The Department of Housing and Urban Development’s Office of Fair Housing and Equal Opportunity (FHEO) has announced its successful negotiation of a “conciliation agreement” between the parties to a lawsuit alleging discrimination on the basis of a mortgage applicant’s disability.

The suit, which arose out of an FHEO investigation, was brought by an applicant for a Federal Housing Administration (FHA)-insured loan against Mortgage One, Inc. of Sterling Heights, Michigan. It alleged discrimination on the basis of the applicant’s disability, which is prohibited by the Fair Housing Act.

According to HUD’s November 17, 2015, press release, a Mortgage One loan processor made “intrusive and unnecessary” requests for documentation concerning the nature and expected duration of the applicant’s disability. HUD’s FHA Mortgagee Handbook, which addresses the underwriting treatment of Social Security, Veterans’ or private disability income, states that “Under no circumstance may [a lender] inquire into or request documentation concerning the nature of the disability or the medical condition” of any applicant.

Although it was not required to admit wrongdoing, Mortgage One agreed to make a $10,000 payment to the complainant. The company must also distribute to all loan officers, underwriters, and processors an agreed-upon statement regarding company’s policy concerning information requests, particularly those for personal medical information, from applicants receiving income from Social Security disability or other “public assistance” programs. Finally, the loan processor involved must attend a Fair Housing Act compliance course that covers the Act’s disability status provisions.

FHEO’s conciliation process is entirely voluntary. However, the conciliation agreement provides that if HUD has “reasonable cause” to believe Mortgage One has failed to comply with its obligations thereunder, HUD may refer the case to the U.S. Attorney General’s Office.