The U.S. Department of Housing and Urban Development (HUD) announced that it is charging Fifth Third Bank, Fifth Third Mortgage Company and Cranbrook Mortgage Corporation with discriminating against a couple with disabilities who were attempting to refinance their home mortgage. HUD’s charge alleges that the Cincinnati, Ohio-based mortgage lender and the Clinton Township, Michigan-based mortgage broker required unnecessary medical documentation in order to qualify the couple for a Federal Housing Administration (FHA) loan.
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 family status, including imposing different application or qualification criteria.
“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 case came to HUD’s attention after a married couple that receives Social Security Disability Insurance (SSDI) benefits filed a complaint claiming that their application for an FHA-insured home refinance loan was unfairly denied. According to HUD’s charge, the lender and mortgage broker made statements and employed written policies requiring the couple to provide physician statements to establish continuance of SSDI income. The charge alleges that at the time of the couple’s loan, Fifth Third’s underwriting policy explicitly specified a physician’s statement as appropriate evidence for establishing continuance of disability income.
While lenders may verify an applicant’s income amount and source, they may not place higher qualification standards on applicants who receive disability income. The couple did not provide the requested physician statements and Cranbrook and Fifth Third denied the loan application.
HUD’s charge will be heard by a United States Administrative Law Judge unless any party to the charge elects to have the case heard in federal district court. If an administrative law judge finds after a hearing that discrimination has occurred, he may award damages to the complainants. The judge may also order injunctive relief and other equitable relief to deter further discrimination, as well as payment of attorney fees. In addition, the judge may impose fines in order to vindicate the public interest. If the matter is decided in federal court, the judge may also award punitive damages.