Streams

Paying for Countrywide's Discrimination

Friday, December 23, 2011

Bank of America has agreed to pay $335 million to settle allegations of racially discriminatory lending practices by Bank of America owned Countrywide. Josh Zinner, co-director of the Neighborhood Economic Development Advocacy Project (NEDAP), joins us to discuss the settlement.  

Guests:

Josh Zinner

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Comments [35]

Eugenia Renskoff from Brooklyn, NY

Hi, The subject of foreclosures is a deeply personal one to me. In 2002 I bought a condo in Atlanta, Ga, in the neighborhood of Buckhead. I got 2 loans, what I later found out were called 80/20 for the same house. Credit score at the time was 754. It was a beautiful condo in a good neighborhood. A few days before closing in July 2002, I learned that the loan officer recommended to me by the realtor had told somebody to tell the mortgage lender Novastar that I made $120,000 a year. I thought I had to go through with the loan. I felt trapped. On November 1, 2005, my condo foreclosed. Before that I tried practically everything—including selling it, renting it out, refinancing, getting in touch with HUD—to save it. Nothing worked. Now it is as if I had been shot and left for dead somewhere in the middle of nowhere. What came after I lost my home has been bad too. I don’t know if I was discriminated against. I did tell the realtor and loan officer that I had been born in Argentina and grew up in San Francisco. I feel that the people discriminated against by Bank of America should a nd must get all of their money back. If their experience is similar to mine that is the least that the government has to do for them. Eugenia Renskoff

Dec. 23 2011 02:51 PM
Amy from Manhattan

Steve, you can contact NEDAP, the guest's organization. Their contact info is at nedap.org. There's probably info at the Justice Dept's. site too: www.justice.gov.

Dec. 23 2011 10:59 AM
Paul I. Adujie from Elmont, NY

Brian Lehrer, Thanks again for your socially relevant and socially responsible shows-programming!!!!

A million thanks to your guest Mr. Josh Zinner for doing such a superb job in articulating all the issues and their far reaching ramifications for the victims of these banks! He is a true activist and advocate for social justice!

I called in, could only reach the screener who informed me that it was too late to make on air comments.

My intent was to inform one of your callers, and indeed, everyone, that the Department of Justice did announce along with the settlements, that an Administrator will be appointed and modalities for determining claimants and amounts will be established and announced shortly.

This Administrator to be appointed will be similar to the Administrator which was appointed to administer the US Department of Justice September 11th Victim Compensation Fund. and similar as well, to the Gulf of Mexico BP Oil Spillage compensation fund, both which were headed by Special Master Kenneth R. Feinberg

Dec. 23 2011 10:48 AM
Amy from Manhattan

bernie & Jawahar, weren't you listening? The guest said the lenders were specifically found to have offered worse-structured loans at higher interest to black & Latino borrowers than they did to white borrowers **with the same financial qualifications**! So yes, Jawahar, they were similarly situated, & no, bernie, they did not have bad credit & not enough income. And in loans to both nonwhite & white borrowers, the language of many mortgage contract was deliberatle constructed to be nearly impossible to understand if you weren't a financial professional (one report said that even PhDs couldn't understand it). So it's not that white borrowers who took mortgages from the same banks understood what they signed any better than the nonwhite ones--many of them also got bad mortgages, but the nonwhite borrowers were offered even worse ones.

Dec. 23 2011 10:48 AM
Edward from NJ

@Jack Jackson, it was a settlement with the Department of Justice, so there's no contingency fee for the lawyers.

Dec. 23 2011 10:43 AM
Jack Jackson from Central New Jersey

$1,200 ($335M less a third to the lawyers divided by 200,000 - just a WAG) is nothing...If CountryWide and BoA really did this someone needs some jail time.

Bush's ONLY economic win was the housing market even though the GOP was pushing an additional $300-$600B of borrowed money into the general economy. $600B is $5400 per worker. Greeenspan and the naive "market knows best" philosophy that started this and let it grow is no protection against the evil that men do.

