BofA settles loan bias case

BANK of America Merrill Lynch’s Countrywide mortgage division has settled an agreement to pay a record $335m (£213.7m) for discriminating against minority homebuyers in what Justice Department officials have said is the largest discrimination settlement in US history.

The case, brought against subprime mortgage company Countrywide for its conduct between 2004 and its 2008 acquisition by Bank of America, includes allegations of charging African-Americans and Hispanics higher interest rates and fees than non-minorities and steering them towards subprime loans that were more expensive than necessary.

Countrywide’s actions affected more than 200,000 borrowers across 41 states, who will receive compensation from the Bank of America unit.

“The victims had no idea they were being victimised,” said Thomas Perez, head of the Justice Department’s civil rights division. “This is discrimination with a smile.”

The Obama administration has come under fire recently for failing to prosecute financial institutions which have misbehaved during the US housing crisis since 2008.

Bank of America shares dipped $0.07 to $5.10 on the New York Stock Exchange before closing up at $5.23.