$335m fine to Bank of America for increasing mortgage lending rates based on race

December 21st, 201110:06 pm @

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$335m fine to Bank of America for increasing mortgage lending rates based on race

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Dan Frahm, a Bank of America spokesman, said in a statement that the bank did not practice lending based on race.

BoA bought Countrywide in 2008.

The business specialised in sub-prime mortgages, which were granted without proper checks on, for example, borrowers’ creditworthiness.

Dan Frahm, a Bank of America spokesman, said: “We discontinued Countrywide products and practices that were not in keeping with our commitment and will continue to resolve and put behind us the remaining Countrywide issues.”

It is the latest problem for Bank of America (BoA) over sub-prime mortgages.

The settlement covers conduct between 2004 and 2008 before the BoA takeover.

It involves a range of alleged misconduct, including charging African-Americans and Hispanics higher interest rates and fees and steering some to more expensive sub-prime mortgages.

Earlier this year BoA paid $8.5bn from its Countrywide arm to settle claims it sold poor quality mortgage-backed bonds that lost money when the market crashed.

In another case, insurance group AIG also sued BoA for $10bn , accusing it of carrying out a “massive fraud” on bad mortgage debt.

AIG alleges that BoA exaggerated the quality of the $28bn worth of mortgage-backed investment products it bought from the bank prior to the 2008 turmoil in the financial markets.

BoA rejected those allegations.

Bad US mortgage debt that sparked the 2008 credit crunch and resulting turmoil in the global financial markets.