Two Maryland counties have filed federal lawsuits against Bank of America, N.A, and Wells Fargo Bank, N.A, alleging violations of the Federal Housing Act by those banks and acquired entities.
Montgomery and Prince George’s Counties allege that beginning in the early to mid-2000s these mortgage lending institutions targeted African American and Latino borrowers for, or steered them into, higher cost, non-prime mortgage loans.
The complaints allege these loans were intended to, and did, generate higher profits and mortgage servicing income for the defendant banks through higher loan interest rates, increased mortgage servicing charges over the life of the loan, loan pre-payment penalties, expensive added fees, and increased default interest rates and fees charged to late-paying or defaulting borrowers.
They also allege that the lenders knew that many of the loans were likely to fail or were not in the borrowers’ best interests.
The lawsuit states that the loans were either originated directly by the banks and their acquired entities including Countrywide Financial Corporation, Merrill Lynch & Co and Wachovia Corporation; or assisted other brokers and affiliates – including Accredited Home Lenders, AmeriQuest Mortgage Company, First Franklin Financial Corp., New Century Mortgage Corp., Option One Mortgage Corp., and Ownit Mortgage Solutions - to originate them.
Tens of thousands of loans
The lawsuit alleges that in total Bank of America, Countrywide and Merrill Lynch are responsible for at least 97,500 potentially predatory and discriminatory mortgage loans originated in Montgomery County and Prince George’s County; and the Wells Fargo defendants are responsible for more than 56,000 loans. Many of them are still in existence, the lawsuit claims.
“The discriminatory equity stripping housing practices engaged in by the banks and their affiliates greatly damaged our communities,” said Montgomery County Executive Ike Leggett. “Bank of America’s wrongful mortgage practices continue to this day. We cannot allow this to continue to harm the finances of the County and shift the costs that the defendants are responsible for onto our taxpayers.”
The banks say there is no merit in the claims.
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