{"id":369305,"date":"2016-04-04T10:47:20","date_gmt":"2016-04-04T15:47:20","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/realestate\/mortgages-equity-loans\/fair-housing-and-lending.html"},"modified":"2024-06-10T16:46:38","modified_gmt":"2024-06-10T21:46:38","slug":"fair-housing-and-lending","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/realestate\/mortgages-equity-loans\/fair-housing-and-lending.html","title":{"rendered":"Types of Fair Housing Act and Fair Lending Violations"},"content":{"rendered":"\n<div class=\"wp-container-core-columns-is-layout-9d6595d7 fl-sectionWithSidebar fl-container fl-flex fl-flex-wrap fl-gap30\">\n    \n    <div class=\"fl-page-articles fl-section-main fl-section-main-full-width\">\n        <h1 class=\"fl-no-margin-top\">Types of   Fair Housing Act   and   Fair Lending   Violations<\/h1>\n<section class=\"fl-gutenberg-byline\">\n    <div class=\"fl-gutenberg-byline-content\">\n                    By <a href=\"https:\/\/www.findlaw.com\/company\/our-team\/robert-rafii-esq\/\">Robert Rafii, Esq.<\/a> | Legally reviewed by <a\n                href=\"https:\/\/www.findlaw.com\/company\/our-team\/robert-rafii-esq\/\">Robert Rafii, Esq.<\/a>\n                | Last updated\n        <time>\n                            June 10, 2024\n                    <\/time>\n    <\/div>\n\n    \n    <details class=\"fl-gutenberg-byline-toggle fl-gutenberg-byline-legally-reviewed\">\n        <summary>\n            <i class=\"fl-gutenberg-byline-icon\" aria-hidden=\"true\"><\/i>\n            Legally Reviewed\n        <\/summary>\n\n        <div class=\"fl-gutenberg-byline-toggle-content\">\n            <p><em>This article has been written and reviewed for legal accuracy, clarity, and style by <a href=\"https:\/\/www.findlaw.com\/company\/our-team.html\">FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with <a href=\"https:\/\/www.findlaw.com\/company\/company-history\/editorial-policy.html\">our editorial standards<\/a>.<\/em><\/p>\n\n        <\/div>\n    <\/details>\n\n    <details class=\"fl-gutenberg-byline-toggle fl-gutenberg-byline-fast-checked\">\n        <summary>\n            <i class=\"fl-gutenberg-byline-icon\" aria-hidden=\"true\"><\/i>\n            Fact-Checked\n        <\/summary>\n\n        <div class=\"fl-gutenberg-byline-toggle-content\">\n            <p><em>The last updated date refers to the last time this article was reviewed by FindLaw or one of our <a href=\"https:\/\/www.findlaw.com\/company\/our-team\/contributing-authors.html\">contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please <a href=\"https:\/\/lawyers.findlaw.com\/?fli=bylinelink\" target=\"_blank\" rel=\"noopener\">contact an attorney in your area<\/a>.<\/em><\/p>\n\n        <\/div>\n    <\/details>\n<\/section>\n<p>Most common mortgage rights violations happen due to unfair lending practices and lending discrimination. These include violations of:<\/p>\r\n<ul>\r\n<li><a href=\"https:\/\/www.findlaw.com\/consumer\/credit-banking-finance\/equal-credit-opportunity-act.html#:~:text=Under%20the%20ECOA%2C%20creditors%20cannot,their%20receipt%20of%20public%20assistance.\" style=\"font-size: 0.8125rem;\">Equal Credit Opportunity Act<\/a><span style=\"background-color: transparent; font-size: 0.8125rem;\"> (ECOA)<\/span><br>\r\n<\/li>\r\n<li><a href=\"https:\/\/corporate.findlaw.com\/finance\/consumer-rights.html\" style=\"font-size: 0.8125rem;\" target=\"_blank\" rel=\"noopener\">Home Mortgage Disclosure Act<\/a><br>\r\n<\/li>\r\n<li><a href=\"https:\/\/www.findlaw.com\/smallbusiness\/business-finances\/federal-consumer-credit-laws-checklist.html\" style=\"font-size: 0.8125rem;\">Consumer Credit Protection Act<\/a><br>\r\n<\/li>\r\n<li><a href=\"https:\/\/www.findlaw.com\/civilrights\/discrimination\/fair-housing-federal-laws.html\" style=\"font-size: 0.8125rem;\" target=\"_blank\">Fair Housing Act<\/a><span style=\"background-color: transparent; font-size: 0.8125rem;\"> (FHA)<\/span><br>\r\n<\/li>\r\n<\/ul>\r\n<p>These laws protect mortgage consumers against discrimination in real estate-related transactions. But the Fair Housing Act is perhaps the best-known federal law that bans discrimination during a home purchase. The following information gives a general overview of the main provisions of the Fair Housing Act. See&nbsp;<a href=\"https:\/\/www.findlaw.com\/realestate\/mortgages-equity-loans\/mortgages-and-your-rights-to-fair-lending.html\">Mortgages and Your Rights to Fair Lending<\/a> for more details.