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There are several federal laws which
provide you with protection during the
processing of your loan. The Equal
Credit Opportunity Act ("ECOA"), the
Fair Housing Act, and the Fair Credit
Reporting Act ("FCRA") prohibit
discrimination and provide you with the
right to certain credit information.
No Discrimination.
ECOA prohibits lenders from
discriminating against credit applicants
on the basis of race, color, religion,
national origin, sex, marital status,
age, the fact that all or part of the
applicant's income comes from any public
assistance program, or the fact that the
applicant has exercised any right under
any federal consumer credit protection
law. To help government agencies monitor
ECOA compliance, your lender or mortgage
broker must request certain information
regarding your race, sex, marital status
and age when taking your loan
application.
vThe Fair Housing Act also prohibits
discrimination in residential real
estate transactions on the basis of
race, color, religion, sex, handicap,
familial status or national origin. This
prohibition applies to both the sale of
a home to you and the decision by a
lender to give you a loan to help pay
for that home. Finally, your locality or
state may also have a law which
prohibits discrimination.
Frequently, there are differences in the
types and amounts of settlement costs
charged to the borrower -- for example,
some borrowers are charged greater fees
for mortgages depending on their credit
worthiness. These differences may be
justified or they may be unlawfully
discriminatory. It is important that you
examine your settlement documents
closely, especially lines 808-811 on the
HUD-1 settlement statement, and do not
hesitate to compare your settlement
costs with those of your friends and
neighbors.
If you feel you have been discriminated
against by a lender or anyone else in
the home buying process, you may file a
private legal action against that person
or complain to a state, local or federal
administrative agency. You may want to
talk to an attorney; or you may want to
ask the federal agency that enforces
ECOA (the Board of Governors of the
Federal Reserve System) or the Fair
Housing Act (HUD) about your rights
under these laws.
Prompt Action/Notification of
Action Taken. Your lender
or mortgage broker must act on your
application and inform you of the action
taken no later than 30 days after it
receives your completed
application. Your application will not
be considered complete, and the 30 day
period will not begin, until you provide
to your lender or mortgage broker all of
the material and information requested.
Statement of Reasons for
Denial. If
your application is denied, ECOA
requires your lender or mortgage broker
to give you a statement of the specific
reasons why it denied your application
or tell you how you can obtain such a
statement. The notice will also tell you
which federal agency to contact if you
think the lender or mortgage broker has
illegally discriminated against you.
Obtaining Your Credit Report.
The Fair Credit Reporting Act ("FCRA")
requires a lender or mortgage broker
that denies your loan application to
tell you whether it based its decision
on information contained in your credit
report. If that information was a reason
for the denial, the notice will tell you
where you can get a free copy of the
credit report. You have the right to
dispute the accuracy or completeness of
any information in your credit report.
If you dispute any information, the
credit reporting agency that prepared
the report must investigate free of
charge and notify you of the results of
the investigation.
Obtaining Your Appraisal.
The lender needs to know if the value of
your home is enough to secure the loan.
To get this information, the lender
typically hires an appraiser, who gives
a professional opinion about the value
of your home. ECOA requires your lender
or mortgage broker to tell you that you
have a right to get a copy of the
appraisal report. The notice will also
tell you how and when you can ask for a
copy.
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Equal Housing Opportunity