Originally published Thursday, June 26, 2008 at 12:00 AM
State accuses Countrywide of discriminatory lending
Countrywide Home Loans is facing a $1 million fine and the loss of its mortgage business in Washington after a state agency determined that it charged minority borrowers more for its loans than it charged white borrowers in similar circumstances.
Seattle Times staff reporter
Countrywide Home Loans is facing a $1 million fine and the loss of its mortgage business in Washington after a state agency determined that it charged minority borrowers more for its loans than it charged white borrowers in similar circumstances.
The company also could be forced to pay restitution to at least 50 borrowers the state says were victimized by the company's discriminatory pricing, according to administrative charges filed Monday by the state Department of Financial Institutions.
The action is the state's first ever fair-lending case, and could pressure the company — and possibly other lenders — to modify loan terms for state homeowners who are struggling to repay mortgages with high interest rates that are continuing to climb, said Deborah Bortner, director of DFI's consumer services division.
Countrywide sold about 80,000 mortgages in the state over the past two years, and an examination of those loans could turn up even more problem loans, she said.
"The state is not going to be able to save everyone," said Bortner, noting that some Countrywide borrowers already have lost or will lose their homes to foreclosure before the case is resolved. "If they lose their house, we'll get them restitution."
The state also alleged that Countrywide owes taxpayers nearly $5.6 million in unpaid fees for loans it sold here but did not report as required. Those loans date back to 2002, according to the state claim.
The company has 20 days to request an administrative hearing on the charges. It also can negotiate a settlement with the state.
Bortner said the state examined 600 loans that Countrywide offered or sold to state homeowners, and found 50 cases in which minority borrowers received or were offered more expensive loans than white borrowers with similar credit scores who obtained loans during the same period, in the same geographic area, for about the same loan amount.
In some cases, minority borrowers were steered to higher interest-rate loans with higher fees even when their credit scores were better than their white counterparts, she said.
The examination began with a tip last year from a federal agency that analyzed mortgage data, and provided states with a list of lenders that potentially were engaged in discriminatory lending, Bortner said.
The Department of Financial Institutions began analyzing individual loans, and identified a pattern of lending that resulted in minorities obtaining more costly loans, but did not show that they were targeted for those loans because of their race or ethnicity. Interviews conducted with homeowners showed that in some cases, homeowners were sold costly loans by a broker with the same ethnicity, Bortner said.
"The reason minority borrowers are disproportionately affected is because economics creates disproportionality," said Winona Hollins-Hauge, a member of King County's Commission on African American Affairs.
![]()
The state's action came on the heels of suits filed Wednesday by attorneys general in California and Illinois. In those cases, Countrywide was accused of tricking borrowers into costly loans they didn't understand and couldn't afford.
The company's business practices have generated about 130 complaints to the state attorney general in the past three years. The company also is being sued by an arm of the U.S. Justice Department, and by shareholders.
The company did not return a phone call for comment on Wednesday.
Kurt Eggert, a law professor at Chapman University School of Law in Orange, Calif., said states may be focusing on Countrywide because it's still in business. Unlike many of its competitors that have gone bust, the company has substantial assets and is still servicing loans, he said.
The action was filed Monday but announced Wednesday during a news conference at the Urban League of Metropolitan Seattle, which is helping borrowers so they don't lose their homes.
A. Linda Taylor, the group's housing director, said homeowners who need help can call the Urban League at 800-368-1455.
Consumers also can file complaints with the DFI online at www.dfi.wa.gov, by calling 877-746-4334, or via e-mail at CSEnforceComplaints@dfi.wa.gov.
Susan Kelleher: skelleher@seattletimes.com.
Copyright © 2008 The Seattle Times Company
UPDATE - 11:34 PM
Teen is beaten in bus tunnel; Metro to review policies
UPDATE - 12:15 AM
School levies passing in most area districts
NEW - 10:16 PM
Medical pot exceeds law, but no charges
Seattle physician Brian Krabak will do more than treat injuries at Winter Olympics
NEW - 10:39 PM
Two names dominate as Seattle begins police-chief search

nwautos
Associated Press Study: Fatal crashes down in Washington Last year Washington's roads were the scene of the fewest fatal crashes since 1955. According...
Post a comment
nwjobs
Post a comment
Michelle Goodman blogs about work/life balance.
Five reasons to stick with a job you hate -- for now
Post a comment
- Alaska Air dropping Jones Soda beverages, going back to Coca-Cola
- Man found shot dead in pickup truck in Seattle
- Seattle is first U.S. stop for Picasso exhibit
- Husky Football Blog | Pac-10 expansion to get consideration over next year
- State Senate votes to clear way for tax increases
- Idol Confessions | "American Idol" hopeful from Seattle didn't make it to Hollywood afterall
- Belltown boulevard could be completed by early next year
- Nicole Brodeur | Chrisceda Clemmons' house wasn't the only casualty
- Brier Dudley's Blog | Google rolls its own Facebook & Twitter with Gmail "Buzz"
- Sex, drug rumors swirl about N.Y. Gov. Paterson
- Republicans may be no-shows at health-plan summit
278 - State Senate votes to clear way for tax increases
250 - Pac-10 expansion to get consideration over next year
249 - Lee undergoes foot surgery
231 - Obama: GOP and Dems together can spur job growth
210 - Fort Lewis soldier charged with abusing 4-year-old, holding her head in water
193 - Rivals names Martin one of Pac-10's best recruiters
143 - Belltown boulevard could be completed by early next year
127 - Bus-tunnel attack while guards watched prompts review of Metro security
118 - White House mocks Sarah Palin from podium
91
- Seattle is first U.S. stop for Picasso exhibit
- Belltown boulevard could be completed by early next year
- 747-8 soars smoothly on first outing
- Wine Adviser | Oregon's quality pinots join the bargain ranks
- Alaska Air dropping Jones Soda beverages, going back to Coca-Cola
- Snap out of your photo funk: How to make sense of all those piles of images
- How clean are those pre-washed salad greens?
- Answers to biggest Olympic TV questions
- Brier Dudley's Blog | Google rolls its own Facebook & Twitter with Gmail "Buzz"
- Jerry Brewer | Huskies softball pitcher Danielle Lawrie: A star on the field, not in her mind