<\/p>\r\n<h2><b>How the Fair Housing Act Prohibits Discrimination<\/b><\/h2>\r\n<p>The Fair Housing Act bans discrimination in mortgage lending. Legally, only an applicant&#8217;s financial profile (such as credit rating) may factor into the good faith decision to extend a mortgage. The act makes it unlawful to engage in certain practices on the basis of race, color, and national origin. It also prohibits discrimination based on religion, sex, marital status, familial status, or disability. The law makes it illegal for a mortgage lender to:<\/p>\r\n<ul>\r\n<li>Refuse to make a mortgage loan<br>\r\n<\/li>\r\n<li>Refuse to provide information about loans<br>\r\n<\/li>\r\n<li>Impose different terms or conditions on a loan, such as different interest rates, points, or fees<br>\r\n<\/li>\r\n<li>Discriminate in appraising property<br>\r\n<\/li>\r\n<li>Refuse to sell a loan or set different terms or conditions for purchasing a loan<br>\r\n<\/li>\r\n<\/ul>\r\n<p>More protected classes under the FHA include gender identity and sexual orientation. These bad faith discriminatory practices violate federal fair lending laws and prevent potential homeowners from equal opportunity to get financing.<\/p>\r\n<p>Due to the federal regulatory interest in protecting civil rights, any financial institutions, housing lenders, and home mortgage lenders who discriminate illegally may get reported to the <a href=\"https:\/\/www.consumerfinance.gov\/\" target=\"_blank\" rel=\"noopener\">Consumer Financial Protection Bureau<\/a> (CFPB) and the <a href=\"https:\/\/www.hud.gov\/complaints_home\" target=\"_blank\" rel=\"noopener\">U.S. Department of Housing and Urban Development<\/a> (HUD).<\/p>\r\n<h3><b>Subprime Lending<\/b><\/h3>\r\n<p>Subprime loans play a significant role in today&#8217;s mortgage lending market. They make homeownership possible for many families with blemished credit histories or who otherwise fail to qualify for prime, conventional loans.<\/p>\r\n<p>While the subprime mortgage market serves a legitimate role, these loans tend to:<\/p>\r\n<ul>\r\n<li>Cost more (due to higher interest rates)<br>\r\n<\/li>\r\n<li>Have less advantageous terms than prime market loans<br>\r\n<\/li>\r\n<\/ul>\r\n<p>Subprime lenders are largely unregulated by the federal government. Data shows minorities are much more likely than others to get a subprime loan. Many of the borrowers who take out these loans could qualify for loans with better rates and terms. Because of this, many have expressed fair lending concerns about the subprime market.<\/p>\r\n<p>Consider a borrower who makes $20 per hour with a credit score below 650. Not everyone has the luxury of earning the big bucks and touting a high score. Someone just starting the job market might have a starting wage and little to no credit history. Here, the borrower in our example might:<\/p>\r\n<ol>\r\n<li>Be eligible for public assistance programs or other special loans that suit their circumstances<br>\r\n<\/li>\r\n<li>May be offered a high-interest &quot;subprime&quot; loan that is difficult to pay back<br>\r\n<\/li>\r\n<\/ol>\r\n<p>But a loan officer might illegally discriminate against such a borrower not on the basis of their humble financial circumstances, but rather because they are from a specific part of town. They may dismiss the borrower&#8217;s more viable loan options to lock them into inferior, less forgiving loan terms.<\/p>\r\n<h2><b>Redlining<\/b><\/h2>\r\n<p>One reason for concern in this area involves homebuyers in minority neighborhoods who fall victim to the illegal practice of redlining. This is an illegal practice in the residential real estate context, where a refinance or loan application is classified by home loan providers as hazardous for investment.<\/p>\r\n<p>As a result of this discrimination and due to the limited availability of public help in these areas, many borrowers fall prey to subprime lenders who take advantage of them. They may do so by offering anything but favorable terms during:<\/p>\r\n<ul>\r\n<li>Credit transactions<br>\r\n<\/li>\r\n<li>Mortgage evaluation<br>\r\n<\/li>\r\n<li>Related transactions<br>\r\n<\/li>\r\n<\/ul>\r\n<h3><b>Predatory Lending<\/b><\/h3>\r\n<p><a href=\"https:\/\/www.findlaw.com\/realestate\/mortgages-equity-loans\/predatory-lending.html\">Predatory lenders<\/a> saddle borrowers with loans that come with outrageous terms and conditions. This is often through deception. These lenders frequently target older women and minority populations. The typical predatory loan is:<\/p>\r\n<ol>\r\n<li>Over those available to similarly situated