Consumer complaints have triggered yet another legal problem for Bank of America. The Department of Housing and Urban Development announced on Monday that it is charging the Bank with discriminating against disabled homebuyers under provisions of the Fair Housing Act.
The charges arise out of allegations from two borrowers in Michigan and one in Wisconsin who said they were required to provide personal medical information and documentation regarding their disability and proof of the continuance of the Social Security payments in order to qualify for a home mortgage loan. HUD alleges that Bank of America first denied the loans to the borrowers who relied on disability income to qualify for their home loans. The Bank then imposed unnecessary and burdensome requirements as evidence of the continuation of Social Security income including provision of physician's statements to reevaluate and approve the loans
HUD's charge is based on a "Secretary-initiated investigation" and is also being issued as part of the work by the Federal Financial Fraud Enforcement Task Force's non-discrimination working group. The matter will now be handled by the Department of Justice.
The Fair Housing Act makes it illegal to discriminate in the terms and conditions of a loan to an individual based on a disability, including imposing different application of qualification criteria. The Act also makes it illegal to inquire about the nature or severity of a disability except in limited circumstances which HUD said did not apply in these cases.
"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 Trasviña, 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."
This is just the latest legal tangle for Bank of America which is involved in numerous suits from both government agencies and individual homeowners arising out of its assumption of Countrywide Mortgage Corporation in 2008. Along with four other major lenders it recently settled a suit with federal and state authorities for a reported $25 billion and that same week reached a $1 billion settlement with FHA over past lending practices.