Last week, NCLR hailed the $335 million settlement reached between and Countrywide Financial Corporation over violations of fair lending laws. It was the largest residential fair-lending settlement in history. Now that a settlement has been reached, it is up to the Department of Justice to start locating the victims of Countrywide’s practices. This may be one of the most difficult tasks yet, as those who were the hardest hit are often the most difficult to find.
From The Wall Street Journal:
Minority borrowers who suffered the greatest harm from Countrywide’s allegedly discriminatory mortgage-lending practices could be the most difficult to locate, observers say, because they are the victims most likely to have lost their homes to foreclosure and subsequently moved several times.“It’s going to be really difficult to find those families,” said Janis Bowdler, a policy director at National Council of La Raza, a Latino civil-rights group.
The landmark case is also the first by the Justice Department that accuses a lender of steering borrowers to more costly mortgages, creating novel and possibly difficult questions on setting monetary payments for some victims. For example, how should the government compensate a family that both lost its home and was unfairly steered into a more costly subprime loan?
If past settlements are any indication, finding the victims could take a couple of years. The Wall Street Journal reports that the Federal Trade Commission (FTC) reached its own settlement with Countrywide last year for $108 million. Eighteen months later, the FTC still has about 25% of the funds from the settlement because it can’t find people.
Justice department officials say they are confident that they can locate all the victims, but caution that it will take some time.