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.
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17 comments:
As I have always said; I LOVE IT when somebody robs a bank & gets away with it (so long as they don't hurt anyone)!
This just sounds like the bank is doing their due diligence. Giving loans to anyone and everyone is how the bubble started right?? If this loan is not going to be bought by a GSE, I don't think the government has any right to tell the bank how to do business.
They should pay at least $5 billion fine to the government (and forgive loans too). Given their reckless behavior on three loans, nothing less should be mandated. That will teach them to follow "straight-forward" language of regulations. LOL
First they get slammed for being too loose and not requiring documentation, now they get slammed for asking for documentation. Your tax dollars at work folks. What a screwed up system we have developed. If I was BofA I would just get out of da bizness.
Stay classy BOA...America 1st!
To "Europeanexpat:" Just where do you think that $5 billion fine you propose would come from? It would come from the shareholders (owners) of BoA (through lowered dividends) AND from the interest charged on loans, including other mortgage borrowers! Did those folks make the "error?" No. There's no free lunch, but you can't teach some Dimlibs that fact. To the extent that disability payments come from the Federal Government, from a pure mortgage underwriting standpoint, all that "income" should be discounted for qualification purposes because there is no assurance (nor proof) that the Feds can continue to make such payments if the trillion $$ deficits continue.
@ LFord
If you didn't sense the sarcasm in my post then I'm sorry
so verifying income is unlawful now? Wasn't making loans to people who couldn't afford the amount they were asking for part of the whole housing mess to begin with?
Couldn't HUD have just made BofA aware of their concern vs. filing a lawsuit? I guess HUD has to do something to justify their existence.
Next it will be discrimination against "gay" borrowers. Heaven help them then.
More of the Obama's politicized Justice dept going after BofA. Looking for more victims of capitalism.
What they need to do is make their employees unionized and then contribute a lot of money to the Democratic Party. They are following the Jesse Jackson method of corporate chakedowns.
Nothing I hear about BofA surprises me any more, especially if it's bad. Nothing at all.
I should sue. That evil bank wanted me to show that I have a job before they would give me a mortgage! They are discriminating against me!
Baby boomers on fixed incomes should shed BofA and put your money in a credit union...PERIOD!!!
What a joke. If BofA DOES give these "disabled" loans without doing due diligence, then they are NOT running the bank properly (i.e. just giving away money, which is what Clinton mandated, which is what brought down the real estate market, which is what slammed this country into reverse) and are GUILTY of creating an atmosphere that "ruined" the economy. You can't have it both ways Observer...pick another whipping boy, you've beaten this one to death.
To those saying BofA was just doing their due diligence, BofA had already verified the disability income. Now they were asking for a doctor's note saying they would continue to be disabled. They did not require working people to provide a note saying they were expected to continue to be able-bodied enough to work, or asking your employer promise that you wouldn't be fired or laid-off. They were applying a higher standard to disability income than that of other types of income. That's blatant discrimination.
I've been in lending for 15 years, every lender requires something to prove disability income will continue. Sometimes disability income can be temporary, thus the need for a doctors note. If this goes through you can expect this type of suit to go against every other lender in America.
I'm buying more of their stock. The bad publicity is driving the stock down and i'm buying as much as I can.
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