Illinois AG Slaps Subpoenas On Countrywide, Wells Fargo In Probe Into Race Bias In Lending Practices

The Wall Street Journal reports:

• Illinois's attorney general issued subpoenas yesterday to units of Countrywide Financial Corp. and Wells Fargo & Co., for an investigation into whether lenders have improperly steered minority borrowers into high-cost or inappropriate loans. The subpoena joins a long list of investigations by state and federal officials examining the business practices of the nation's mortgage lenders. Critics say such companies played a major role in the housing and mortgage crisis, which has led to record levels of home foreclosures.

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• In Illinois, Attorney General Lisa Madigan is trying to determine whether Countrywide, the nation's largest mortgage lender, and Wells Fargo, the second-largest lender, put black and Latino borrowers in subprime or other high-cost loans when they could have qualified for a lower-cost loan.

• If the subpoenas find evidence of discriminatory lending practices, Ms. Madigan may push lenders to more aggressively modify loans to minority borrowers in financial distress so they can stay in their homes, or seek other monetary remedies in addition to changes in how loans are made, said Deborah Hagan, chief of the Illinois Attorney General's Consumer Protection Division. The investigation might be extended to other lenders, she added.

For more, see Illinois Probes Mortgage Firms (State Asks Whether Minority Borrowers Were Bias Victims) (subscription required; if no subscription, try here, then click link for story, then "refresh" browser if needed).

For Illinois AG News Release, see African American and Latino Homeowners May Have Been Steered to High-Cost Loans.

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