African Americans and Latinos were more likely to receive a high-cost mortgage with risky features, regardless of their credit.
Last July, it proposed rule revisions that would simplify the fine print on mortgages and highlight risky features of a loan.
The lawsuit, which is expected to be filed on Wednesday in Illinois state court, accused Countrywide and Mr. Mozilo of relaxing underwriting standards, structuring loans with risky features, and misleading consumers with hidden fees and fake marketing claims, like its heavily advertised "no closing costs loan".
To avoid steering the buyer into a loan that is offering less favorable terms, the rules now say that the borrower must be provided with competing options, including the lowest qualifying interest rate, the lowest points and origination fees, and the lowest qualifying rate without risky features like prepayment penalties.
Density assumes that high concentrations of risky features creates a unique context for illegal behavior and increases the likelihood of crime events at high density places.
Proximity (i.e., Euclidean distance) means that being within a certain distance from risky features increases the likelihood of illegal behavior.
Specifically, loans with risky features such as interest-only payments, negative amortization (meaning that even if the borrower makes all their payments as scheduled, the total loan balance actually goes up), prepayment penalties or interest rates that reset in less than five years had foreclosure rates three to four times that of conventional loans.
Another series shown on BBC America, "Manchild," has even more sex and nudity than HBO's "Sex and the City," but the show's riskiest feature is its characters' ages: these friends are men hitting 50, with sex at the center of their mid-life crises.
One reason the Fed pulled back was that the mortgage industry pointed out that some loans with riskier features performed well in the crisis.
