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CNN.com BofA settles unfair lending claims for $335 million


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http://money.cnn.com/2011/12/21/news/companies/bank_america_settlement/index.htm?hpt=hp_t3

BofA settles unfair lending claims for $335 million

NEW YORK (CNNMoney) -- The Justice Department announced a $335 million settlement with Bank of America Wednesday over discriminatory lending practice at Countrywide Financial.

Attorney General Eric Holder said a federal probe found discrimination against at least 200,000 qualified African American and Hispanic borrowers from 2004 to 2008, during the height of the housing market boom. He said that minority borrowers who qualified for prime loans were steered into higher-interest-rate subprime loans.

I remember hearing about the evil government forcing banks to issue subprime loans. If that's the case why were they pushing fully qualified home loan applicants into riskier loans? The answer is simple, banks loved these loans as they paid great and locked people in with prepayment penalties. What they didn't count on is the threat of foreclosure losing its teeth when the market collapsed.

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This just in - BoA is NOT a good banking institution to do business with! They are not alone in this category either. Recommend folks look into GOOD institution to do their banking with such as reputable CREDIT UNIONs or a good bank such as USAA.
Finished my bank change from BoA to USAA end of last month. I had 2 CCs, 2 checking accts, 2 savings accts, 2 IRAs and 3 CDs with BoA for a decade. Every red cent is now with USAA. The look on the managers face at the local BoA branch when she looked at how my balances changed in 30 days was priceless. I am by no means rich, but listening to her sales pitch to keep me as a customer was quite funny. I had to stop myself from laughing multiple times.

Actual quotes:

BoA manager: "Mr Pope, what can we do to change your mind in regards to closing all these accounts and canceling your CCs?"

Me: "Deposit every penny in this branch into my savings account."

Manager: "Excuse me?"

Me: "There is nothing, short of handing me a check for $100,000, that will make me even think about remaining a client of this institution."

Manager: "I am not sure I understand Mr Pope."

Me: "There is nothing you can do."

Manager: "Sorry to hear that sir."

The look on her face alone was worth the hassle of changing banks.

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This just in - BoA is NOT a good banking institution to do business with! They are not alone in this category either. Recommend folks look into GOOD institution to do their banking with such as reputable CREDIT UNIONs or a good bank such as USAA.

To be fair the article says the lawsuit covered countrywide's behavior. They were later bought out by BoA. Having said that I'm not s fan of BoA.

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http://money.cnn.com/2011/12/21/news/companies/bank_america_settlement/index.htm?hpt=hp_t3

... If that's the case why were they pushing fully qualified home loan applicants into riskier loans?

He said that minority borrowers who qualified for prime loans were steered into higher-interest-rate subprime loans.

I don't know about anyone else but I could not be "steered" or pushed into such a thing. It only takes a little research to figure out which loan is better for you, and which one is better for the lender. I have a hard time feeling sorry for people who claim to be "victimized" by these banks. They are no more a victim then someone who bought a car they couldn't afford at a dealership. Ohhh but they were "pushed" into buying it! Those car salesmen made me buy the more expensive car at a higher rate! Spare me.

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He said that minority borrowers who qualified for prime loans were steered into higher-interest-rate subprime loans.

I don't know about anyone else but I could not be "steered" or pushed into such a thing. It only takes a little research to figure out which loan is better for you, and which one is better for the lender. I have a hard time feeling sorry for people who claim to be "victimized" by these banks. They are no more a victim then someone who bought a car they couldn't afford at a dealership. Ohhh but they were "pushed" into buying it! Those car salesmen made me buy the more expensive car at a higher rate! Spare me.

Having been a loan officer for a major bank I can tell you that Internet educated folks like yourself were suckered all the time. You apply for the loan you think is best for you and the loan officer tells you that you won't get it, but not to worry because he'll make it work. Or you go to get requalified and they base all the numbers off a subprime loan from the start and never bother telling you. Then there's the real slime balls that tell your one thing and the paper work says another.

Why do you think so many loan offices have been convicted of fraud? Most of them will never get caught and they made a lot of money (100-500k a year) doing it. I never worked subprime but I did notice a great deal of clients sent to me by agents wondering why the rate was high with their clients lender.

Plus despite how clever you think you are the fact is this steering is against the law and every one in banking knew that. I switched companies twice because of the bad behavior I saw.

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So, this fine works out to about $1600 for every person that they can prove were discriminated against.

I'm wondering if this is one of those cases where the criminal actually made a profit from the crime.

----------

OTOH, I also wonder. Was this a "BofA had racist policies that screwed minorities?" Or a "BofA treated every borrower who met certain credit criteria this way, because they wanted more money"?

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Having been a loan officer for a major bank I can tell you that Internet educated folks like yourself were suckered all the time. You apply for the loan you think is best for you and the loan officer tells you that you won't get it, but not to worry because he'll make it work. Or you go to get requalified and they base all the numbers off a subprime loan from the start and never bother telling you. Then there's the real slime balls that tell your one thing and the paper work says another.

Why do you think so many loan offices have been convicted of fraud? Most of them will never get caught and they made a lot of money (100-500k a year) doing it. I never worked subprime but I did notice a great deal of clients sent to me by agents wondering why the rate was high with their clients lender.

