Bank of America will pay a penalty smaller than the average down payment on a Fannie Mae-backed mortgage, after one of its mortgage loan officers allegedly violated the Fair Housing Act.
According to the Department of Housing and Urban Development, Hung Tran, one of the bank’s loan officers at its branch in Fairfield, California, allegedly discriminated based on sex and familial status when he withheld approval of a mortgage loan until the prospective borrower returned from maternity leave. The Fair Housing Act has outlawed discrimination on the basis of sex and family status since 1988.
The bank — which yesterday reported a net income of $7.1 billion and mortgage originations of $16 billion in the first quarter of 2022 — will pay just $15,000 to settle the claims HUD lodged against it. As part of the agreement, the bank denied its employee discriminated, and does not admit any wrongdoing.
The bank also said it will make no changes in its current policies. Instead, it will “maintain” its existing policies that it claims allow potential borrowers on temporary leave, including parental leave, to qualify for a home loan without first returning to active work status. The bank agreed to provide documentation to HUD showing that it “already maintains such policies.”
HUD will monitor the bank’s adherence to the conciliation agreement, which governs the bank’s behavior for one year. A breach of the agreement would result in a referral to the U.S. Attorney General.
Bank of America declined to comment. Hung Tran, who according to his LinkedIn profile left the bank in February, did not return a request for comment.
How To Increase Production and Help Customers Achieve Wealth Through Homeownership
This case study explores how Fulton Mortgage Company achieved its goal of delivering a more personalized, digital mortgage experience for borrowers, while also increasing production and return on assets.
Presented by: Mortgage Coach
HUD did not immediately comment on the agreement or how many similar claims it receives.
The agreement arose from a complaint that two Napa, California residents filed with HUD in October 2021. HUD has said that in recent years it has struggled to keep up with the onslaught of complaints alleging housing discrimination. HUD said that fair housing complaints reached a five-year high of 8,402 in 2021, and that it desperately needs funding to hire staff to resolve the complaints in a timely manner.
Staffing levels at the division of HUD that oversees fair housing complaints is well below staffing levels of nearly 20 years ago. In 2003, HUD’s office of fair housing and equal opportunity had 744 full time employees. As of 2021 the division had just 534.
“The staffing decrease has challenged HUD’s ability to keep pace with both the number of complaints filed by the public for violations of their rights and the completion of statutorily required fact-finding investigations,” HUD wrote in its recently released equity action plan.
Earlier this year, President Biden proposed a budget increase, which would provide HUD with $1.8 billion for salaries and expenses, $306 million more than it received in 2022. Even if that were approved by Congress, it would only allow for 624 full-time employees at the office of fair housing and equal opportunity.
