By Andrew A. Turner, J.D.
Evolve Bank & Trust of Memphis, Tenn. has agreed to maintain revised policies, conduct employee training, and compensate victims to resolve Justice Department claims that it discriminated against loan applicants receiving Social Security disability benefits in violation of the Fair Housing Act and Equal Credit Opportunity Act. The FHA prohibits lenders from discriminating on the basis of disability, and the ECOA prohibits lenders from discriminating on the basis of receipt of public assistance.
Bank practices. The Justice Department alleged that mortgage applicants were asked to document their disability and that loan applications were denied if they did not comply. "The requirement that borrowers with a disability provide a letter from a doctor or other information about the borrower’s disability to show that income will continue is an intrusive and burdensome requirement that Evolve imposed on borrowers with a disability and did not impose on other borrowers," according to the Justice Department complaint.
Settlement. The terms of the settlement require Evolve to establish a settlement fund of $86,000 to compensate eligible mortgage loan applicants who were asked to provide a letter from their doctor to document their disability income. Evolve will also be required to conduct training for its underwriters and loan officers, and monitor loan applications to ensure that applicants with disabilities are not asked for a letter from a doctor.
“Loan applicants who rely on disability income should not be treated differently than other applicants,” warned Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division. “This settlement not only provides restitution for mortgage applicants that were harmed by the bank’s discriminatory practices, but ensures that the bank institutes new, fair policies and trains its staff to implement them, added Federal Reserve Governor Lael Brainard.”
The lawsuit originated with a referral from the Board of Governors of the Federal Reserve System to the Civil Rights Division. Evolve is a member of the Federal Reserve System.
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