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National Fair Housing Alliance Fires Shots At BofA Over Racial Loan Profiling

National Mortgage Professional
Feb 19, 2014

The National Fair Housing Alliance announced a housing discrimination complaint against the Bank of America Corporation based on its treatment of prospective Latino borrowers seeking mortgage loans. NFHA’s investigations in Charleston, SC found that Bank of America denied prospective Latino borrowers’ requests to speak with a loan officer about obtaining a home loan or quoted prospective Latino borrowers a higher monthly payment and closing costs, compared to treatment of similarly situated but less qualified prospective white borrowers. The complaint has been filed with the U.S. Department of Housing and Urban Development (HUD) alleging a violation of the Fair Housing Act. “We are disturbed by the unfair treatment prospective Latino borrowers received at Bank of America,” said Shanna L. Smith, president and CEO of NFHA. “Obtaining information about and applying for a home loan should be a business decision, not one based on a person’s national origin.” Over several months, NFHA sent a series of Latino and white individuals posing as prospective borrowers to a Bank of America branch in Charleston, South Carolina, in order to see whether they would be treated fairly. The Latino individuals were slightly more qualified for a mortgage loan than their white counterparts. The Latino individuals had higher incomes, more money available for down payment and closing costs, and comparatively stronger employment profiles. In one instance, a white individual stopped by a bank branch and expressed interest in getting a home loan. After a brief interview with a branch employee, a loan officer with the bank followed up almost immediately by calling her to discuss her situation. The loan officer emailed the white individual multiple estimates for monthly payments and closing costs, offered that he could offset her closing costs with a bank credit, and provided contact information for two real estate agents. A few hours later, a Latina individual visited the same branch and expressed interest in getting a home loan. A branch employee took her information and told the Latina that she would be contacted by a loan officer. In contrast to the white individual, the Latina individual was never contacted. NFHA’s lending discrimination complaint notes that Home Mortgage Disclosure Act data for the Charleston region show that, over the past few years, the number of purchase loan applications Bank of America has received from Latinos has declined, and Bank of America’s market share of Latinos’ applications has significantly dropped in relation to other banks’ market share. Bank of America, one of the nation’s largest banks, already has a different type of housing discrimination complaint filed against it by NFHA, in which HUD is investigating Bank of America’s alleged failure to maintain and market its bank-owned foreclosed homes in communities of color compared to those in white communities. “In view of our existing complaint against Bank of America for discrimination on the basis of race and national origin in the marketing and maintenance of bank-owned properties, these additional findings in loan originations are particularly disturbing.” continued Smith.
Published
Feb 19, 2014