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HUD Settles With BofA for $160,000 on Refi-Related Discrimination Claim

Jun 08, 2012

The U.S. Department of Housing & Urban Development (HUD) has announced that Bank of America has agreed to pay up to $161,180 to settle allegations that one of the bank’s San Jose, Calif. branches refused to refinance the mortgage of an Irvine, Calif. woman because she was on maternity leave. HUD reached the agreement with Bank of America to resolve a Fair Housing Act complaint that had been filed by the Fair Housing Council of Orange County (FHCOC). The Fair Housing Act prohibits housing discrimination in mortgage lending and real estate-related transactions based on a person’s race, color, national origin, religion, sex, family status and disability. Refusing to approve a mortgage loan or provide refinancing because a woman is pregnant or on family leave violates the Fair Housing Act’s prohibition against sex and family status discrimination. “The Fair Housing Act prohibits lenders from denying home loans to women because they are pregnant or on maternity leave,” said John Trasviña, HUD Assistant Secretary for Fair Housing and Equal Opportunity. “Today’s settlement follows HUD actions involving other lenders across the country which we will continue until maternity leave discrimination is eliminated.” The woman told FHCOC, a non-profit fair housing organization funded by HUD, that in December 2009, a Bank of America agent offered her a five percent interest rate for a home refinance loan, with no costs or fees. But in January 2010, after she had applied for the loan and supplied the necessary documents, the bank allegedly refused to process her application because she was on maternity leave. In her complaint, the woman alleged that a bank agent told her that she would have to return to work full-time in order for her loan to be approved. Even after she informed the bank that she received the same rate of pay and benefits while on maternity leave, the bank would not process her application. In March 2010, the bank finally approved the woman’s application, but by that time the interest rate on her loan had increased to 5.25 percent, making each loan payment higher. “We regret our treatment of the applicant," said a Bank of America official. "We take our Fair Lending responsibilities very seriously and will work with HUD to ensure our customers on maternity leave are treated appropriately during the mortgage application process.” Under the terms of the Conciliation Agreement, Bank of America will pay $30,000 to the woman, $16,180 to her attorney, and $15,000 to FHCOC. The bank will also create a $100,000 Compensation Fund to pay damages to loan applicants or borrowers who may have been denied a loan, subjected to adverse loan terms, or had their loan applications delayed because they were pregnant or on maternity leave. In addition, the bank is requiring all of its loan officers nationwide to complete annual fair lending training.
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Jun 08, 2012
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