With respect to mortgage loans, during the application process or when making a credit decision, a creditor (Familial status refers to the makeup of your family, including whether your household includes children under the age of 18 or pregnant women).īelow are some examples of what is (and what is not) illegal mortgage discrimination under the ECOA and/or FHA. This law makes it illegal to discriminate based on race, color, religion, sex, national origin, disability, or familial status. This applies to all aspects of residential real-estate transactions including making loans to buy, build, repair, or improve homes. The FHA protects people from discrimination when they’re engaging in housing-related activities. Everyone who participates in the decision to grant credit, or in setting the terms of that credit, must comply with ECOA’s prohibition against discrimination, including real estate brokers who arrange mortgage financing. The law makes it illegal for creditors to discriminate based on race, color, religion, national origin, sex, marital status, age, or because all (or part) of a person’s income comes from public assistance or because the applicant has in good faith exercised a right under the Consumer Credit Protection Act. That includes banks, small loan and finance companies, mortgage companies, retail and department stores, credit card companies, and credit unions. The ECOA applies broadly to any organizations or people who regularly extend credit. You don’t have to supply the information. And, creditors may ask you to volunteer certain information that might seem discriminatory - for example, race, ethnicity, age, sex, and marital status (married, unmarried, or separated) - because it helps the government keep statistics that fight discrimination. This is even more challenging because creditors often must ask you for (and evaluate) personal information - like your income, expenses, debts, and credit history. It can be difficult to know if a creditor is rejecting your loan application, charging you more for a loan, or offering you less-favorable terms based on illegal discrimination - or if it’s because of some weaknesses in your loan application. Two federal laws can protect you against discrimination when you apply for a mortgage: the Equal Credit Opportunity Act (ECOA) and the Fair Housing Act (FHA).
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