation to sue a federally chartered lender for its
role in creating the foreclosure crisis. In 2012, Madigan and the U.S.
Department of Justice reached a $175 million settlement with Wells Fargo.
[Text from file received from the office
of
Illinois Attorney General Lisa
Madigan]
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