WASHINGTON — The Department of Housing and Urban Development alleged Monday that Bank of America Corp. imposed "unnecessary and burdensome" requirements on borrowers who relied on disability income to qualify for home loans.
In the complaint, which has been referred to the Justice Department, HUD says B of A also improperly required some disabled borrowers to provide doctors' statements in order to get qualified.
Under the Fair Housing Act, it is illegal for a lender to impose different application or qualification criteria on individuals with disabilities than it does on other borrowers, or inquire about the nature or severity of a disability, except in limited circumstances.
"Holding homebuyers with disabilities to a higher standard just because they rely on disability payments as a source of income is against the law," John Trasviña, HUD's assistant secretary for fair housing and equal opportunity, said in a press release. "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 case originated with complaints filed by two individual borrowers in Michigan and one borrower in Wisconsin. They claimed B of A had required them to provide personal medical information and proof of continued disability income they receive from the Social Security Administration.
A Bank of America spokesman said the three individual cases involved underwriting criteria required by the Federal Housing Administration, and those criteria are stricter than more conventional HUD standards.
"In each instance, we followed the stricter FHA standards and, importantly, all three borrowers received funding for their loans from Bank of America," spokesman Dan Frahm said. "There is no basis to allege that Bank of America has engaged in a systemic practice of discriminating on the basis of disability in connection with mortgage lending."
