HUD Accuses Bank Of America Of Discriminating Against Disabled Homebuyers

Just when you thought people had run out of reasons to hate Bank of America, the U.S. Department of Housing and Urban Development pops in to give you a new one. Earlier today, HUD charged BofA of discriminating against homebuyers with disabilities.

According to HUD, the bank imposed “unnecessary and burdensome requirements on borrowers who relied on disability income to qualify for their home loans and required some disabled borrowers to provide physician statements to qualify for home mortgage loans.”

Big problem: It’s in violation of the Fair Housing Act to impose different application or qualification criteria on a homebuyer just because they are disabled. It’s also almost always illegal to inquire about the nature or severity of a disability.

“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 Trasvi√±a, HUD Assistant Secretary for Fair Housing and Equal Opportunity. “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.”

HUD charges that BofA asked some borrowers for proof of their disabilities and also requested documentation of their Social Security income before approving loans.

The investigation now gets handed over to the Department of Justice.

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  1. Pigfish99 the randomly insane says:

    Hopefully, This will cripple BoA’s business enough that they go bankrupt. fat chance, but I had to make the joke.

  2. El_Fez says:

    Good to see the government not turning a blind eye to these offenses. I’m sure that BoA wont have a leg to stand on.

  3. voogru says:

    So the moral of the story is, don’t use different lending practices for people of different protected classes.

    Just avoid making loans to them all together.

    • Buckus says:

      I think the moral of the story is don’t use different lending standards to customers of protected classes. You can’t treat protected classes different from other customers, even if you treat all protected classes the same (deny, deny, deny).

      • voogru says:

        When those differences may possibly affect their ability to repay the loan over 30 years, it’s worth doing their homework.

        It’s not discriminating to deny loans to people who the bank thinks can’t pay back the loans. If these are really responsible borrowers, I’m sure a more worthy bank will step in.

        By the way, I am no fan of bank of america. They caused me a great deal of hassle, I submitted the story to consumerist but they never posted it.

  4. TuxthePenguin says:

    I’m not so sure I agree with HUD in this case. Normally with mortgages you do not have to provide evidence on certain incomes if you do not want that income considered when applying for the mortgage (I’ve seen a few clients do this where the husband owns his own business and the wife works. They apply with just the wife’s income).

    But if you’re giving a loan to someone with disability income and they want to use it as evidence of their ability to repay the loan… it seems entirely reasonable that they should provide evidence that they are receiving that income in accordance with the law.

    Then again, how much of an issue is this? I don’t know how much fraud there is in the disability payment system and how often someone just gets cut off. Do they have to recertify their disability every so often or something? If that’s the case, it would make sense that a mortgage lender would want evidence that this is going to be a 30-year issue.

    • jayphat says:

      My thought process was how long is the disability? Permanent? Temporary? Partial? Those are the kind of things when it comes to income that a bank MAY be entitled too. They do have an obligation to establish you have a steady source of income to repay the loan, right?

      • who? says:

        How long is your job? Permanent? Presumably if the person’s disability is temporary, then once they’re not disabled, they’ll be able to get a job.

      • sponica says:

        I used to calculate rents for a transitional housing program partially funded by HUD. All I could do was VERIFY that the client was receiving funds from social security. I wasn’t allowed to ask why they were receiving social security disability.

    • mistyfire says:

      The USDA Rural Development, which is a part of HUD, is helping me buy a house and while my sons SSI for his disability isn’t a factor in paying the mortgage, I was required to report ALL houshold income, including his SSI, on the paperwork to the bank. Luckly I am not dealing with BofA.

    • Such an Interesting Monster says:

      Well by that token they should be looking not only at a potential buyer’s current employment, but their past employment history as well as the financial status of their current employer, just to make sure the buyer isn’t going to be unemployed any time in the next 15-30 years.

      • TuxthePenguin says:

        I’d have no problem providing the last five years worth of employers as that was something that the borrower has some semblance of control over (layoffs, of course, were are not, but firings typically are due to bad performance).

        But employer’s financials go a bit too far – the employee has no control over that. That, by concept, would be backed into the general default risk that is baked into loan’s interest rate. Although I’m sure its crazy complicated, I’d love to see the actuarial data that goes into those loan rates. Or at least a list of the variables that it takes into account.

    • Not Given says:

      I think they review social security disability on a regular basis.

  5. Cat says:

    I don’t want to be seen as a BofA defender, but I can understand a bank’s position. If I rely on my job to get approved, they may ask questions of my employer. If someone is relying on disability income to be approved, then the bank should be allowed to ask some questions about their income source and the reliability of that income. Not involving a doctors note, or any contact with their physician, but certainly contacting disability for some answers should be allowed.

    If I walk into a bank for a loan, is it enough for me to throw down my last 4 weeks pay stubs and last year’s tax return? What if my employment is temporary? What if the disabled applicant’s disability income is expected to be temporary?

    The bank has the same sort of concerns about loaning to a disabled or non-disabled person, and they should should not have a higher standard for the disabled, but the SAME standards, for asking MY employer as they would a provider of disability income (their employer).

    • Doubting thomas says:

      That’s pretty much what I came here to say.
      There is no linked article so I can’t read any further (I am too lazy to do a google search) but it does not say that they discriminated against the disabled, they discriminated against those who rely on disability payments. With the significant amount of fraud in the disability system it makes sense for someone loaning you hundreds of thousands of dollars to want to make sure that the income you say you have now is the income you have every expectation of having next year.

