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5/3 Charged With Discrimination

Violation of Fair Housing Act alleged

Aug. 22, 2013

By Mortgage Daily staff

Subsidiaries of Fifth Third Bancorp were charged along with a mortgage broker with discrimination because they required loan applicants to verify the duration of disability income.

The case involves a Michigan couple who applied with the broker to refinance their Federal Housing Administration-insured home loan.

The couple relied on Social Security Disability Insurance. When they were asked to provide physician statements to establish continuance of SSDI income, they refused.

So, according to an announcement from the Department of Housing and Urban Development, their loan application was turned down.

The couple then filed a complaint with HUD alleging that their application was unfairly denied.

HUD agreed and filed administrative charges against Fifth Third Bank, Fifth Third Mortgage and the broker, Cranbook Mortgage Corp.

HUD claims that the three companies violated the Fair Housing Act because they imposed different application or qualification criteria by requiring unnecessary medical documentation.

HUD said that at the time of the application, Fifth Third's underwriting policy explicitly specified that a physician's statement would be appropriate to establish the continuance of the SSDI income.

HUD explained that it is ok to verify an applicant’s income amount and source. But it's not ok to place higher qualification standards on applicants who receive disability income.

"Persons with disabilities should not have to meet higher mortgage qualification standards because they rely on disability insurance payments as a source of income," HUD Acting Assistant Secretary for Fair Housing and Equal Opportunity Bryan Greene said in the announcement. "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."

A U.S. administrative law judge will hear the charge unless Fifth Third or the broker chooses to have the case hear in federal court.

If the administrative judge determines that discrimination has occurred, damages can be awarded to the complainants. The judge can additionally choose to order injunctive relief and other equitable relief to deter further discrimination, order payment of attorney fees and impose fines in order to vindicate the public interest.

If the case is heard in federal court, the judge can impose punitive damages.

Fifth Third profile

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