Broker and bank hammered by HUD for discrimination

 by Ryan Smith | 23 Aug 2013

A major bank and an Ohio mortgage broker are being charged with discriminating against a couple with disabilities, according to the Department of Housing and Urban Development.

HUD announced Thursday that it was charging Fifth Third Bank and the Clinton Township, Ohio-based Cranbrook Mortgage Corporation with discrimination against a couple who were trying to refinance their home. HUD alleges that the bank and the mortgage firm required unnecessary medical documentation when the couple applied for a Federal Housing Administration loan.

According to a Thursday news release, a couple who received Social Security disability benefits filed a claim that their loan application had been wrongly denied. HUD alleges that both Fifth Third and Cranbrook required the couple to provide physician’s statements as proof of their Social Security income. According to HUD, at the time the couple applied for the loan, “Fifth Third’s underwriting policy explicitly specified a physician’s statement as appropriate evidence for establishing continuance of disability income.” The couple refused to provide the statements and was denied the loan.

According to the Fair Housing Act, lenders may verify the amount and source of an applicant’s income, but can’t place higher standards of proof or qualification on those who receive disability benefits.

“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.”

The charge will be heard by a U.S. administrative law judge, provided no party in the case requests a hearing in federal district court, according to HUD. If an administrative law judge finds that discrimination has occurred, he or she may award damages and order other relief, including injunctive relief and payment of attorneys’ fees.  If the case goes before a federal court, punitive damages may also be awarded.