Judge rejects Countrywide discrimination class action

Michael P. Tremoglie Oct. 17, 2011, 8:00am

LOUISVILLE, Ky. (Legal Newsline) - A request to give class action status in a lawsuit against Countrywide Bank was rejected Oct. 13 by a federal judge in Kentucky.

The suit alleges Countrywide discriminated against African-American and Hispanic borrowers by charging them more for borrowing than Caucasian borrowers.

U.S. District Judge John Heyburn II ruled that Countrywide gave a great deal of latitude to individual loan officers. This discretion was so great that the judge believed it was impossible to make it a general practice ordered by the company.

"However, the idea that thousands of loan officers in hundreds of separate locations around the country would exercise their discretion in a similarly discriminatory fashion as to each purported class member defies belief," Heyburn wrote. "Whether an individual loan officer or a single office did so, might be a different question."

According to a report by The Associated Press, the plaintiffs submitted a report by Ian Ayres, a Yale law school professor and economist, who studied nearly three million loans made by Countrywide between July 2005 and June 2007. The Ayres's study found that minorities paid more for home loans and received higher-cost loans than other similarly-situated borrowers.

Ultimately, Heyburn believed that there were too many independent decisions made by too many independent people to lump into one set of claims.

He concluded, the AP report said, "that Ayers' findings don't support a conclusion that every class member suffered the same economic injury or any harm at all. The differences in the cost of the loans could be "well within the range expected" when thousands of loan officers and brokers working in different offices exercise discretion.

"More would be required to prove any individual or collective claim in these circumstances," Heyburn wrote.

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