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Bank Of America Settles In FHA Sexual Orientation Discrimination Case

A press release issued on Jaunary 2, 2013 announces a settlement between the Department of Housing and Urban Development and Bank of America regarding a discrimination case filed by the government.

According to HUDNo.13-001, “The U.S. Department of Housing and Urban Development today announced an agreement with Bank of America (BOA) to settle a claim that the mortgage lender refused to provide financing to a lesbian couple.  The agreement is the first enforcement action taken against a lender involving HUD’s recent rule ensuring that the Department’s core housing programs be open to all eligible persons, regardless of sexual orientation, gender identity, or marital status.”

The case involves alleged violations of the HUD rule “Equal Access to Housing in HUD Programs Regardless of Sexual Orientation or Gender Identity” which prohibits lenders from “basing eligibility determinations for mortgage loans insured by the Federal Housing Administration (FHA) on actual or perceived sexual orientation, gender identity or marital status.” The Equal Access rule applies equally in all HUD/FHA housing programs.

The details of the case involve a couple who HUD says were denied an FHA mortgage loan based on marital status and sexual orientation rather than financial qualifications. According to the press release, “Because one partner was not employed, the applicant enlisted her partner’s mother as a co-applicant on the loan.  The couple worked with BOA for several weeks to provide all of the necessary loan application documents and the couple was assured by BOA that they were likely to receive a mortgage.  One business day prior to closing, BOA denied the mortgage because it did not consider the loan applicant and the co-applicant directly related because the applicant and her partner were not married.  As a result of BOA’s actions, the couple was not able to close on the loan.”

The settlement between HUD and Bank of America involves a fine of $7,500 and an agreement that Bank of America must “notify its residential mortgage loan originators, processors and underwriters of its Settlement Agreement with HUD. In addition, BOA will remind its employees that they are prohibited from discriminating against FHA-loan applicants on the basis of sexual orientation, gender identity or marital status.  BOA will also update its fair lending training program to include information on HUD’s rule.”

“This agreement demonstrates that HUD will vigorously enforce its Equal Access rule and pursue lenders that discriminate on the basis of sexual orientation, gender identity or marital status,” said Helen Kanovsky, HUD’s General Counsel.  “By the same token, BOA should be commended for stepping up and taking immediate corrective action after HUD notified BOA of the violation.”

John Trasviña, HUD’s Assistant Secretary for Fair Housing and Equal Opportunity, added, “The HUD Equal Access Rule means just what it says:  one’s sexual orientation, gender identity or marital status is not a legitimate basis on which to deny a mortgage. Members of the housing industry should take note of this settlement agreement.  HUD will enforce its regulations to make sure its programs are truly open to all qualified families.”

We report stories like these to remind our readers that sometimes the borrower is the only defense against such types of discrimination. If you don’t file a report, you cannot raise awareness of this illegal activity and stop it. Anyone who has experienced discrimination in the FHA loan process should complain immediately to the FHA and HUD by contacting the HUD Office of Fair Housing and Equal Opportunity at (800) 669-9777. You also have the option of  filing a housing discrimination complaint online.

Do you have questions about FHA home loans? Ask us in the comments section.

Joe Wallace - Staff Writer

By Joe Wallace

January 4, 2013

Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.

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