    • Such an Interesting Monster says:

      But how far should they be able to go? I mean, should a bank require access to your employer’s financials to ensure you’re not going to be laid off any time soon?

      I can see asking if it’s a temporary or permanent disability, but not why they would need to know the nature of the disability. It’s none of their business why you’re permanently disabled, just that you are.

      So while it’s possible that someone who is disabled might at some time in the future lose that income, it’s also likely that someone with a stellar job history might get laid off too. I don’t see how it’s right to single out one but not the other.

  6. voogru says:

    Plus, I’m having some difficultly finding where in the United States Federal Constitution that people have a right to a loan?

    What will end up happening is the same thing that happens in all discrimination cases, the discriminated classes will have an even harder time.

    I know companies that just won’t hire handicapped programmers. Two missing legs doesn’t affect job performance in computer programming, but I know of a case where they had to lay off a handicapped person due to the recession.

    He sued for discrimination, won, they paid.

    Now they just don’t hire handicapped people at all.

    Problem solved.

    • Buckus says:

      Discriminating against handicapped persons is a clear violation of federal laws. Any handicapped person who applies and gets turned down “Because they’re handicapped” has a pretty cut and dried lawsuit on their hands.

      • voogru says:

        I love this.

        Banks are in business to make money (I’m sure this won’t be a surprise to you).

        They don’t care if you are White, Black, Purple, Disabled, Gay, Lesbian, Hispanic or any other protected class.

        All they want is your money, and all they want is more money.

        If they think they can make money off of you in a loan, they’ll issue you a loan. Period.
        If they think you are a high credit risk, and that you might not be able to pay back the loan, they don’t issue you a loan. Period.

        They are discriminating against whether or not you can pay back the loan.

        They don’t care about anything else, except making money.

        And don’t forget the consequences of low lending standards where anyone with a pulse was able to get a $500,000 mortgage.

      • voogru says:

        Of course, this all goes out the window if you think that banks are a charity and should make loans to everyone with a pulse and not care if it gets paid back or not.

        Just be sure to put your money where your mouth is and put all of your money into that bank.

        • Buckus says:

          You’re making a different argument about underwriting standards vs. just throwing money at people. If a person has income, and can prove they have that income, that’s no different than proving you have a job (which pays money).

          If you claim you have a job, say, driving a forklift, they don’t make you demonstrate that you can drive a forklift, or ask how long you expect to be able to continue this line of work.

  7. AlteredBeast (blaming the OP one article at a time.) says:

    But, if they investigate, and find fault, etc., does that impact the people who they already declined? Basically any money they saved by doing this, they still saved, even in light of any fines imposed. So it’s just, “Break the law till someone sees it.”

  8. longfeltwant says:

    Bank of Assholes
    Bastards of America

  9. vastrightwing says:

    I see said the blind man as he picked up his hammer and saw.

  10. rockingrandma says:

    There is no such thing as temporary disability when it comes to SSDI or SSI. In order to qualify for disability you have to be permanently disabled. And yes, every few years you are sent some papers to fill out stating that you are still disabled and nothing has changed.

    It’s guaranteed money though, unlike money from a job. You can lose a job in a heartbeat, but you have a heads up when Social Security gets retarded and tries to cut you off. When you appeal a decision they can’t cut you off until a determination on the case is made.

    Income is income though and if you are trying to get a loan based on income from Social Security you need to show that. It’s easy, you call or go to an office, ask for a proof of income statement, and they print out a page with what you receive every month. Big deal….we do it probably 4 times a year for other things.

  11. dush says:

    They need to remove the word America from their name.

  12. PsiCop says:

    Re: “HUD charges that BofA asked some borrowers for proof of their disabilities and also requested documentation of their Social Security income before approving loans.”

    Wait. I don’t get this. I mean, I understand it being illegal for BoA to ask what someone’s disability is. What I don’t get is why it’s illegal for them to ask for proof they’re getting Social Security. When did income verification become illegal?

  13. wakeboardermom says:

    SSI disability can be temporary. My husband was in an accident and had a paralyzed hand so he could no longer do mechanic work. His doctor had already given him his disibility papers and he was about to apply for it when the doctors at Duke told him they could get him all fixed up. It took 6 months but he’s good as new. They said he could apply for it during that phase. He did not do it though, becuase his work said if he would NOT apply as disabled, they would hold his job for him. SSI likes it when the disability is temporary. They encourage you to retrain in another field if possible depending on the extent of the disability. This may have been the information the banker was trying to get to.

  14. geopapa says:

    Moynihan needs to be whipped & quartered in a public square for all to watch. He IS a real piece of shit.

  15. Mrs. w/1 child says:

    Um, it may be illegal but it certainly makes more sense to require those who rely on disability to prove they can afford a loan. Why? Because disability income is usually very low. Additionally some “disabilities” are not physical. Some are mental (as in crazy) or addiction related (alcoholism, drugs).

    There is a very real possibility that if you are disabled and spend your time talking to the aliens that communicate with you through your dog or spend your free time trying to acquire booze and pills that paying your mortgage may not be a high priority.

    All kinds of discrimination legislation is devoid of common sense. (Insert banshee screeches of racism, able body centrism, etc, here).

    If a bank is loaning you money they should be able to require any type of verification they feel comfortable with – or be able to NOT loan you money that isn’t yours. You are not entitled to a loan.

    One final note: Harrison Bergeron by Kurt Vonnehut Jr. Don’t worry, it is short and easily accessible.