HUD’s Office of Fair Housing and Equal Opportunity (FHEO) published a final rule on February 3, 2012 implementing HUD’s Equal Access regulations to ensure that its core programs are open to all, regardless of sexual orientation, gender identity, or marital status (see Memo, 2/3/12). On January 2, HUD announced the first enforcement action taken against a lender involving this rule.The equal access rule explicitly states that eligibility determinations for HUD-insured or HUD-assisted housing must be made without regard to actual or perceived sexual orientation, gender identity or marital status. This prohibition applies to lenders in an FHA mortgage insurance program, owners or administrators of HUD-assisted or HUD-insured housing and any other recipient or sub-recipient of HUD funds. A lesbian couple was denied an FHA-insured loan at a Bank of America location in Indialantic, FL based on their marital status or sexual orientation. Because one partner was not employed, her mother was a co-applicant on the loan. The bank assured the couple that they were likely to receive a mortgage. However, one day before loan closing, the bank denied the mortgage because it did not consider the loan applicant and co-applicant directly related because the applicant and her partner were not married.A settlement agreement between HUD and the bank calls for the bank to:
- Notify its mortgage originators, processors and underwriters of the settlement, including a link to the equal access regulations.
- Remind applicable employees that they are prohibited from discriminating against applicants of FHA-insured loans on the basis of sexual orientation, gender identity or marital status.
- Update its existing fair lending training program to include information on the equal access regulations.
HUD General Counsel Helen Kanovsky said, “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. 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, FHEO Assistant Secretary, added, “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.” Click here for a HUD media release and settlement agreement. Click here for the Equal Access rule.