Mortgage Discrimination
Problems
The
Equal Credit Opportunity Act (ECOA) and the Fair Housing
Act (FHA) protect you against discrimination when you apply
for a mortgage to purchase, refinance, or make home improvements.
Your
Rights Under ECOA
The ECOA prohibits discrimination in any aspect of a credit
transaction based on:
- race
or color;
- religion;
-
national origin;
- sex;
- marital
status;
- age
(provided the applicant has the capacity to contract);
- the
applicant’s receipt of income derived from any public
assistance program; and
- the
applicant’s exercise, in good faith, of any right under
the Consumer Credit Protection Act, the umbrella statute
that includes ECOA.
Strengthening your application
Not
everyone who applies for a mortgage will get one. Lenders
can use factors such as income, expenses, debts, and credit
history to evaluate applicants.
There
are steps you can take to ensure that your application gets
full consideration. Give the lender all information that
supports your application.
For
example, stable employment is important to many lenders.
Perhaps you’ve recently changed jobs but have been employed
steadily in the same field for several years. If so, include
that information on your application.
Get
a copy of your credit report before you apply for a mortgage.
Reports sometime 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 find errors,
dispute them with the credit bureau and tell the lender
about the dispute.
If you’ve
had past bill-paying problems, such as a lost job or high
medical expenses, write a letter to the lender explaining
what caused your past credit problems. Lenders must consider
this information at your request.
Try For the Best Loan Terms
Some
mortgage lenders may try to charge some borrowers more than
others for the same loan product offered at the same time.
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. Even if you decide to accept terms that are not
the lowest available, ask the lender why you did not qualify
for better terms. The answer may help you to correct errors
and to become more creditworthy.
If You Suspect Discrimination
Take
action if you think you’ve been discriminated against.
Complain
to the lender. Sometimes you can persuade the lender to
reconsider your application.
Check with your state Attorney General’s office to see if
the creditor violated 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 also may recover reasonable lawyers’ fees
and court costs. You also might 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, in part, on the type of financial institution you
dealt with.
For
ECOA violations involving mortgage and consumer finance
companies:
Federal
Trade Commission
Consumer Response Center
Washington, DC 20580
202-326-2222; TDD: 1-866-653-4261
While
the FTC generally does not intervene in individual disputes,
the information you provide may indicate a pattern of violations
requiring action by the Commission.
The
Center also can provide you with a copy of Best Sellers,
a complete list of FTC consumer and business publications.
Or, visit us at ftc.gov on the World Wide Web.
For
violations of the FHA:
Office
of Fair Housing and Equal Opportunity
US Department of Housing and Urban
Development (HUD), Room 5204
Washington, DC 20410-2000
Toll-free hotline: 1-800-424-8590
TDD: 1-800-543-8294
You
have one year to file a complaint with HUD, but you should
file as soon as possible. Your complaint to HUD should include:
Your
name and address;
The name and address of the person or company who is the
subject of the complaint;
The address or other identification of the housing involved;
A short description of the facts that caused you to believe
your rights were violated; and
The dates of the alleged violation.
HUD will notify you when it receives your complaint. Normally,
HUD also will:
Notify
the alleged violator of your complaint and permit the person
to submit an answer;
Investigate your complaint and determine whether there is
a reasonable cause to believe the Fair Housing Act has been
violated; and
Notify you if it cannot complete an investigation within
100 days of receiving your complaint.
For violations of the ECOA and the FHA:
For
nationally-charted banks:
Comptroller
of the Currency
Compliance Management
Mail Stop 7-5
Washington, DC 20219
For
state-chartered banks insured by the Federal Deposit Insurance
Corporation, but not members of the Federal Reserve System:
Federal
Deposit Insurance Corporation
Consumer Affairs Division
Washington, DC 20429
For
federally-chartered or federally-insured savings and loans:
Office
of Thrift Supervision
Consumer Affairs Program
Washington, DC 20552
For
federally-chartered credit unions:
National
Credit Union Administration
Consumer Affairs Division
Washington, DC 20456
For
state member banks of the Federal Reserve System:
Consumer
and Community Affairs
Board of Governors of the Federal Reserve System
20th & C Streets, NW
Washington, DC 20551
For
discrimination complaints against all kinds of creditors:
Department
of Justice
Civil Rights Division
Washington, DC 20530
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