Legal Newsline

Wednesday, April 1, 2020

HUD accuses Bank of America of discrimination

By Michael P. Tremoglie | Mar 1, 2012

WASHINGTON (Legal Newsline) -- The U.S. Department of Housing and Urban Development is accusing Bank of America of discriminating against homebuyers with disabilities.

HUD alleges the bank "imposed unnecessary and burdensome requirements on borrowers who relied on disability income to qualify for their home loans and required some disabled borrowers to provide physician statements to qualify for home mortgage loans."

It is illegal, according the federal Fair Housing Act, to discriminate against individuals with disabilities in the terms and conditions of a loan. This includes using different application or qualification criteria. This same law makes it illegal to inquire about the nature or severity of a disability when considering loans.

"Holding homebuyers with disabilities to a higher standard just because they rely on disability payments as a source of income is against the law," said John Trasvina, HUD Assistant Secretary for Fair Housing and Equal Opportunity. "Mortgage companies may verify income and have eligibility standards but they may not single out homebuyers with disabilities to delay or deny financing when they are otherwise eligible."

The HUD allegation is the result of a "Secretary-initiated investigation" after the department received a complaint from a borrower in Michigan and one in Wisconsin. Both complainants claimed that Bank of America required personal medical information and documentation about their disability and proof of Social Security disability income to qualify for a mortgage.

The matter will now be handled by the Department of Justice.

This is the third time since December 2011 that Bank of America has run afoul of federal discrimination laws. The bank based in Charlotte, N.C., paid a $335 million fine in December to settle allegations that its Countrywide Financial unit discriminated against minorities. A federal court approved on Feb. 24 a class action against Bank of America's Merrill Lynch division for racial discrimination.

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