Bank of America, DOJ reach settlement

The nation’s second-largest bank will pay back up to $5,000 to individuals whom were forced to undergo additional application requirements for home mortgages on the basis of their disabilities, as part of a settlement dated September 13 with the Department of Justice.

Bank of America Sign
Settlement Reached

As part of its application process, Bank of America had a policy of requiring people receiving Social Security Disability Insurance income to provide the bank a doctor’s note with information regarding the nature and severity of the person’s disability.

After receiving complaints, the U.S. Department of Housing and Urban Development investigated the bank and filed a lawsuit in February 2012, alleging that the bank’s mortgage application policies, by imposing “unnecessary and unduly burdensome” requirements on people with disabilities, violated the Fair Housing Act.

The settlement, which also allegedly violated the Equal Credit Opportunity Act, requires the bank to hire a third-party administrator to review as many as 25,000 loan applications. Individuals subjected to the additional requirements at issue in the case will receive either $1,000, $2,500 or $5,000.

Bank of America, which admitted to no wrongdoing as part of the settlement, will also implement a training programs for underwriters and loan officers.

“Loan applicants with disabilities should not be subjected to invasive requests for medical information from a doctor when they are applying for credit,” said Thomas E. Perez, assistant attorney general for the Justice Department’s Civil Rights Division, in a news release.

For the next 42 months, from the time the settlement is approved by a the U.S. District Court for the Western District of North Carolina, the DOJ must approve any changes to the bank’s disability income policies.