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Mortgage Discrimination: Guide to Understanding Your Rights


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TERMINOLOGY

Mortgage discrimination is strictly prohibited in the United States. When it comes to getting a mortgage, there are certain things that a lender can and cannot do. Here are a few things to consider about mortgage discrimination and how you can tell if you have been a victim.

Mortgage Discrimination

Mortgage discrimination is a scenario in which you may be prevented from getting a mortgage loan because of outside circumstances. When a lender evaluates you for credit approval, they have to look at certain things and avoid other factors. For example, they can look at your credit report and your income to determine if you are a good potential customer for them to work with. However, they cannot look at things that are irrelevant, such as your race or your religion. If a mortgage lender looks at any of these factors when deciding if you should get a loan, then you are a victim of mortgage discrimination.

Equal Credit Opportunity Act

The Equal Credit Opportunity Act is a law that was put into effect in order to guarantee that everyone gets equal treatment when it comes to getting a mortgage. Under this act, there are certain rules as to what a lender can look at when they are evaluating you for mortgage approval. According to this act, they cannot base their decision on your race, your religion, your color, your national origin, your sex, your marital status, your age or whether you get public assistance. If a mortgage lender looks at any of these factors when they are making their decision, then they are guilty of mortgage discrimination. According to the law, lenders are allowed to collect this information from you with the exception of asking about your religion. The rest of the information can be gathered for demographics purposes only. However, having this play any role whatsoever in the lending decision is strictly prohibited.

Fair Housing Act

While the Equal Credit Opportunity Act prohibits discrimination for all types of credit, the Fair Housing Act takes it is step further and focuses on real estate transactions. According to the Fair Housing Act, mortgage lenders are not allowed to discriminate against anyone that is applying for a mortgage. In addition to all of the factors in the Equal Credit Opportunity Act, the Fair Housing Act mentions disabilities, family status and pregnancy. This act covers discrimination when it comes to purchasing a house, getting a loan for one or renting one.

What Lenders Can and Can't Do

Lenders are allowed to consider any income that you bring in for your mortgage. This can include public assistance, alimony, a part-time job or any other source of income. They can also accept someone as a cosigner that is not your spouse.

Lenders are not allowed to look at your sex, religion, race or any of these factors when making lending decisions. They also cannot have any different loan terms for a certain group of people.