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Lending

HUD fines Freedom Mortgage over discrimination claims

Lender forced disabled applicants to provide proof of disability income

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Freedom Mortgage, a national residential mortgage lender based in Mt. Laurel, New Jersey, has been ordered to pay $104,000 by the U.S. Department of Housing and Urban Development to settle claims that the lender discriminated against loan applicants with disabilities.

According to HUD, Freedom Mortgage did not apply the same underwriting practices and procedures to people with disabilities as it did to people without disabilities.

HUD filed an initial complaint against Freedom Mortgage in 2013, alleging that the lender subjected persons with disabilities to different terms and conditions from other applicants by requiring, among other things, that they provide doctor’s notes or letters from the Social Security Administration that their disability income would continue for three years.

HUD determined those actions violated the Fair Housing Act, which makes it unlawful to discriminate in the sale, rental, and financing of dwellings, and in other housing-related transactions, based on race, color, national origin, religion, sex, family status, or disability.

“This includes requiring persons with disabilities to provide medical or other documentation not required of mortgage applicants who are not disabled,” HUD said in a statement.

“Applicants who are otherwise qualified for a home loan may not have additional requirements placed on them because of a disability,” said Gustavo Velasquez, HUD's assistant secretary for fair housing and equal opportunity.

"We are pleased that this national mortgage lender, through the agreement, is making a commitment to comply with its obligation to treat persons with disabilities the same way they treat those who are not disabled.”

Through its investigation, HUD identified 69 applicants that were discriminated against because of their disability.

In one case, a loan applicant provided medical documentation of his disability, a Department of Labor Work Capacity Evaluation form, and a benefits statement showing regular disability payments since 2009. Nonetheless, Freedom Mortgage allegedly continued to request proof that the income would continue for at least three years.

As part of the settlement with HUD, Freedom Mortgage will establish a system to provide relief to the discrimination victims, in the form of payments of $1,000, $2,000, or $5,000 in damages.

Additionally, Freedom Mortgage has been ordered to amend its underwriting guidelines to abolish disability-related income verification requirements for applicants who receive disability income.

Freedom Mortgage employees have also been ordered to attend training on the Fair Housing Act.

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