HUD: Bank of America Settles with Woman Unfairly Denied Loan Modification

HUD: Bank of America Settles with Woman Unfairly Denied Loan ModificationUnder the terms of an agreement announced by U.S. housing officials, Bank of America will pay $22,449 to a woman who was denied a mortgage modification after she had provided full documentation on a disability that kept her from working.
The payment includes $19,349 to cover the approximate closing costs on a refinance loan. In addition, Fannie Mae will pay the woman $3,400.
Bank of America, the loan servicer, and Fannie Mae, the mortgage-financing giant which owned the loan, reached a Conciliation Agreement, said the U.S. Department of Housing and Urban Development (HUD).
The deal settles allegations that Bank of America and Fannie Mae violated the Fair Housing Act by denying the borrower’s application to modify her mortgage loan because she did not provide sufficient information about the nature of her disability.
The woman was applying for a loan modification through the Obama Administration’s Home Affordable Modification Program (HAMP).
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 familial status.
According to the complaint, a San Bruno, California woman applied for a loan modification at Bank of America that would have reduced her interest rate and made it easier for her to pay her mortgage. The woman suffered a disability that caused her to miss several months of work.
During her leave of absence, the woman used her savings to pay her mortgage. The woman feared that she would not be able to continue paying her mortgage without a lower interest rate or some type of modification. She then applied for a mortgage payment reduction, citing her physical “hardship.”
In responding to her request, a loan officer with the Bank of America asked her to provide documentation relating to her medical condition.
The woman provided the loan officer with a letter from her physician, a current medical bill, and a letter from her employer certifying her approved leave of absence due to her disability.
HUD said that the Bank of America denied her application, allegedly telling her that she had not provided sufficient information about the nature of her disability.
“Even after the woman provided another letter from her physician and insurance records showing her medical treatment between 2007 and 2011, the bank reportedly denied her modification application and Fannie Mae allegedly stated that her doctor’s letters and other documentation were insufficient to show that she was permanently disabled,” HUD said in a statement.
As part of the agreement, Bank of America will also provide fair lending training to its newly-hired employees.
“People with disabilities should not have to answer unnecessary questions about the nature of their disability when seeking a loan modification,” said Bryan Greene, HUD General Deputy Assistant Secretary for Fair Housing and Equal Opportunity. “HUD will continue to take action against lenders that subject persons with disabilities to discriminatory practices.”
Anyone who believes they have experienced discrimination may file a complaint by contacting HUD’s Office of Fair Housing and Equal Opportunity at (800) 669-9777 (voice) or (800) 927-9275 (TTY). Housing discrimination complaints may also be filed by going to www.hud.gov/fairhousing.

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