The U.S. Department of Housing and Urban Development (HUD) announced that it had settled a discrimination complaint with Bank of America for allegedly refusing to provide a mortgage loan to a lesbian couple from Florida. According to a press release issued by HUD, the agreement is the first enforcement action taken against a lender involving HUD’s recent rule requiring that the HUD’s “core housing programs” be open to all eligible persons, regardless of sexual orientation, gender identity, or marital status.
Under the terms of the agreement, Bank of America will pay HUD $7,500; notify its residential mortgage loan originators, processors, and underwriters of its Settlement Agreement with HUD; remind its employees that they are prohibited from discriminating against FHA-loan applicants on the basis of sexual orientation, gender identity, or marital status; and update its fair lending training program to include information on HUD’s rule.
HUD issued its rule regarding LGBT gender equality in February 2012. The rule applies to all housing programs administered by the Department, including lenders who issue loans insured by the Federal Housing Administration (FHA). Among other things, the rule prohibits such lenders from basing eligibility determinations for mortgage loans on actual or perceived sexual orientation, gender identity or marital status.
Commenting on the settlement in the press release, HUD General Counsel Helen Kanovsky stated: “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.” 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.”
HUD claimed Bank of America denied a loan to a Florida couple seeking to obtain an FHA-insured mortgage because of their sexual orientation and marital status. 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.