Plus despite how clever you think you are the fact is this steering is against the law and every one in banking knew that. I switched companies twice because of the bad behavior I saw.

Internet educated folks like myself huh? How nice of you to insult my intelligence. Maybe you would like to tell me more about my education or perhaps my profession? Apparently you’re an expert. ;)

I didn’t say the banks are innocent angles, there was obviously plenty of wrong doing. However, the “I didn’t know any better, I was a victim!” thing gets tiresome. I’m underwater = banks fault. Lost my house to foreclosure = banks fault. I have a terrible mortgage = banks fault. It gets old.

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To be fair the article says the lawsuit covered countrywide's behavior. They were later bought out by BoA. Having said that I'm not s fan of BoA.

True, I should have mentioned that. Countrywide = slime, BoA just a really bad bank for anyone paying attention and they later bought them out, no surprise.

He said that minority borrowers who qualified for prime loans were steered into higher-interest-rate subprime loans.

I don't know about anyone else but I could not be "steered" or pushed into such a thing. It only takes a little research to figure out which loan is better for you, and which one is better for the lender. I have a hard time feeling sorry for people who claim to be "victimized" by these banks. They are no more a victim then someone who bought a car they couldn't afford at a dealership. Ohhh but they were "pushed" into buying it! Those car salesmen made me buy the more expensive car at a higher rate! Spare me.

Well count me into one of those that got "steered" into a really ****y loan for my first new vehicle not knowing any better. I learned from my ignorance, and never made the same mistake again!

Otherwise I agree with you on all points. Not loosing sleep though that BoA got fined, especially since they were one of the banks "too big to fail" and bailed out by us taxpayers.

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Internet educated folks like myself huh? How nice of you to insult my intelligence. Maybe you would like to tell me more about my education or perhaps my profession? Apparently you’re an expert. ;)
I meant no offense and the comment came from this:
It only takes a little research to figure out which loan is better for you, and which one is better for the lender.
That research is done on the net. I didn't mean to imply that all of your education came from the internet (though internet colleges are all the rage these days lol). No insult was intended. In my experience good old fashioned distrust and a determination to shop around served people better than researching loan specifics which changed constantly.

I didn’t say the banks are innocent angles, there was obviously plenty of wrong doing. However, the “I didn’t know any better, I was a victim!” thing gets tiresome. I’m underwater = banks fault. Lost my house to foreclosure = banks fault. I have a terrible mortgage = banks fault. It gets old.

If someone was scammed then they are a victim. That is clearly not the case for most of the foreclosure situations.
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Not loosing sleep though that BoA got fined, especially since they were one of the banks "too big to fail" and bailed out by us taxpayers.

Agree. Didn’t feel bad for Washington Mutual when they were slapped with their lawsuit either.

http://www.bloomberg.com/news/2011-07-02/washington-mutual-reaches-208-5-million-class-action-accord.html

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There's that Internet education :pfft:

Got me! :)

---------- Post added December-21st-2011 at 06:06 PM ----------

I meant no offense and the comment came from this:

That research is done on the net. I didn't mean to imply that all of your education came from the internet (though internet colleges are all the rage these days lol). No insult was intended. In my experience good old fashioned distrust and a determination to shop around served people better than researching loan specifics which changed constantly.

I know what you meant just giving you a hard time. :) Shopping around and the like is more of what I was thinking in terms of "research". Buying a house is not something you do every day and should not be entered into without due diligence. What BofA did was dishonest and they deserve to pay for it, on that I think everyone can agree. That said, there’s a sucker born every minute.

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I remember hearing about the evil government forcing banks to issue subprime loans. If that's the case why were they pushing fully qualified home loan applicants into riskier loans? The answer is simple, banks loved these loans as they paid great and locked people in with prepayment penalties. What they didn't count on is the threat of foreclosure losing its teeth when the market collapsed.

Because "both" couldn't possibly be an option.

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Because "both" couldn't possibly be an option.

It could be it doesn't strike you so odd that with so many people banks were forced to lend and yet no one shows a any numbers backing it up. Everyone points to redlining bans, which provide banking to poorer areas as if that proves anything. You don't need to live in a great area to have a credit profile that predicts a repayment rate at acceptable levels.

If you have a problem with the government role look at the GSE's who made it possible to make bad loans on a large scale. They did not however mandate it and they left it to the banks to ensure credit worthiness was established. That was incredibly dumb.

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It could be it doesn't strike you so odd that with so many people banks were forced to lend and yet no one shows a any numbers backing it up. Everyone points to redlining bans, which provide banking to poorer areas as if that proves anything. You don't need to live in a great area to have a credit profile that predicts a repayment rate at acceptable levels.

If you have a problem with the government role look at the GSE's who made it possible to make bad loans on a large scale. They did not however mandate it and they left it to the banks to ensure credit worthiness was established. That was incredibly dumb.

Oh, the GSEs were a total disaster. And believe me, I'm not the type who argues that the housing bubble was caused by the CRA. I just found it (and still find it) rather strange that you seem to be implying that a law that Clinton believed was necessary actually had no effect whatsoever.

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