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HUD: Bank of America violated Fair Housing Act

The trouble continues for Bank of America (BAC). According to a press release issued Monday, the U.S. Department of Housing and Urban Development (HUD) alleges the bank is guilty of discriminating against borrowers with disabilities.

This is just one in a string of allegations against B of A, one of the nation's largest banks.

HUD claims Bank of America "imposed unnecessary and burdensome requirements on borrowers who relied on disability income to qualify for their home loans and required some disabled borrowers to provide physician statements to qualify for home mortgage loans."

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According to the report, Bank of America allegedly asked borrowers to provide proof of their disabilities and the continuation of their Social Security income before approving loans, after first denying them. If the allegations are true, B of A violated the Fair Housing Act.

"Holding homebuyers with disabilities to a higher standard just because they rely on disability payments as a source of income is against the law," John Trasvia, HUD assistant secretary for Fair Housing and Equal Opportunity, said in the press release. "Mortgage companies may verify income and have eligibility standards but they may not single out home buyers with disabilities to delay or deny financing when they are otherwise eligible."

According to Reuters, Bank of America said "there is no basis to allege that Bank of America has engaged in a systemic practice of discriminating on the basis of disability in connection with mortgage lending."

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The Fair Housing Act makes it illegal to discriminate based on race, color, national origin, religion, sex, familial status or handicap. This includes imposing different application or qualification criteria based on disability. Fair Housing also makes it illegal to inquire about the nature or severity of a disability except in limited circumstances which, according to HUD, are not applicable in this case.

The allegations are based on a secretary-initiated investigation of complaints filed by two borrowers in Michigan and one borrower in Wisconsin.

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