Page 13 - Bank of America E Case Study

Critical Acquisitions

Countrywide Financial

was the largest U.S.

mortgage lender

controlling 20–25% of the

home loan market in

2008, compared with

BofA’s roughly 8 percent,

but it had become notorious for pushing borrowers into

predatory loans and as a result had grown weaker from

the large number of those loans defaulting.

BofA had announced in January 2008, its intent to acquire
Countrywide Financial for $4.1 billion but in March 2008,

it was reported that the Federal Bureau of Investigation
(FBI) was investigating Countrywide for possible fraud

relating to home loans and mortgages. The acquisition

was finally completed in July 2008.

However, in 2011 BofA had to settle a Justice Department

complaint alleging racial discrimination of African-

American and Hispanic in mortgage lending by its

Countrywide subsidiary.

BofA’s Countrywide subsidiary was accused of:

• Charging higher rates and fees on mortgages to

minorities than to whites with similar characteristics

• Shifting minorities into subprime mortgages with

exploitative terms