Dec. 23 2011 10:40 AM
David from Fredericksburg, VA

To Steve from Queens

To paraphrase Leona Helmsley, Only the little people have to follow the law

Dec. 23 2011 10:39 AM
Bob from si

Why is this a race issue instead of outright theft? I applied for a loan to refinance my houseat a lower rate at countrywide. I specifically asked for a (cma) consolidation modification and adjustment so i would not have to pay the state mortgage tax. Countrywide lied to me and expected me to pay fees and sign for a higher rate than i was told. i walked out and refinanced with chase. I can understand how less educated people can be taken advantage of especially with the puchase of a house. But where was the homeowner's lawyer to look out for them. I had a lawyer at my first closing and he explained the process to me. If a homeowner signs a contract and is being taken advantage of how much is the buyers fault. I believe rich women are always being taken advantage of when they buy designer handbags but no one is going to file a class action lawsuit on their behalf

Dec. 23 2011 10:37 AM
Opal from NYC

Discrimination is such an old story. I am a white woman who worked with a light-skinned black man who was seeking insurance. This was about 30 years ago. The agent came to interview the man and wasn't sure whether he was black. The agent then approached me and mentioned that he was an insurance agent and wanted to know whether or not the man was black because the rates were different. I refused to answer him. I never mentioned this to my fellow worker because he would probably have met with the same bigotry from all the insurance companies.

Dec. 23 2011 10:36 AM
Steve from Queen

How do I tell if I was sucker to these bank. I refinanced with Citibank back in 2005 and they made the variable loan sound so good because the rates were so good, my wife and I went with a variable mortgage. Never did this in my life. After 3 months my payments jump and I immediately decided as soon as possible to refinance again at a fix rate. I think after about 1 year we were able to refinance at 25 year fix. I still have and completely own my home because I used all my company stock and severance pay to pay off my mortgage. Then they say racial discrimination is dead, ha! as long as I am black it will never be dead. We need to reevaluate white collar crimes so that these people need to be brought up on charges and put to prison .

Dec. 23 2011 10:35 AM
fuva from Harlemworld

Jawahar, I'm wondering if you and others here understand:(1) how financially illiterate most people are. Again it is not taught in schools. Financial knowledge has historically been and still is mostly transferred socially. Those from economically-excluded communities have fewer opportunities to accumulate this knwoledge. And (2), how aggressively the financial experts pursued their financially illiterate prey. This was/is no contest of equals.

Dec. 23 2011 10:32 AM

The banks knew they could sell the risky mortgages. Knowing that they didn’t care who they gave a loan

Dec. 23 2011 10:31 AM
Bonn from EV

My first job when I was 16 many decades ago: I worked for a large chain (still in business) that had the installment plan in a poor black and Latino neighborhood. My duties, among others, were to take the monthly payments from the teller's window. If the person paid off the purchase before the due date, he/she was entitled to a reimbursement on the interest. I told one payee that while collecting his final fee. Afterwards, my supervisor, a Repo Man, told me not to tell people they were entitled to that money. I was sickened. I don't think I ever worked for a profit-making company after that.

Dec. 23 2011 10:30 AM
Barbara Conn from Mt Vernon NY


I would like to point out that many people who had prime mortgages, and an income sufficient to pay for their mortgages, lost their homes, when the economic downturn, caused by the subprime mortgage debacle and other wall street and banking unethical dealings, because they lost their jobs.
As an example, my daughter-in-law lost her teaching job in NJ, as did many other teachers who did not yet have tenure. She was several months short of receiving tenure, and was definitely a teacher her principal wished to retains
This loss of income, caused her and her husband to go into foreclosure. I think the banks and other financial institutions are directly to blame.

Dec. 23 2011 10:29 AM
bernie from bklyn

unbelievable! so if an indian family or a chinese family falls prey to the same loan officers and agree to these stupid terms then they don't get anything from this lawsuit? because they're not black or latino? what's racist now?

Dec. 23 2011 10:29 AM
Sheldon from Brooklyn

Or was it a perception that many minorities weren't as financially literate? Which in a sad way was proven true.

Dec. 23 2011 10:25 AM
fuva from Harlemworld

jenn, absolutely.

Dec. 23 2011 10:25 AM
Jawahar from Lincoln Park, NJ

Regarding the caller from Brooklyn, I don't follow how and why a 5-year ARM is automatically a sub-prime loan? I feel only if the interest rate and fees in loans to minorities were substantially higher than similar loans to similarly situated White people could it be considered that way.
I myself am from a minority community and was the target of aggressive marketing to choose an ARM, but I consciously decided to go for 30-year Fixed. Surely the borrower has some responsibility to decide what kind of financial arrangement they want to have?
Thanks, Jawahar

Dec. 23 2011 10:24 AM
bernie from bklyn

this is complete hogwash! i'm puerto rican. i did not buy a house or attempt to buy a house during the bubble because I COULDN'T AFFORD IT!
and can someone tell me how this is racist? these people were steered towards these stupid loan situations because they had bad credit and not enough income to afford the home. not becuase they were "of color". ridiculous. grow up and be responsible for your own behavior.
also, what are the stats on the racial makeup of the loan officers that steered these people "of color" into these ARM loans? i think i know the answer.
this is the same logic behind cab drivers not wanting to pick up black people; becuase most of the time they don't have the money for the ride and they complain and gripe about it and call it racism.
please save the calls of racism for when it really happens.

