Three county governments in metro Atlanta have sued Bank of America for engaging in the practice of equity stripping, where the bank targeted minority borrowers with high-interest mortgage loans.
B of A's illegal practice involved both the origination and servicing of mortgage loans, the counties said. Starting in the mid-2000s, the bank steered black and Hispanic borrowers into high-cost, nonprime mortgages. The originations were in violation of the Fair Housing Act.
"The banks knew that many of the loans were likely to fail or were not in the borrowers' best interests," the counties said in a news release.
The loans were made to generate higher profit and mortgage-servicing fees for the bank. They increased the number of foreclosures and vacancies.
Fulton, DeKalb and Cobb counties named B of A, Countrywide Financial and Merrill Lynch in their lawsuit, filed in federal court in Atlanta.
