Real Estate Discrimination

Home Loan Articles >> Real Estate Discrimination

The Equal Credit Opportunity Act (ECOA) and the Fair Housing Act (FHA) protect you against discrimination when applying for a mortgage to buy, FHA loans, refinance, or make home improvements.

Your Rights Under ECOA:

Color or race

Religion

National origin

Gender

Marital status

Age

An applicant's receipt of income derived from any public assistance program

The applicant's exercise, in good faith, of any right under the Consumer Credit Protection Act (the umbrella statute which includes the ECOA)

The FHA prohibits discrimination in any aspects of residential real estate-related transactions, including:

Your Rights Under FHA:

Making loans to purchase, construct, repair, or improve a dwelling

Selling, brokering, or appraising residential property

Selling or renting a dwelling

It also prohibits discrimination based on:

Race or color

National Origin

Sex

Religion

Handicap

Family status (defined as children under the age of 18 living with a parent or legal guardian, pregnant women, and people securing custody of children under 18)

Lender Do's and Don'ts

Lenders Must:

Consider consistent public assistance income in the same way as other income.

Consider reliable income from part-time employment, social security, pensions, and annuities.

Consider reliable alimony, child support, or maintenance payments, if you choose to provide this information. A bank may ask you for proof that this income is received consistently.

If a co-signer is required, accept someone other than your spouse, he or she may be asked to sign documents allowing you to mortgage the property.

Lenders Cannot:

Discourage you from applying for a mortgage or deny your application because of your race, national origin, religion, sex, marital status, age, or because you get public assistance income.

Consider your race, national origin, or sex, although you will be asked to voluntariliy disclose this information to help federal agencies enforce anti-discrimination laws. A creditor may consider your immigration status and whether you have the right to remain in the country long enough to repay the debt.

Impose different terms or conditions, such as a higher interest rate or bigger down payment, on a loan based on your race, sex, or other excluded factors.

Consider the racial composition of the neighborhood where you are looking to live. This also applies when property is being appraised.

Ask about your plans for having a family. Questions about expenses related to your dependents are accepted.

Refuse to buy a loan or set different terms or conditions on the loan purchase based on discriminatory factors.

Require a co-signer if you qualify for the lender's standards without needing a co-signer.

Strengthening Your Application

Not everyone who applies for a mortgage will get one. Lenders can use factors such as income, expenses, debts, and creditworthiness to evaluate applicants.

There are actions you can follow to ensure that your application gets full consideration. Give the lender all information that solidifies your application. For example, stable employment is very important to many lenders. Perhaps you’ve recently changed jobs but have been employed steadily in the same field for many years. If so, include documentation on your application.

Get a duplicate of your credit report before you apply for a mortgage loan. Reports often contain inaccurate information. For example, accounts might be reported that don’t belong to you or paid accounts might be reported as unpaid. If you see errors, dispute them with the credit bureau and tell the lender about the dispute.

If you’ve had past slow pay problems, such as a lost job or high medical expenses, write a letter to the lender justifying what caused your bad credit problems. Lenders must consider this information at your request.

Try for the Best Loan Terms

Some mortgage lenders might try to charge some borrowers more than others for the exact loan product offered at the same period. This may include higher interest rates or origination fees or more points. Ask the lender if the rate you’re being quoted is the lowest offered that day. The lender is probably basing the loan offer on the list of mortgage rates frequently issued by that institution to its loan officers. Ask to see this list. If the lender refuses and you suspect you are not being offered the lowest rates or points available, you may want to negotiate for better terms or shop for another lender.

If Your Application is Turned Down

If your mortgage is denied, the lender must give you specific reasons why or tell you of your right to ask for them. Under the law, you have the right to:

Know within 30 days of the date of your finished application whether your mortgage loan is approved. The lender must make a reasonable effort to obtain all necessary information, such as credit reports and home appraisals. If your application is rejected, the lender must tell you in writing why it was.

Know exactly why your application was rejected. The lender must tell you the specific reason for the rejection or your right to learn the reason if you ask within 60 days. An acceptable response might be "Your income was too low," or "You haven't been employed long enough." A response of "You didn't meet our minimum standards," is not specific enough.

Learn the specific reason why you were offered less desireable terms than had applied for, but only if you reject these terms. For example, if the lender offered you a smaller mortgage or a higher interest rate, you have the right to know why if you did not accept the lender's counter offer.

Find out what is in your credit report. The lender may haver rejected your application because of negative information in your credit report. If so, the lender must tell you this and give you the name, address, and phone number of the credit bureau. You can get a copy of that report from the credit bureau if you need it within 60 days. Otherwise, the credit bureau can charge up to $9.00.

If your credit report contains wrong information, the credit bureau is required to investigate things that you dispute. Those companies reporting inaccurate information to the credit bureaus also must reinvestigate items that you dispute. If you still dispute the credit bureau's account after a reinvestigation, you can include your summary of the problem in your credit report.

Get a copy of the property appraisal from the lender. Mortgage applications may be turned down because of poor appraisals. Review the appraisal. Check that it contains accurate information and determine whether the appraiser considered illegal factors, such as the racial composition of the neighborhood.

If You Suspect Discrimination

Take immediate action if you think you've been discriminated against in any way at all.

Complain to the lender. Sometimes you can get the lender to reconsider your application.

Check with your local state Attorney General's office to see if the creditor violated any state laws. Many states have their own equal credit opportunity laws.

Contact a local private fair housing group and report violations to the appropriate government agency. If your mortgage application is denied, the lender must give you the name and address of the agency to contact.

Consider suing the lender in federal district court. If you win, you can recover your actual damages and be awarded punitive damages if the court finds that the lender's conduct was willful. You may also recover reasonable lawyer's fees and court costs. You also might want to consider joining with others to file a class action suit.

A number of federal agencies share enforcement responsibility for the ECOA and the FHA. Determining which agency to contact depends on the type of financial institution you are dealing with.

Begin the Quote Process

Select Your Country

Enter Zip Code

Customer Testimonial

Words cannot express the satisfaction I felt with the service I received from everyone at National Financer.

Brownette H.
Rhode Island

Login:	Password: