- (Photo:REUTERS/Fred Prouser)
Bank of America Corp will fork over a whopping $335 million to settle claims that it discriminated against minorities through a subprime lending scheme.
The major U.S. bank has been forced to take responsibility for Countrywide Financial Corp's misconduct, despite purchasing the mortgage company after the unethical lending took place.
The U.S. Department of Justice recently filed suit alleging that Countrywide, which was purchased by BOA in 2008, deceived thousands of minority home buyers between 2004 and 2007.
Countrywide is accused of overcharging more than 200,000 of its African-American and Hispanic customers, and making them subject to higher interest rates than its white customers.
Attorney General Eric Holder weighed in on what is said to be the highest paid settlement relating to residential discrimination in US history.
Holder said, "These institutions should make judgments based on applicants' creditworthiness, not on the color of their skin," reports Reuters.
"With today's settlement, the federal government will ensure that the more than 200,000 African-American and Hispanic borrowers who were discriminated against by Countrywide will be entitled to compensation," Holder added.
The suit states that Countrywide, which contributed to the 2008 financial crash, offered minority customers costly subprime loans even when they qualified for more affordable standard loans.
Oblivious customers often accepted with the assumption that they were receiving favorable service, when in reality they were being deceived.
Thomas Perez, head of the Justice Department's civil rights division, slammed the misconduct saying, "'This is discrimination with a smile."
"The victims had no idea they were being victimized- they were thrilled to have gotten a loan and realize the American dream," Perez added.
BOA insists it never adapted any improper policies and procedures from Countrywide after purchasing it, and claims that its existing lending practices are legal and nondiscriminatory.