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Question & Answer

Question: We have a loan application for a mortgage from a person who is physically disabled. What compliance issues should we be concerned with?

Answer:You are right to check this out. Although the ECOA does not list handicap as a prohibited basis, the Fair Housing Act does. Because the Fair Housing Act applies broadly to all aspects of a housing transaction, it applies to the sale as well as to the financing. The lender's responsibility relates to the financing application and processing. In this respect, there are two areas for attention. First, the application-taking process itself. Both the physical accommodation and the way the bank staff treats the customer should be of concern. In effect, the customer with the handicap should be able to enter the bank, dignity intact, and transact business.

Second, in underwriting the loan, don't take into account the borrower's handicap as a derogatory factor. Look instead at the facts of the situation. For example, some people might assume that a person with a severe physical handicap cannot be fully self-supporting or could not live independently. Do not make assumptions! Look at the facts. Many individuals with disabilities are self-supporting. Many are able to support themselves and live independently. In considering the application, you should look at the applicant and the applicant's qualifications. What resources does the applicant bring? What debts or obligations does the applicant have. Remember, the application is from a person, not a disability. Finally, remember that the Americans with Disabilities Act would also apply to the situation. In this respect, you should be particularly concerned about the physical setting for the loan application and for meetings with the applicant. Under ADA, you should take reasonable steps to accommodate the applicant's needs.

Copyright © 1998 Compliance Action. Originally appeared in Compliance Action, Vol. 3 , No. 5 & 6, 4/98

First published on 04/01/1998

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