Washington State Department of Financial Institutions

News Release

Thursday, December 22, 2011


Lyn Peters, Director of Communications
PH (360) 902-8731 lyn.peters@dfi.wa.gov

Deborah Bortner, Director, Division of Consumer Services
PH (360) 902-0511 dbortner@dfi.wa.gov


Washington DFI Commends Justice Department For Their Fair-Lending Settlement With Bank Of America/Countrywide Financial

DFI Division of Consumer Services filed statement of charges in 2008 against Countrywide Home Loans alleging discriminatory lending. Washington consumers received restitution checks in 2010.

OLYMPIA – The Washington State Department of Financial Institutions (DFI) commends the United States Department of Justice for their fair-lending settlement with Bank of America regarding allegations of discriminatory lending practices in their Countrywide Financial unit.

Yesterday’s announcement by the Justice Department finding more than 200,000 minority borrowers nationwide were given loans with higher fees and rates than white borrowers with similar credit backgrounds reinforces DFI’s findings in Washington State. On June 23, 2008 DFI became the first and only state regulator to file a Statement of Charges against Countrywide Home Loans alleging the company was discriminating against ethnic and racially protected classes by offering loan products that were less favorable than those offered to non-protected classes.

“DFI’s examination, investigation and legal teams, understand the importance of protecting vulnerable citizens and know all too well the thousands of hours required to fully investigate and prosecute this type of case,” DFI Director Scott Jarvis said. “We take very seriously our charge to protect Washington’s residents, which is why DFI launched our own investigation four years ago and filed a Statement of Charges against Countrywide Home Loans more than three years ago for discriminatory lending practices. We’re proud to say Washington residents received compensation this time last year in a settlement resulting from that investigation.”

“Our job is to protect hard-working Washingtonians, and we did,” Gov. Chris Gregoire said. “We saw more than three years ago the damage of discriminatory lending, and took every step to stop it – ending Countrywide’s ability to operate in our state. I commend our Department of Financial Institutions, which led a full investigation to ensure impacted home buyers received the compensation they deserve. And I’m pleased the federal government is following our lead to protect the American dream.”

On July 1, 2008, Bank of America purchased Countrywide Home Loans. As a result, Countrywide Home Loans became a subsidiary of the national bank and DFI lost jurisdiction over any loans made after that time.

The DFI Consumer Services unit conducted more than 2,400 hours of examination and investigation to determine the extent of the problem. DFI examiners evaluated more than 30,000 loans and discovered more than 100 alleged victims of predatory pricing based upon comparisons with statistically significant control group members.

In addition to the complex nature of DFI’s allegations, the case was complicated with numerous changes in the Washington State Consumer Loan Act over the period of time our allegations covered.

In the settlement, DFI identified 123 victims of alleged discriminatory pricing. Each of these Washington residents received a settlement ranging from $997 to $26,176 depending on the type of loan, number of predatory features in the loan and whether or not the consumer was foreclosed upon. Consumers received the full $650,000 of the settlement. DFI did not retain any of the settlement.

View the DFI Consent Order at www.dfi.wa.gov/cs%20orders/countrywide-consent.pdf.

About DFI
www.dfi.wa.gov ▪ 360.902-8700 ▪ 877.746-4334
The Washington State Department of Financial Institutions regulates a variety of financial service providers such as banks, credit unions, mortgage brokers, consumer loan companies, payday lenders and securities brokers and dealers. The department also works to improve financial education throughout Washington through its outreach programs and online clearinghouse www.dfi.wa.gov/financial-education. In addition to posting information about licensees and administrative actions, DFI uses the Web and social media to provide financial education information: http://www.twitter.com/FinEd4All, www.twitter.com/DFIConsumers, www.finlit.blogspot.com, www.youtube.com/user/WADFI, www.homeownership.wa.gov.

About the Division of Consumer Services
www.dfi.wa.gov/cs ▪ 360.902-8703
The mission of the Division of Consumer Services is to protect consumers from illegal and fraudulent lending practices. The division accomplishes its mission through licensing, licensee examinations, investigations, and enforcing selected state and federal statutes and rules. Consumer Services regulates the business activities of consumer loan companies, mortgage brokers, money transmitters and currency exchangers, as well as check cashers and sellers, also known as "payday lenders." The Division is entirely self-supporting, with funding provided by licensing, auditing, and policing of regulated businesses and individuals. No money is received from the state General Fund or other public revenue source.