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Bank of America will pay $300K to settle DOJ mortgage lending discrimination claim
Bank did not admit fault but as part of settlement will pay $4K to 75 eligible loan applicants “affected by the bank’s prior discriminatory policies,” government said
Bank of America and the U.S. Department of Justice reached a settlement over allegations the bank denied mortgages and home equity loans to adults with disabilities who were under legal guardianship.
The bank’s alleged actions relating to mortgages ran from 2010 to 2016, and violated the Fair Housing Act, according to the Justice Department. The government also said the bank’s practice regarding home equity loans lasted until 2017.
Under the terms of Thursday’s settlement, Bank of America did not admit fault but will pay $4,000 to about 75 eligible loan applicants who “were affected by the bank’s prior discriminatory policies,” according to a DOJ news release. The total payment will amount to around $300,000, the government said. The settlement still must be approved by a judge.
The Justice Department notified Bank of America as far back as 2016 that it was looking into its mortgage lending practices as possible violations of the Fair Housing Act.
The civil complaint filed in federal court in New York alleged Bank of America denied loans even “where the applicants provided court orders that specifically granted the guardian or conservator the legal authority to the mortgaged property.”
Seth D. DuCharme, acting U.S. Attorney for the Eastern District of New York, said the settlement “ensures that Bank of America will no longer discriminate against people with disabilities when issuing mortgage and home equity loans, and compensates the victims for their losses.”
According to the settlement, Bank of America said it “did not unlawfully discriminate against any person based on a disability,” but has since changed its guidelines. The bank said it entered into the settlement “solely for the purpose of avoiding costly litigation with the United States.”
As part of the settlement, Bank of America agreed to maintain its new loan processing and underwriting guidelines and continue training its employees about those guidelines.
The settlement comes less than two weeks after a news report showed that a separate federal investigation into discriminatory lending at Bank of America in Philadelphia stalled in late 2018, after complaints from the bank. The report, from ProPublica and The Capitol Forum revealed that the scuttled Bank of America inquiry was “part of a larger, previously unreported pattern in which the Trump administration has pulled back on civil rights enforcement as a part of its overall relaxation of bank oversight.”