Predatory lending may be vast at Countrywide Financial Corp., as Reuters reports.
Four black homeowners sued Countrywide Financial Corp. on Thursday, accusing the largest U.S. mortgage lender of racial discrimination in its lending practices.
In a lawsuit seeking class-action status, the Massachusetts homeowners accused Countrywide and several affiliates of marking up interest rates or tacking on fees after agreeing to lend based on objective criteria such as credit histories and home values.
Such actions, the plaintiffs alleged, have subjected black applicants to “a significantly higher likelihood of exposure to discretionary points, fees and interest markups.”
That violates the federal Fair Housing Act and Equal Credit Opportunity Act, according to the complaint.
Countrywide, which provides about 1 in 6 U.S. home loans, said in a statement that it had not reviewed the lawsuit and did not tolerate discriminatory lending.
The lawsuit is the second in two days to accuse Calabasas-based Countrywide of bias often known as predatory lending. On Wednesday, the National Assn. for the Advancement of Colored People accused Countrywide and 13 other lenders of steering blacks into higher-cost sub-prime loans while offering white borrowers better terms.
“This is different from much of the sub-prime litigation,” said Robert Rothman, a partner at Lerach Coughlin Stoia Geller Rudman & Robbins, one of the plaintiffs’ lawyers. “We are alleging that Countrywide had a discretionary pricing system that allowed it to add surcharges of points, fees and additional interest to what would otherwise be charged.”
Rothman said “tens of thousands” of borrowers might be covered in the Massachusetts case.
Thursday’s lawsuit was filed with U.S. District Court in Massachusetts. The NAACP sued in federal court in Los Angeles and is also seeking class-action status.
The Massachusetts plaintiffs want Countrywide to halt any racially discriminatory lending practices, reimburse unfair charges and pay punitive damages, among other remedies.