The U.S. Department of Housing and Urban Development filed a lawsuit February 27 against Bank of America, alleging that the bank “imposes unnecessary and unduly burdensome” requirements on people with disabilities applying for home 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 assistance secretary for fair housing and equal opportunity, in a news 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 lawsuit is on behalf of three individuals, living in Michigan and Wisconsin, whom applied for home loans with the bank in 2009 and 2010. The individuals each filed complaints under the Fair Housing Act, prompting an investigation by the HUD into the bank’s lending practices.
The HUD found that the bank required the individuals to provide additional documentation that they would continue to receive Social Security Disability payments for longer than three years in order to qualify for certain long times. Additionally, the HUD found that the bank required proof of “permanent disability” to qualify for certain loans insured from by the U.S. Department of Veterans Affairs.
Bank of America also allegedly asked for additional information from doctors of physicians regarding the extent of certain disabilities.
The Fair Housing Act makes it “illegal to inquire about the nature or severity of a disability except in limited circumstances not applicable here,” according to the news release.
The case is now being handled by the Department of Justice.