Dec. 23 2011 10:23 AM
jenn

It is truly a shame that we don't teach basic financial literacy in public schools. It might not stop all the injustice, but it will give everyone a fighting chance against banks, and credit card companies.

Dec. 23 2011 10:22 AM

Bravo, Josh Zinner, for saying what _no_ journalist at NPR or The New York Times (with exceptions of Joe Nocera, Gretchen Morgenson, and economist Paul Krugman) will say about the crimes of banks.

$335 million is NOTHING to Bank of America. BofA has revenue of $134 BILLION and assets over $2 TRILLION. How how how is $335 million going to stop them or even deter them from doing the same thing again.

Put Bank of America and Countrywide execs in prison. But no -- Angelo Mozilo KEPT most of the hundred or two hundred million he captured through monstrously immoral activity.

Dec. 23 2011 10:22 AM
fuva from Harlemworld

Thanks to Josh for addressing some of the ripple effects of this economic/ financial discrmination that has a very long history in this country. It's not discussed enough and too few are aware. I hope he also mentions intergenerational effects...Holder is touting this $375 million settlement that is less than Mozillo, the head of Countrywide, made in 5 years ($470 million). What a joke.

Dec. 23 2011 10:20 AM

Joe Corrao
wall st bought the loans and wall st pumped up the bubble

Dec. 23 2011 10:20 AM
Amy from Manhattan

The settlement sounds horribly inadequate--why did the borrowers' lawyers accept it?

Dec. 23 2011 10:20 AM
The Truth from Becky

Greed on both sided fueled this fire.

Dec. 23 2011 10:20 AM
John from office

The true cause of this was the Clinton administration pushing for home loans to the less qualified. Many of these people would have been better off renting

Dec. 23 2011 10:19 AM
Edward from NJ

@Joe Corrao, if these were sub-prime loans, Fannie and Freddie didn't have anything to do with them. One of the reason sub-prime loans are "sub-prime" is that the GSEs won't buy them.

Dec. 23 2011 10:19 AM
The Truth from Becky

Should have done your research is all I have to say...no one should have been able to "steer" you into anything.

Dec. 23 2011 10:18 AM
melissa from Brooklyn

Can't individual borrowers opt out of the settlement and pursue their individual claims in order to get more?

Dec. 23 2011 10:17 AM
David from Fredericksburg, VA

I suspect that the numbers skewed the way they did due to lack of experience on the part of the buyers. If you're the first person in your group/family/community to engage in an activity, you don't have access to others' prior experience.

I don't think Countrywide was so stupid as to target minorities - I think they pulled the scam when they thought they could get away with it.

Here in Virginia they have Car Title and Pay Day loans - these businesses get away with it due to the ignorance on the part of the borrowers (and the result of big dollar lobbying of the state legislature)

I think this once again points out the need for better financial literacy in this country.

Dec. 23 2011 10:17 AM
Andre from New York City

I did not get a sub-prime loan, but I am african american and felt that my home purchase was suspect. I purchased a house in a predominantly african american suburb in NY state. My initial contact at the bank told me I only needed to put down 10%. Then a week before closing she would not return my calls and another representative told me it would be 20%. Then at the closing I find that the extra time it took me to get the additional 10% would cost me $1000 and I would be taking out a home equity variable rate loan for 10%. The bank was Wells Fargo and this was in 2005.

Dec. 23 2011 10:15 AM

Can we at least note -- again -- that right-wing, neo-classical, extremists _cannot_ account for this. No government intervention should be required. Markets should regulate themselves. Bank of America and Countrywide should self-police...

Does anybody believe the right-wing Friedman-Hayek-Rand-Greenspan idiocy? ... Yet it continues to dominate, including the Obama brigade with the likes of Summers and Rubin.

How many crimes like this or the rest of the Wall Street crimes have to happen before even one conservative admits mistake?

Dec. 23 2011 10:14 AM
Joe Corrao

was it really discriminatory lending...it was more like greed lending

Dec. 23 2011 10:14 AM
Jesse from nyc

Brian,

I know that Country and others went aggressively after the Immigrant community as well.

Immigrants cant read and were great targets as well

Dec. 23 2011 10:12 AM
Joe Corrao

so Fannie/Freddie backed the loans...and the Fed pumped up the bubble

Dec. 23 2011 10:11 AM

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