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Judicial Watch • USA v Countrywide et al No 11 10540 Consent Order

USA v Countrywide et al No 11 10540 Consent Order

USA v Countrywide et al No 11 10540 Consent Order

Page 1: USA v Countrywide et al No 11 10540 Consent Order


Number of Pages:17

Date Created:January 4, 2012

Date Uploaded to the Library:February 20, 2014

Tags:Countrywide, 10540, Consent, USA, order

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 INTRODUCTION This Consent Order (Order) submitted jointly the pa1ties for the approval and entry the Court simultaneously with the filing the United States' Complaint this action. This Order resolves the claims the United States that the Defendants have engaged pattern practice conduct violation the Equal Credit Opportunity Act (ECOA),42 U.S.C.  U.S.C.  1691-1691f, and the Fair Housing Act (FHA), 01-36 19, discriminating the basis race, national origin, and marital status the extension residential credit and the making residential real estate-related transactions. There has been factual 
finding adjudication with respect any matter alleged the United States. The parties have entered into this Order avoid the risks, expense, and burdens litigation and resolve voluntarily the claims the United 
States' Complaint the Defendants' alleged violations federal fair lending laws. 
II. BACKGROUND Between 2004 and 2008, Countrywide Financial Corporation ("CFC"), acting through its various divisions and subsidiaries (collectively, "Countrywide"), was one 
the largest single-family mortgage lenders the United States. During that period, Coutrywide originated over million residential mortgage loans through its retail loan offices and its wholesale division using mortgage brokers. 2006, Federal Reserve System examiners initiated fair lending review Countrywide Home Loans' mortgage pricing practices. result that review, the Federal Reserve Board ("FRB") determined that had "reason believe that 

Countrywide Home Loans engaged pattern practice discrimination based race and ethnicity violation Section 701(a) the Equal Credit Opportunity Act and the Fair Housing Act." Following that determination, and pursuant U.S.C.   1691e(g), the FRB referred the matter the Department Justice. early 2008, the Office Thrift Supervision ("OTS") conducted examination the operations Countr)'vide, including compliance Countrywide Bank, that time subsidiary CFC, with applicable fair lending laws and regulations, and determined that had 'reason believe' that Countrywide has displayed 'pattern practice' 
discriminating against minority loan applicants the pricing home loans and against married couples concerning the terms and condition home loans." Following its determination, and pursuant U.S.C.  169le(g), the OTS referred the matter the Department Justice. its Complaint, the United States alleges that between 2004 and 2008, 
Countrywide's Consumer Markets Division and Wholesale Lending Division engged pattern practice discrimination the basis race and national origin Violation both the FHA and the ECOA based the interest rates, fes, and costs paid African-American and Hispanic borrowers. For loans sourced through mortgage brokers, the Complaint further alleges that Countrywide engaged pattern practice discrimination because African-American and Hispanic borrowers were more than twice likely placed subprime loans than non-Hispanic White wholesale botTowers who had similar credit qualifications. The Complaint also alleges that, until least June 2008, Countrywide engaged discrimination the basis marital 1,9 status following policies and practices that had the effect requiring married borrowers applying for credit one spouse's name having th.eir 
nonapplicant spouses give all their rights and interests the property securing the loan the time the loans were originated. Under the ECOA, creditor may only require the non-applicant spouse execute the document(s) necessary create valid security interest the series corporate transactions that occurred April 27, 2009, Countrywide Bank C'CWB") converted its charter that national bank; Bank America> N.A. immediately acquired CWB merger; and CWB then ceased exist. Thus, Bank America, N.A. the successor interest CWB. 

and minority borrowers connection with obtaining credit, loan modifications and 
other retention activities. This Consent Order does not contain any injunctive measures 
line business. Countrywide Defendants shall also implement policies, practices and 

against the currenf operations BAC any its subsidiaries. 
Unless otherwise stated herein, the remedial provisions this Order shall property used secure the loan; the creditor may not obligate the non-borrower spouse sign instrument that transfers that spouse's rights interest the property. The United States acknowledges that its claims against the Defendants relate solely loans originated Countrywide and not relate any mortgage lending practices Bank America Corporation ("BAC,,) Defendants deny all the allgations and claims pattern practice discrimination violation the FHA and the ECOA set forth the United States' Complaint. aries not originate and price loans employing policies and procedures that the United States alleges resulted the discriminatory practices issue its Complaint. BAC has further rpresented that has furnished substantial support non-profit community organizations which provide education counseling and other assistance low income 

Case 2:11-cv-1 540-P $'G)AJW Document led 12/28/.11 Page Page monitoring designed prevent and detect potential fair lending violations their 

