Countrywide Financial was among the most pernicious and reckless lenders that caused the economic downturn under which our Nation continues to labor. Their practices gave rise to a proposed class action lawsuit filed in federal court in Louisville to consist of "all African-Americans and Hispanic borrowers to whom Countrywide originated a residential-secured loan, including correspondent loans, between January 1, 2002, and the present." The district court ruled the proposed class failed the commonality rule of Fed.R.Civ.Pro 23; the Sixth Circuit affirmed in Miller v. Countrywide Lending, No 12-5250 (January 15, 2013).
Countrywide empowered loan officers and mortgage brokers to increase or decrease a borrower's interest rate within a specified range of the borrower's par rate, a rate used through application of objective factors. Loan officers and brokers received extra compensation from Countrywide "when a loan had a higher interest rate or additional fees." As a result, according to the suit, Countrywide charged African-American borrowers on average 11.64 basis points and Hispanic borrowers 12.50 basis points over the APR paid by white borrowers. The plaintiffs pleaded disparate impact claims under the Equal Credit Opportunity Act, the Fair Housing Act and the Civil Rights Act seeking damages, injunctive relief and declaratory relief. The district court denied class certification.
The Sixth Circuit held that class certification was properly denied under the rule drawn from Wal-Mart v. Dukes, 131 SCt 2541 (2011), explaining as follows:
Both cases challenge policies to grant broad discretion to local agents: Countrywide to local agents who varied home-loan prices[.] ... In both cases, the exercise of discretion is cabined inside clear boundaries: ... Countrywide agents could vary home loans only within a specified range of the predetermined par rate. ... in neither case is it asserted that, for acts of discretion taken within these boundaries, a uniform policy or practice guides how local actors exercise their discretion, such that the corporate guidance caused or contributed to the alleged disparate impacts. ... class members must unite acts of discretion under a single policy or practice, or through a single mode of exercising discretion, and the mere presence of a range within which acts of discretion take place will not suffice to establish commonality.
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