CFPB Warns Lenders To Stop Discriminating Against a Recipient of Social Security Disability

The Consumer Financial Protection Bureau (CFPB) has issued a warning to lenders, especially for mortgages, that they cannot discriminate against a recipient of Social Security Disability benefits who applies for a loan.

Under the Equal Credit Opportunity Act (ECOA), the lender cannot ask the borrow questions related to disability income as part of the mortgage application, such as specific details about the borrower’s disability, how long the disability might last (whether it is permanent or temporary, for example), and how long the borrower expects to receive this form of income.

However, the lender can consider the amount of income from Social Security Disability when underwriting a loan. The income qualifies as public assistance under the CFPB’s ability-to-repay (ATR)/qualified mortgage rules, using Qualified Mortgage debt-to-income ratios to determine if the Social Security Disability income is enough for the loan.

“Everyone deserves the opportunity to qualify for a mortgage that they can afford,” said CFPB Director Richard Cordray. “Consumers should not be put at a disadvantage just because they receive Social Security disability income. Lenders should continue to make fair and responsibly underwritten mortgages without imposing unnecessary requirements on consumers who receive these benefits.”

To protect a recipient of Social Security Disability, the Social Security Administration generally will not provide documentation regarding how long benefits will last based on the type of disability the borrow has. More than 15 million Americans receive Social Security Disability as part or all of their income, including veterans of the Armed Forces. According to the CFPB, some mortgage loan applicants have reported being asked for information about their disabilities, or even, in some cases, doctors’ notes proving that the applicant was disabled and eligible for Social Security Disability.

“For those relying on this income, qualifying for a mortgage can be a challenge when lenders ask for proof of how long they will receive their benefits,” the CFPB said. “The Social Security Administration provides these benefits for individuals with serious disabilities, but generally will not provide documentation regarding how long benefits will last.”

The Strom Law Firm Can Help with Social Security Disability Claims

Social Security disability applications require the claimed medical condition to last at least one year, or result in death. Temporary disability pays workers to focus on their recovery so they can return to work, but permanent or total disability pays small living stipends to those who suffer chronic and terminal illnesses so terrible they will be unable to work for the rest of their lives – these illnesses include multiple sclerosis, rheumatoid arthritis, and cancer.

Applying for Social Security Disability Insurance can be complex. However, we understand that you need your benefits and we will put our years of experience to work for you to ensure that you have the representation necessary to actively pursue your claim. Call the South Carolina Social Security Disability attorneys at the Strom Law Firm today to discuss your Social Security Disability or Supplemental Security Income case today. We will be glad to discuss any questions you may have during our free, confidential consultation. Call the experienced attorneys at the Strom Law Firm at (803)252-4800.