The U.S. Department of Housing and Urban Development announced Monday that it has charged Bank of America with discriminating against several homebuyers who rely on disability income.
The department alleges that Bank of America employees required home loan applicants who were disabled to provide notes from their doctors outlining their disability and predicting whether they thought the applicant would continue to be eligible for disability payments.
"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, in a statement. "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 investigation stems from three complaints in Wisconsin and Michigan during 2009 and 2010, according to the complaint. The homebuyers were initially denied a loan.
In one case, Bank of America apologized in a letter for requiring the note, the complaint states.
The housing department says that Bank of America's actions violated the Fair Housing Act, which prohibits placing higher burdens on people with disabilities for qualifying for loans. The case will now be handled by the U.S. Department of Justice, the complaint says.
The department seeks restitution for the homebuyers who made the complaints and a civil money penalty.
In a statement, Bank of America denied that it engaged in systemic discrimination and said it is the bank's policy to follow "all applicable fair lending laws and regulations." The bank said that the cases cited by the housing department involved inconsistencies in Federal Housing Administration and conventional underwriting standards.
The bank said all three ended up being approved for a loan.