origination residential loans, and shall provide the United States with the details these policies, practices, and monitoring, forty-five 45) days prior implementing 
such reentry. The United States shall have thirty (30) days review and agree object the proposed policies. The parties shall utilize the dispute resolution procedures set 
forth Paragraph resolve any objections the United States. the event that either Countrywide Defendant reenters the business 
originating residential loans, shall adopt policies and practices designed ensure compliance with ECOA's prohibition marital status discrimination comparable 'to those adopted Countrywide about June 2008. Countrywide Defendants shall provide the United States with the details these policies, practices, and monitoring, forty-five (45) days prior implementing such reentry. The United States shall have 
thirty (30) days review and agree object the proposed policies. The parties shall 
utilize the dispute resolution procedures set forth Paragraph resolve any 
objections the United States. Within thirty (30) days the effective date this Order, Defendants shall 
cause deposited interest-bearing escrow account the total sum three 
hundred and thirty-five million dollars ($335 million) compensate allegedly 
aggrieved persons for monetary and other damages they may have suffered result Defendants' alleged violations the FHA and the ECOA ("Settlement Fund"). Title this account shall specify that "for the benefit aggrieved persons pursuant Order the Court United States Countrywide Financial Corp., filed 
December 21, 2011 Defendants shall provide written verification the deposit the 
United States, along with the account number and identification the depository
institution} within five days the depositing the funds described above.Any interest that accrues shall become part the Settlement Fund and utilized and disposed set forth herein. The United Stes has requested from Defendants information and data 
reasonably believes will assist identifying aggrieved persons and determining any 
damages. Such infon:nation shall used the United States only for the law 	enforcement purposes implementing this Order. Within ninety (90) days the date which the United States provides electronic file specifying the loans for which requests data, Defendants shall supply, the extent that within their custody 
control, the requested information and data. tqe extent that any requested information and data not within Defendants' custody control, but such information and data held currently formerly affiliated entity, they also shall make good 	faith effort obtain such information and data from the entity entities. Defendants 	acquire such information data from such entity entities, they shall supply such information and data within fifteen (15) days receipt such information dafa:. Within sixty (60) days entry this Order Defendants also shall enter into contract retaining Settlement Administrator ("Administrator")1 subject approval 	the United States, conduct the. activities set forth the following paragraphs. 	Defendants shall bear all costs and expenses the Administrator, and Defendants' contract with the Administrator shall require the Administrator comply with the Any documents information required this Order submitted the 
United States shall sent private (non-USPS) overnight delivery addressed 
follows: Chief, Housing and Civil Enforcement Section, Civil Rights Division, U.S. Department Justice, 1800 Street, NW, Suite 7002, Washington, 20006, Attn. #188-12C-32. The parties may also agree delivery electronically hand delivery the above address courier. 
provisions this Order applicable the Administrator.3 The Administrator's contract shall require the Administrator work cooperatively with the United States the conduct its activities, including reporting regular.Iy and providing all reasonably requested information the United States. Defendants shall allow the Administrator access mortgage origination loan files, including non-electronic loan file data and documents that are the possession Defendants any entity owned, directly indirectly, BAC, for the purposes accomplishing the Administrator's task set forth Paragraph 12. The Administrator's contract shall require the Administrator comply with all confidentiality and privacy restrictions applicable the party supplied the information and data the Administrator. The United States shall identify aggrieved persons with respect its race and national origin discrimination claims within ninety (90) days receipt all the information and data requested. The United States shall provide list allegedly aggrieved persons the Defendants and the Administrator. The Administrator's contract shall require the Administrator mae its best efforts, using all reasonable methods, locate each identified aggrieved person and obtain such information the United States reasonably considers necessary from each. The Administrator's contract shall require the Administrator complete this responsibility within period six (6) months from the date the United States provides the list described Paragraph subject extension time provided Paragraph 20. The Administrator's contract shall require the Administrator, part the event the United States has reason believe that the Administrator not 
materially complying with terms its contract with Defendants, the United States 
and Defendants shall meet and confer for the purpose mutually agreeing upon 
course action effect the Administrator's material compliance with its contract with Defendants. the event that the United States and Defendants are unable agree upon course action effect the Administrator's material compliance with its contract with the Defendants, the parties shall present the matter the Court. its operation, establish cost-free means for aggrieved persons contact it, such email and toll-free telephone number. The United States shall specify the amount each allegedly aggrieved person identified Paragraph and located the Administrator shall receive from the 
 Settlement Fund later than one-hundred-and-twenty (120) days after the deadline for locating allegedly aggrieved persons has passed. The United States shall provide the compensation list the Administrator. This list shall direct less than twenty million dollars ($20 million) allegedly aggrieved persons who lived Illinois thetime origination resolve Defendants' pending litigation with the State Illinois, and the Administrator's communications with such borrowers shall refer both the settlement litigation the United States and the State Illinois. 10. The Administrator's contract shall require the Administrator send releases, with language approved the United States> aggrieved persons. After receipt executed releases, Defendants shall require the Administrator promptly deliver 
payments those persons amounts determined the United States described Paragraph The Administrator's identification and_payment responsibility may tke place rolling basis with approval from the United States. 11. The United States also shall provide the Administrator list loans between 2004 and 2008 for which reasonably believes that there the potential that non-borrowing spouse may aggrieved person with respect the marital status discrimination claims alleged the_Complaint. The Administrator's contract shall require the Administrator send letters describing the marital status discrimination alleged the Complaint, the text f9r Which approved advance the United States, the borrowers this list. The letter shall also specifically request that the information regarding these claims shared with the person who was their spouse the time the loan, and further request that the spouse former spouse contact the Administrator quitclaim deed other similar instrument was executed part the loan origination closing process. 

12. The Administrator's contract shall require the Administrator review the loan 
files for those loans with respect which non-borrowing spouse contacts pursuant Paragraph 11. The Administrator shall determine the extent possible, based its review the aforementioned loan files and, necessary, interview the nonborrowing spouse, whether non-borrower spouse made knowing and voluntary decision execute transfer title was presented with the opportunity execute instead only security interest the property connection with the origination the l