In October 2014, in Wigginton v. Bank of America Corp., 2014 U.S. App. Lexis 19850 (7th Cir. October 16, 2014), the Seventh Circuit Court of Appeals rejected the plaintiffs’ assertion that Bank of America’s request for income-related information on the continuation of disability benefits was discriminatory under the Fair Housing Act, 42 U.S.C. § 3605(a) (“FHA”), the Rehabilitation Act, 29 U.S.C.§ 794, and Title III of the Americans with Disabilities Act, 29 U.S.C. 12182(a) (“ADA”). The Seventh Circuit cited to the Equal Credit Opportunity Act (“ECOA”) for the proposition that it is not discriminatory for a bank to collect information about “whether the applicant’s income derives from any public assistance program if such inquiry is for the purpose of determining the amount and probable continuance of income levels, credit history, or other pertinent element of credit-worthiness.” 2014 U.S. App. Lexis 19850 *2, citing 15 U.S.C.§1691(b)(2).
Although the Seventh Circuit agreed that the FHA, the ADA, and the Rehabilitation Act prohibit discrimination, it noted that “[n]one of these statutes forbids asking applicants for information that will be used to apply the same standards that govern non-disabled persons.” 2014 U.S. App. Lexis 19850 *3. The appellate court noted that a creditor is permitted to determine income levels as part of its underwriting process, and that disability benefits are not locked-in for life and may change.
Accordingly, a creditor may request information necessary to determine the continuation of such income as part of the application process.
The take-away from this ruling is that although federal fair lending law – under ECOA, the FHA and the ADA – prohibits discrimination in obtaining applications for lending, it does not prohibit a lender from requesting income information necessary to make a reasoned underwriting decision.