borrowers from other lenders elsewhere in the lending market<br>\r\n<\/li>\r\n<li>Not justified by the creditworthiness of the borrower or the risk of loss<br>\r\n<\/li>\r\n<li>Secured by the borrower&#8217;s home<br>\r\n<\/li>\r\n<\/ol>\r\n<h2><b>If You Suspect Discrimination<\/b><\/h2>\r\n<p>If you believe you&#8217;re a victim of illegal housing discrimination, you can take action. The U.S. Department of Housing and Urban Development (HUD) has <a href=\"https:\/\/www.hud.gov\/program_offices\/fair_housing_equal_opp\/online-complaint\" target=\"_blank\" rel=\"noopener\">a page where you can file a government complaint<\/a>. You may also report the matter to your state&#8217;s attorney general or banking oversight agency. You may need to <a href=\"https:\/\/www.findlaw.com\/realestate\/mortgages-equity-loans\/mortgage-discrimination.html\">take legal action against housing discrimination<\/a> in court.<\/p>\r\n<h2><b>A Lawyer Can Help You Sue<\/b><\/h2>\r\n<p>Due to prevalent discrimination in mortgage lending, it is important to ensure that your lender follows the law. Consider speaking with a&nbsp;<a href=\"https:\/\/lawyers.findlaw.com\/real-estate-law\/?fli=dcta\" target=\"_blank\" rel=\"noopener\">real estate attorney<\/a> if you have more questions or want to file a claim under the Fair Housing Act.<\/p>\r\n<div class=\"was-this-helpful\">\n    <div\n            class=\"was-this-helpful__question-container\"\n            aria-labelledby=\"was-this-helpful__question\"\n            role=\"group\"\n    >\n        <span\n                id=\"was-this-helpful__question\"\n                class=\"was-this-helpful__question fl-text-lg-bold\"\n        >Was this helpful?<\/span>\n        <button\n                class=\"was-this-helpful__button fl-text-sm\"\n                aria-label=\"Yes\"\n                value=\"yes\"\n        >\n            <span class=\"was-this-helpful__button-text fl-text-bold\">Yes<\/span>\n            <i class=\"was-this-helpful__button-icon\">\n                <svg width=\"22\" height=\"22\" viewBox=\"0 0 22 22\" 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19.236 12.01 18.67 12H16M9.00003 14V18C9.00003 18.7956 9.3161 19.5587 9.87871 20.1213C10.4413 20.6839 11.2044 21 12 21L16 12V0.999995H4.72003C4.2377 0.994543 3.76965 1.16359 3.40212 1.47599C3.0346 1.78839 2.79235 2.22309 2.72003 2.7L1.34003 11.7C1.29652 11.9866 1.31586 12.2793 1.39669 12.5577C1.47753 12.8362 1.61793 13.0937 1.80817 13.3125C1.99842 13.5313 2.23395 13.7061 2.49846 13.8248C2.76297 13.9435 3.05012 14.0033 3.34003 14H9.00003Z\"\n                              stroke=\"#666666\" stroke-width=\"2\" stroke-linecap=\"round\" stroke-linejoin=\"round\"\/>\n                    <\/g>\n                    <defs>\n                        <clipPath id=\"clip0_604_3423\">\n                            <rect width=\"22\" height=\"22\" fill=\"white\"\/>\n                        <\/clipPath>\n                    <\/defs>\n                <\/svg>\n            <\/i>\n        <\/button>\n    <\/div>\n    <span class=\"was-this-helpful__taken-action fl-text-sm-bold\"><\/span>\n    <div class=\"was-this-helpful__feedback-container\">\n        <div class=\"was-this-helpful__choose-option-message\" role=\"status\">\n            <p class=\"was-this-helpful__choose-option-message-text\"><\/p>\n        <\/div>\n        <form class=\"was-this-helpful__feedback-form\">\n            <div class=\"was-this-helpful__feedback was-this-helpful__feedback--positive\">\n                <fieldset>\n                    <legend class=\"was-this-helpful__feedback-form-title\" tabindex=\"0\">Why was this helpful?<\/legend>\n                    <div class=\"fl-radio-button-field fl-flex was-this-helpful__feedback-form-title\">\n                        <input\n                                id=\"was-this-helpful__radio-button--understandable\"\n                                class=\"fl-radio-button-field-input\"\n                                type=\"radio\"\n                                name=\"positive-feedback\"\n                                value=\"Easy to understand\"\n         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class=\"was-this-helpful__feedback was-this-helpful__feedback--negative\">\n                <fieldset>\n                    <legend class=\"was-this-helpful__feedback-form-title\" tabindex=\"0\">Why was this not helpful?<\/legend>\n                    <div class=\"was-this-helpful__choose-option-message\" role=\"status\">\n                        <p class=\"was-this-helpful__choose-option-message-text\"><\/p>\n                    <\/div>\n                    <div class=\"fl-radio-button-field fl-flex was-this-helpful__feedback-form-title\">\n                        <input\n                                id=\"was-this-helpful__radio-button--missing-info\"\n                                class=\"fl-radio-button-field-input\"\n                                type=\"radio\"\n                                name=\"negative-feedback\"\n                                value=\"Missing Information\"\n                        >\n                        <label\n                                class=\"fl-radio-button-field-label fl-text-sm was-this-helpful__radio-label\"\n                                for=\"was-this-helpful__radio-button--missing-info\"\n                        >Missing the information I need<\/label>\n                    <\/div>\n                    <div class=\"fl-radio-button-field fl-flex was-this-helpful__feedback-form-title\">\n                        <input\n                                id=\"was-this-helpful__radio-button--complicated\"\n                                class=\"fl-radio-button-field-input\"\n                                type=\"radio\"\n                                name=\"negative-feedback\"\n                                value=\"Too complicated\"\n                        >\n                        <label\n                                class=\"fl-radio-button-field-label fl-text-sm was-this-helpful__radio-label\"\n                                for=\"was-this-helpful__radio-button--complicated\"\n                        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aria-live=\"polite\"><\/p>\n    <\/div>\n<\/div>\n\n\n    <\/div>\n    \n    <div class=\"fl-section-sidebar\">\n        <div class=\"fl-editors-summary\" data-testid=\"fl-editors-summary\">\n    \n    <div class=\"fl-editors-summary-content\" data-testid=\"fl-editors-summary-content\">\n                    <h2>Can I Solve This on My Own or Do I Need an Attorney?<\/h2>\n                <div class=\"fl-editors-summary-content-main\" data-testid=\"fl-editors-summary-content-main\">\n            \n        <\/div>\n        <ul class=\"fl-list-style-none\">\n                            <li data-testid=\"fl-editors-summary-content-item\">\n                    <i class=\"fa fa-check medium fl-editors-summary-content-item-icon\" aria-hidden=\"true\"><\/i>\n                    Many real estate processes can be handled on your own or with the help of a realtor\n\n                <\/li>\n                            <li data-testid=\"fl-editors-summary-content-item\">\n                    <i class=\"fa fa-check medium fl-editors-summary-content-item-icon\" aria-hidden=\"true\"><\/i>\n                    Some tenant or neighbor disputes may need the help of local police\n\n                <\/li>\n                            <li data-testid=\"fl-editors-summary-content-item\">\n                    <i class=\"fa fa-check medium fl-editors-summary-content-item-icon\" aria-hidden=\"true\"><\/i>\n                    Complex real estate issues (such as construction defects or illegal landlord actions) may need the support of an attorney\n\n                <\/li>\n                    <\/ul>\n                    <div class=\"fl-editors-summary-content-description\" data-testid=\"fl-editors-summary-content-description\">\n                <p>Buying or selling a home, facing foreclosure, or mortgage loan issues can benefit from legal expertise. An attorney can offer tailored advice and help prevent common mistakes.<\/p>\n\n            <\/div>\n                            <div class=\"fl-editors-summary-content-link fl-flex\" data-testid=\"fl-editors-summary-content-link\">\n                <i class=\"fa fa-angle-right medium\" aria-hidden=\"true\"><\/i>\n                <p class=\"find-attorney\"><a href=\"https:\/\/lawyers.findlaw.com\/real-estate-law\/#USER_GEO\/?fli=esum:FL43\" target=\"_blank\" rel=\"noopener\">Find a local attorney<\/a><\/p>\n\n            <\/div>\n            <\/div>\n<\/div>\n\n\n<div class=\"email-subscription fl-mb30\">\n    <div class=\"email-subscription-header\">\n        <div class=\"email-subscription-header-content\">\n            <h3 class=\"fl-callout-sm fl-no-margin\">Stay Up-to-Date With How the Law Affects Your Life<\/h3>\n        <\/div>\n        <div class=\"email-subscription-header-image fl-flex fl-items-end\">\n            <img decoding=\"async\"\n                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