Bank Of America Caught Refusing Mortgages To Women On Maternity Leave

Compared to $40 billion-plus in penalties, settlements, adjustments, and legal fees Bank of America has already racked up because it flat-out stinks at servicing home loans, a $45,000 payment split between two couples is a molecule in a drop of water in the bucket. But this story, in which BofA decided that pregnant homeowners were too big a risk for mortgage refinancing, is a good reminder of consumers’ rights under the law and of BofA’s general incompetence.

According to the Dept. of Housing and Urban Development, which sued the bank of behalf of the homeowners, Bank of America violated the Fair Housing Act’s prohibition against discrimination on the basis of gender or familial status by setting different refinancing rules for homeowners who were expecting a child.

The first couple involved in the suit is from San Jose, CA, and claimed that BofA moved back the couple’s refi closing date because they were expecting a child and the mom-to-be was on maternity leave.

The second couple, from Humble, TX, alleged that BofA refused to consider the wife’s employment income and denied their application for a mortgage loan because she was on maternity leave. They also claim that when their real estate agent told the loan officer that this denial was in violation of the Fair Housing Act, the loan officer changed his reasons for denying the loan. In the end, the couple went elsewhere for their mortgage, presumably to a lender that has a basic understanding of the law.

To make this all go away, Bank of America dipped into its “make this go away” fund and has agreed to pay $25,000 to the California couple and $15,000 to the Texas couple, with another $5,000 going to that couple’s realtor.

The bank has also looked into HUD’s eyes and promised, seriously this time, that it will revise its policies to allow applicants on parental leave to be approved for mortgage loans without first returning to active work status… at least until the next time it gets caught.

“No lender should use a woman’s pregnancy or maternity leave as a reason to deny a mortgage loan,” said Bryan Greene, HUD Acting Assistant Secretary for Fair Housing and Equal Opportunity in a statement. “We commend Bank of America for working cooperatively with the Department of Housing and Urban Development in reaching appropriate resolutions of these complaints. Bank of America took affirmative steps to work with government regulators to ensure that its new policies did not conflict with lending guidelines.”

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  1. SingleMaltGeek says:

    That’s pathetic. That’s basically like asking BoA to sweep up all the loose change lying on its dresser/nightstand and pay that as a penalty.

  2. LizNYC says:

    Further proof (as if we needed it) that BOFA is the WORST. I can only imagine how many other homeowners have been caught up in this who a) didn’t know this was illegal or b) were given different bogus reasons why their refi was denied, yet this was the real reason.

  3. Kakolukia says:

    I’m not saying it’s morally or ethically right but if they can get away with bending or breaking the law then it’s good business for them. Protection of pregnant women may make sense from a societal point of view but in almost every case it’s bad business so it is understandable, if not defensible, for companies to try to skirt the law.

    • C0Y0TY says:

      Good business also includes “good will”. Good will is a quantifiable and accountable asset. If a company acts in the interest of the company only, at the harm or chagrin of the customer, its good will asset is useless. If a company chronically constricts its customers like the BOA, its good will asset becomes a liability and bad business.

    • PhillyDom says:

      @Kakolukia: How is it “bad business”? Ability to repay the loan should be the only consideration in granting a mortgage. Pregnancy doesn’t magically render women unable to pay their bills.

  4. MarkyMark says:

    I wonder sometimes if BoA is stupid enough to have an (un)written policy to break the law OR if they unfortunately hire employees who (un)knowingly break the law.

  5. MathManv2point0 says:

    Why is no one commenting on the photo?!?!? That is some freaky photoshop!!

  6. MathManv2point0 says:

    How about temporarily revoking the mortgage licenses at the branches where the FHA was violated?

  7. PhillyDom says:

    It appears to me that at BofA there is an employee (or a whole unit) whose job it is to determine new ways for the company to be evil.