Settlement Marks First Enforcement Action Under HUD’s New LGBT Rule

In January 2013, HUD announced an agreement with Bank of America to settle a claim that the mortgage lender refused to provide financing to a lesbian couple. The agreement is the first enforcement action taken against a lender involving HUD’s recent rule ensuring that its core housing programs be open to all eligible persons, regardless of sexual orientation, gender identity, or marital status.

HUD’s rule, Equal Access to Housing in HUD Programs Regardless of Sexual Orientation or Gender Identity, applies to all housing programs administered by the department, including public and HUD-assisted housing programs. Among other things, the rule prohibits lenders from basing eligibility determinations for mortgage loans insured by the Federal Housing Administration (FHA) on actual or perceived sexual orientation, gender identity, or marital status.

HUD claimed that the bank 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 claimed that, despite assurances that they were likely to receive a mortgage, the bank denied the loan the day before the closing; allegedly, it didn’t consider the loan applicant and the co-applicant directly related because the applicant and her partner weren’t married.

Under the settlement, the bank agreed to pay HUD $7,500 and to remind its employees that they are prohibited from discriminating against FHA-loan applicants on the basis of sexual orientation, gender identity, or marital status.

“This agreement demonstrates that HUD will vigorously enforce its Equal Access rule and pursue lenders that discriminate on the basis of sexual orientation, gender identity, or marital status,” Helen Kanovsky, HUD’s General Counsel, said in a statement. “By the same token, BOA should be commended for stepping up and taking immediate corrective action after HUD notified BOA of the violation.”

John Trasviña, HUD’s Assistant Secretary for Fair Housing and Equal Opportunity, added, “The HUD Equal Access Rule means just what it says: one’s sexual orientation, gender identity, or marital status is not a legitimate basis on which to deny a mortgage. Members of the housing industry should take note of this settlement agreement. HUD will enforce its regulations to make sure its programs are truly open to all qualified families.”

Source: HUD

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