Feds release anti-discrimination guidance to mortgage lenders

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Non-discrimination in Mortgage Lending

The Consumer Financial Protection Bureau reminded mortgage lenders nationwide November 18 that they are required under federal law not to discriminate against recipients of Social Security Disability Insurance and Supplemental Security Income.

“Persons with disabilities should be able to qualify for mortgages they can afford based on their stable income, including from Social Security disability income,” the CFPB said in a blog post. “And anyone with disabilities, including disabled servicemembers, should not be prevented or hindered from buying a home by unnecessary barriers or requirements.”

The five-page bulletin was released in response from reports that some loan officers have asked for specific descriptions of applicant’s disabilities, or a statement from doctors proving that they will likely continue to receive Social Security benefits.

The Equal Credit Opportunity Act, enacted in 1974, “prohibits creditors from discriminating in any aspect of a credit transaction against an applicant because all or part of the applicant’s income derives from a public assistance program.”

The CFPB specified that mortgage lenders can not impose “unnecessary documentation requirements” on people with disabilities, such as medical records. In regard to the length of the benefits, the CFPB specified that unless the Social Security Administration specifies that the benefits will last for less than three years, they should assumed to be indefinite.

According to the bulletin, the Department of Housing and Urban Development has similar requirements for Federal Housing Administration-mortages, as does Fannie Mae and Freddie Mac. Similarly, the Department of Veterans Affairs allows for Social Security income to be used as income for the purpose of qualifying for VA-approved loans.

The CFPB was created as part of the of the Dodd-Frank Wall Street Reform and Consumer Protection Act, passed by Congress in 2010.