The Consumer Financial Protection Bureau (CFBP) issued a bulletin to lenders on Nov. 18, 2014, warning them not to discriminate against Social Security disability insuance beneficiaries (SSD recipients). Some lenders check each applicant’s beneficiary status to deny reverse mortgages and home loans, which is unfair – and illegal.
Your Disability Should Not Limit Your Ability to Qualify for a Mortgage
Qualifying for a mortgage can be challenging for people who aren’t SSD recipients. However, many disabled people feel their limitations or income could make it impossible to do so. It’s no wonder; many lenders often ask applicants to show documentation proving their SSDI payments will continue going forward. This has posed many issues for consumers over the years, as SSA benefit verification letters do not list how long the payments will continue. It’s truly difficult to know how long SSD recipients may be unable to work due to their symptoms.
SSD Recipients Should Report Illegal Discrimination From Mortgage Lenders
Demanding documentation beyond the SSA letter, however, was illegal in 2014, and it’s still not legal today. That’s why the CFPB issued a warning to lenders hoping to avoid extending mortgages to SSD recipients. If the benefits verification letter doesn’t explicitly list an expiration date, then lenders should not ask consumers for any further documentation. Addiitional requests constitute a violation of the applicant’s privacy.
According to the Equal Credit Opportunity Act (ECOA), credit discrimination against SSD recipients or those receiving benefits from any federal assistance program is illegal. This means that, by law, no creditor can practice discriminatory behavior against SSD receipients in the following areas:
- any credit transaction, including mortgage applications
- refinancing or reverse-mortgage applications
If you believe that you’ve experienced unfair discrimination practices from any mortgage lender, click here and report it to the CFPB immediately.
“Everyone deserves the opportunity to qualify for a mortgage that they can afford,” said former CFPB Director, Richard Cordray. “Consumers should not be put at a disadvantage just because they receive Social Security disability. Lenders should continue to make fair and responsibly underwritten mortgages without imposing unnecessary requirements on consumers who receive these benefits.”
The law not only protects SSD recipients from discriminatory lending practices, it also covers anyone receiving any federal assistance benefits. This includes those receiving benefits from SNAP (Supplemental Nutrition Assistance Program) or TANF (Temporary Assistance for Needy Families).
Other Factors SSD Recipients Should Know About When Applying for Home Loans
Although lenders can’t automatically disqualify you for a mortgage based on your disability, they will still check your credit score and assess your ability to make a down payment. If you have difficulty with either of these issues, you may still be able to buy a home.
The Fannie Mae Community HomeChoice program helps applicants with less-than-ideal credit scores secure mortgages. They can also help you make your new home’s features more accessible based on your disability’s limitations. Sellers often cover the down payment on full-price purchase offers. Otherwise, “sweat equity” options may let you work off the down payment by helping build new structures or rehabilitate older homes. Another option, the IDA program, matches any SSD funds you saved up to purchase your home. This means you may reach your down payment goal much faster than you would otherwise.
Regardless of which program ultimately helps you purchase your next home, report any lenders that refuse your application based on your disability status alone. It’s important to know your rights when dealing with lenders and creditors and report any suspected incidents involving unfair discrimination practices.
SSD Recipients May Qualify for Free Legal Assistance
If you have any questions about qualifying for a mortgage or other issues affecting current SSD recipients, contact a Social Security attorney for help. An attorney can answer your questions privately and represent you in court on a contingency basis, if needed. To see if you may qualify for free legal assistance, click the button below to start your free benefits evaluation now.
Lori Polemenakos is Director of Consumer Content and SEO strategist for LeadingResponse, a legal marketing company. An award-winning journalist, writer and editor based in Dallas, Texas, she's produced articles for major brands such as Match.com, Yahoo!, MSN, AOL, Xfinity, Mail.com, and edited several published books. Since 2016, she's published hundreds of articles about Social Security disability, workers' compensation, veterans' benefits, personal injury, mass tort, auto accident claims, bankruptcy, employment law and other related legal issues.