Fair Lending Protection in Home Mortgages

When you apply for a mortgage loan to purchase a house, refinance, or for a second mortgage, there are two federal statues that protect you rights and curb abusive lending pertaining to discrimination.  These two acts or statutes are the Equal Credit Opportunity Act and the Fair Housing Act.  Many aspects of the rules and regulations of the two acts overlap.  Congress intended to provide sufficient protection to homeowners and borrowers when cases of potential discriminatory practices arise.

The Fair Housing Act prohibits discrimination in housing based on race, national origin, religion, sex, familial status and handicap.  Much of the act covers action in housing as it pertains to rentals and sales.  The act also covers several aspects of discriminatory practices in mortgage lending.  The main components covering prohibited lending practices based on race, color, national origin, sex, familial status, or handicap are:
 
Refusal to make a mortgage loan.
Refusal to provide information regarding available home loans.
Enforce different terms and lending conditions.
Discriminating regarding the appraisal of the property.
Refusal to purchase a home loan or set different terms for purchasing a home loan.
Advertise or make statements that indicate limitations or preferences based the protected classes.
Interfering with those who are exercising a fair housing right.

FHA prohibits discrimination in these specific cases but is also designed to cover almost all aspects of mortgage lending.  Mortgage origination’s and mortgage lenders are covered under FHA as is appraising residential properties, the buying and selling of mortgages irregardless if the loan is to purchase, build, repair or make improvements to the residential property.

ECOA is primarily designed to cover credit transactions.  ECOA bars discrimination in credit dealings based on race, religion, national origin, sex, marital status, age, income derived from public assistance, or a borrowers ability to exercise their rights under the Consumer Credit Protection Act.

If you apply for a bank mortgage and are turned down, remember that not all institutions have the same lending standards.  Shop around for another mortgage lender or bank.  If a lender does deny a mortgage loan or place an applicant in a high mortgage rate and high cost loan, it does not mean they have broken any federal laws.  These companies are just predators exploiting the weakness of borrowers in need.  But if the way you were treated suggests the possibility of unlawful discrimination, you may want to check with a local fair housing group, the state enforcement agency, the local branch of a federal enforcement agency or contact the Department of Housing and Urban Development at:

Office of Fair Housing & Equal Opportunity
Dept. of Housing and Urban Development
Washington, DC 20410-2000
1-800-424-8590