HUD files charges against lender
According to the U.S. Department of Housing and Urban Development (HUD), charges have been filed against Ohio-based Fifth Third Bank, Fifth Third Mortgage Company and Cranbrook Mortgage Corporation for allegedly discriminating against a couple with disabilities who were attempting to refinance their home mortgage.
HUD alleges the lender and mortgage broker required “unnecessary medical documentation” to qualify the couple for a Federal Housing Administration (FHA) loan. The couple, who receives Social Security Disability Insurance (SSDI) filed a complaint claiming their application was unfairly denied and that the lender and mortgage broker made statements and employed written policies requiring the couple to provide physician statements to establish continuance of SSDI income. The charge alleges that at the time of the couple’s loan, Fifth Third’s underwriting policy explicitly specified a physician’s statement as appropriate evidence for establishing continuance of disability income.
Enter the Fair Housing Act
The Fair Housing Act makes it unlawful to deny or discriminate in the terms and conditions of a mortgage or loan modification based on disability, race, color, religion, national origin, sex, or family status, including imposing different application or qualification criteria.
“Persons with disabilities should not have to meet higher mortgage qualification standards because they rely on disability insurance payments as a source of income,” said Bryan Greene, HUD’s Acting Assistant Secretary for Fair Housing and Equal Opportunity. “Banks and mortgage companies may verify income and have eligibility standards, but they may not single out homebuyers with disabilities or deny financing when they are otherwise qualified.”
HUD said in a statement that lenders may legally verify an applicant’s income amount and source, but may not place higher qualification standards on applicants who receive disability income. The couple did not provide the requested physician statements, and Cranbrook and Fifth Third denied the loan application.
The charges will go before a U.S. Administrative Law Judge unless any party to the charge elects to have the case heard in federal district court and damages may be awarded if the lender and mortgage broker are found guilty of Fair Housing Act violations. If found guilty, they may also be ordered with injunctive relief and equitable relief to deter future discrimination, and they may pay fines to vindicate public interest.