This comes after many borrowers were impacted by the company's predatory lending practices, which mainly targeted those from low-income backgrounds and minority communities. The settlement, reached between the affected borrowers and Bank of America, will bring some financial reprieve to those who were negatively affected by the practices.
In 2008, Bank of America announced its acquisition of Countrywide, a significant mortgage lender with a troubling reputation of predatory lending practices. The practices, mainly targeting low-income borrowers and minority communities, had created considerable financial hardship for the borrowers. Now, over a decade later, the affected customers are set to receive some form of relief from the tremendous amounts of money they paid in fees, penalties, and interest due to the predatory practices.
The settlement comes as a result of a class action lawsuit on behalf of the affected borrowers. This is one of the first cases of its kind to target a large corporation for their predatory lending practices. The settlement was overseen by the Consumer Financial Protection Bureau (CFPB) and promises payments of as much as $750 per customer. Additionally, any remaining funds will be donated to non-profits that provide housing counseling services.
The relief payments will come in the form of cash payments or mortgage loan relief. It is estimated that up to 290,000 individuals will benefit from the settlement. According to the CFPB, this is the fourth largest financial consumer protection case to go through their process.
The settlement should serve as an example of what customers can do when faced with such predatory practices. While the settlement and relief payment amounts cannot take away the hardships experienced by Countrywide customers, it does provide them with at least a small bit of recompense. Hopefully, this case will also help to deter similar predatory practices from other lenders in the future.
The settlement reached between former Countrywide customers and Bank of America is a monumental win for consumers. Through a class action lawsuit, they were able to hold the massive corporation accountable for their predatory lending practices, resulting in a settlement that could bring a total of $335 million in relief payments and donations to non-profits. Up to 290,000 individuals are expected to benefit from the settlement, with payments of up to $750 per person. This is a great victory for consumers and sends a strong message to companies that engaging in predatory lending practices will not be tolerated. Hopefully, this case serves as a reminder to other lenders that engaging in such practices will not be allowed and could lead to serious consequences.
This article was contributed on Aug 13, 2023