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Justice Department Reaches Settlement with Bank of America to Resolve Allegations of Discrimination Against Recipients of Disability Income

September 13, 2012

News source: Department of Justice

Settlement Provides Compensation to Victims Identified by the Department of Justice and Establishes Procedures for Treating Borrowers Fairly Who Receive Disability Income

Bank of America N.A. has agreed to maintain revised policies, conduct employee training and pay compensation to victims to resolve allegations that it engaged in a pattern or practice of discrimination on the basis of disability and receipt of public assistance in violation of the Fair Housing Act (FHA) and the Equal Credit Opportunity Act.

The settlement, which is subject to court approval, was filed yesterday in federal court in Charlotte, North Carolina, where Bank of America is headquartered.The terms of the settlement require Bank of America to pay $1,000, $2,500 or $5,000 to eligible mortgage loan applicants who were asked to provide a letter from their doctor to document the income they received from Social Security Disability Insurance (SSDI). Applicants who were asked to provide more detailed medical information to document their income may be paid more than those who were asked to have a doctor verify their source of income. Bank of America will hire a third party administrator to search approximately 25,000 loan applications involving SSDI income to identify any other victims. Under the settlement, Bank of America will conduct training of its underwriters and loan officers and will monitor loan applications to ensure that applications from [individuals with disabilities] are treated in a manner consistent with applicable law.

This lawsuit arose as a result of three complaints filed by loan applicants with the U.S. Department of Housing and Urban Development (HUD). After investigating the complaints, HUD undertook a broader investigation into Bank of America’s practices. Bank of America revised its policies for documenting disability income during HUD’s investigation. The Assistant Secretary of HUD elected to have the case heard in federal court and referred the case to the Department of Justice. The HUD complainants will receive a total of $125,000 to their harm and compensate them for costs associated with their loan applications.

“Loan applicants with disabilities should not be subjected to invasive requests for medical information from a doctor when they are applying for credit,” said Thomas E. Perez, Assistant Attorney General for the Justice Department’s Civil Rights Division. “Today’s settlement shines a light on a practice that violates the Fair Housing Act and the Equal Credit Opportunity Act.”

A copy of the complaint [pending], as well as additional information about fair lending enforcement by the Justice Department, can be obtained from the Justice Department’s website at www.justice.gov/fairhousing.

Full Press Release: Justice Department Reaches Settlement with Bank of America to Resolve Allegations of Discrimination Against Recipients of Disability Income


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