WASHINGTON — The U.S. Department of Housing and Urban Development (HUD) on Wednesday announced a settlement agreement in a claim it brought against Bank of America for discriminating against a lesbian couple applying for a federally insured mortgage loan.
The settlement marks HUD’s first enforcement action taken under its recently enacted LGBT Equal Access Rule.
The rule, which represents one of the most significant federal nondiscrimination efforts ever taken on behalf of the LGBT community, went into effect on March 5, 2012. It prohibits discrimination based on sexual orientation, gender identity, and marital status in public housing and HUD’s core housing programs, including eligibility determinations for mortgage loans insured by the Federal Housing Administration (FHA).
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 Bank of America for several weeks to provide all of the necessary loan application documents and the couple was assured by Bank of America that they were likely to receive a mortgage. One business day prior to closing, Bank of America 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 Bank of America’s actions, the couple was not able to close on the loan.
“Today’s announcement is a turning point for the LGBT community in its fight for equal access to fair and affordable housing,” said Maya Rupert, Director of Policy for The National Center for Lesbian Rights, in a statement.
“This settlement agreement shows how serious HUD is about working to ensure all people and their families can access public housing and crucial housing programs,” said Rupert.
Under terms of the agreement, Bank of America agreed to pay HUD $7,500 and to notify its residential mortgage loan originators, processors and underwriters of its settlement agreement with HUD.
In addition, Bank of America will advise its employees that they are prohibited from discriminating against FHA-loan applicants on the basis of sexual orientation, gender identity or marital status.
Bank of America will also update its fair lending training program to include information on HUD’s rule.