Consumers who were victims of mortgage discrimination could get anywhere from $500 to thousands of dollars each as a result of a settlement announced Wednesday by the Justice Department.
Under the deal, Bank of America's Countrywide Financial unit is paying a record $335 million to settle civil charges that it discriminated against minority home buyers.
More than 200,000 individuals were affected and could be eligible for payments from the fund.
Affected consumers include two different groups of victims who will be eleligible for two different types of damages, said Ira Rheingold, executive director of the National Association of Consumer Advocates, who spoke with Justice Department officials abou the settlement.
The first group involves Latinos and African Americans who had quality, prime loans with Countrywide but were charged more money, mostly in fees, for their mortgages than other consumers, Rheingold said. This group, which includes about 200,000 individuals can expect to get anywhere from $500 to $1,500.
The second set of victims, including about 10,000 Latino and African American borrowers, were steered into subprime loans even though they qualified for prime loans that carried a lower interest rate.
“Their damages may be more extensive,” Rheingold said, because in addition to being charged a higher rate many of these consumers ended up with greater financial problems as a result, including bad credit and possibly the loss of their homes. Such damages could total thousands of dollars per victim.
Rheingold expects the cases for the 200,000 victims to be handled much more quickly than those of the subprime borrowers, but overall he estimated most claims would be paid by the end of 2012.
“This is a good thing for the nation and for consumers,” said Kathleen Day, a spokeswoman for the Center for Responsible Lending, about the settlement.
The settlement, she added, “establishes what should a have been a line in the sand more than a decade ago. This never should have been allowed to happen.”
The Justice Department has identified the victims and will be contacting consumers directly about the settlement, but if you believe you were a victim or have questions about the case you can email the agency at: firstname.lastname@example.org.