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WASHINGTON / NEW YORK, July 23 (Reuters) – Bank of America Corp on Thursday agreed to settle allegations that the US Department of Justice illegally denied mortgages and home equity loans to disabled adults in guardianship or curatorship.

The second largest US bank adopted the lending policy in January 2010 in response to the global financial crisis, to protect “risky” loan seekers from exploitation.

But the Justice Department said the policy, which the Charlotte, North Carolina-based bank abandoned, amounted to discrimination on the basis of disability under federal Fair Housing Act.

Bank of America agreed in settlement to pay $ 4,000 to compensate each affected loan applicant, with payments expected to total approximately $ 300,000, the Justice Department said.

The bank denied any responsibility by accepting the settlement, which requires the approval of a federal judge in Brooklyn.

Bank of America ended the mortgage policy in 2016 and home equity loans in 2017.

In a statement, Bank of America said it has an “exceptional record” in supporting customers and employees with disabilities, and that its Disability Advisory Board is working to improve its strategy.

According to court documents, the Justice Department began investigating the bank’s lending practices in December 2016 and said in September 2019 that it had been allowed to file a complaint. (Reporting by Chris Prentice in Washington and Jonathan Stempel in New York; Editing by Leslie Adler and Jonathan Oatis)