Mortgage discrimination is against the law. That’s important to know if you are thinking about applying for a mortgage to buy, refinance, or make improvements to your home. According to the Federal Trade Commission (FTC), the nation’s consumer protection agency, consumers who want to get a mortgage may want to research not only mortgage types and mortgage rates, but also their rights under federal laws in place to protect them from discrimination in the mortgage marketplace. Here’s some information to get started.
The Equal Credit Opportunity Act (ECOA) prohibits credit discrimination on the basis of race, color, religion, national origin, sex, marital status, age, or whether you get public assistance. Creditors may ask you for most of this information in certain situations, but they may not use it when deciding whether to give you credit or when setting the terms of your credit. They are never allowed to ask your religion. Everyone who participates in the decision to grant credit or in setting the terms of that credit, including real estate brokers who arrange financing, must follow the provisions of the ECOA.
The Fair Housing Act (FHA) prohibits discrimination in all aspects of residential real-estate related transactions, including:
The FHA prohibits discrimination based on race, color, religion, sex, national origin, handicaps, or family status, which is defined as children under 18 living with a parent or legal guardian, pregnant women, and people securing custody of children under 18.
If you are looking for a mortgage, by law, lenders must:
But lenders cannot:
Not everyone who applies for a mortgage will get one. Potential creditors are entitled to use factors like your income, expenses, debts, and credit history to evaluate your application for a mortgage. You may want to take some basic steps to strengthen your application to make sure that it gets full consideration.
The Fair Credit Reporting Act (FCRA) requires each of the three nationwide consumer reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months. To order your report, visit annualcreditreport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. You can print the form from ftc.gov/credit.
Consider shopping with several lenders to compare the fees they charge. When comparing prices, remember to look at all fees charged on your loan, as well as the interest rate.
Some lenders may try to charge some borrowers more than others for the same loan product offered at the same time. Charges might include higher interest rates, higher lender origination fees and points, and/or higher broker origination fees and points.
Ask the loan officer or broker you are dealing with if the rate you’re being quoted is the lowest offered that day. The loan officer or broker probably is basing the offer on a list of mortgage rates issued by the lender. Ask to see the list; it’s often called a rate sheet. If the loan officer or broker refuses and you suspect you aren’t being offered the lowest rates available, consider negotiating for a lower rate or going to another lender or broker.
Remember that negotiating is acceptable. Many of the fees for your loan, like origination, application, and processing fees, may be negotiable. Ask your loan officer or broker to explain each of the fees on your loan and whether there’s any flexibility on the amounts.
If your mortgage application is denied, the lender must give you specific reasons — or tell you that you have the right to ask for the reasons. The law gives you the right to:
The lender may have rejected your application because of negative information in your credit report. If so, the lender has to tell you that, and give you the name, address, and phone number of the consumer reporting company that provided the information. You can get a free copy of that report from the consumer reporting company if you ask for it within 60 days. Otherwise, unless you order your free annual credit report from that particular consumer reporting company, expect to pay up to $10.50 for a copy. If your credit report has inaccurate information, the consumer reporting company is required to investigate items that you dispute. Those companies furnishing inaccurate information to the consumer reporting company also must reinvestigate items that you dispute. If you dispute the consumer reporting company’s account even after the reinvestigation, make sure that your credit report includes your summary of the problem.
Take action if you think you’ve been discriminated against.
A number of federal agencies enforce the ECOA and the FHA. Determining which agency to contact depends on the kind of financial institution you dealt with.
For ECOA violations involving mortgage and consumer finance companies:
Federal Trade Commission
Consumer Response Center
Washington, DC 20580
1-877-FTC-HELP (1-877-382-4357)
TDD: 1-866-653-4261
www.ftc.gov
The FTC generally does not intervene in individual disputes, but the information you provide may indicate a pattern of violations that the Commission would investigate.
For FHA violations:
Office of Fair Housing and Equal Opportunity
US Department of Housing and Urban
Development (HUD), Room 5204
Washington, DC 20410-2000
1-800-424-8590; TDD: 1-800-543-8294
www.hud.gov/fairhousing
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 you are complaining about; the address or some other way to identify the housing involved; a short description of the facts that make you think your rights were violated; and the dates of the violation you are alleging. HUD will notify you when it receives your complaint. HUD also usually notifies the alleged violator of your complaint and allows the person to submit an answer; offers you and the alleged violator the chance to resolve your complaint voluntarily through a conciliation process; investigates your complaint and determines whether there is reason to believe the FHA has been violated; and lets you know if it cannot finish an investigation within 100 days of receiving your complaint.
For violations of the ECOA and the FHA:
Nationally-charted banks (National or N.A. will be part of the name):
Comptroller of the Currency
Consumer Assistance Group
1301 McKinney Street
Houston, TX 77010-9050
1-800-613-6743
www.helpwithmybank.gov
State-chartered banks insured by the Federal Deposit Insurance Corporation, but not members of the Federal Reserve System:
Federal Deposit Insurance Corporation
Consumer Response Center
2345 Grand Boulevard
Suite 100
Kansas City, MO 64108
1-877-ASK-FDIC (877-275-3342)
www.fdic.gov
Federally-chartered or federally-insured savings and loans:
Office of Thrift Supervision
Consumer Affairs
1700 G Street NW
Washington, DC 20552
1-800-842-6929; TTY: 800-877-8339
www.ots.treas.gov
Federally-chartered credit unions:
National Credit Union Administration
1775 Duke Street, Suite 4206
Alexandria, VA 22314-3437
1-800-755-1030
www.ncua.gov
State member banks of the Federal Reserve System:
Federal Reserve Consumer Help Center
P.O. Box 1200
Minneapolis, MN 55480
1-888-851-1920; TDD: 877-766-8533
www.federalreserveconsumerhelp.gov
For discrimination complaints against all kinds of creditors:
Department of Justice
Civil Rights Division
Washington, DC 20530
www.usdoj.gov/crt
If you can’t figure out which federal agency is responsible for the financial institution you dealt with, visit www.federalreserveconsumerhelp.gov or call 1-888-851-1920.
For details about your rights under the ECOA, see Equal Credit Opportunity.
For details about the Fair Housing Act, visit the Office of Fair Housing and Equal Opportunity at www.hud.gov/offices/fheo.
To learn how to challenge inaccurate information in your credit report, see How to Dispute Credit Report Errors.
To learn practical steps to save money on a mortgage or home loan, see Looking for the Best Mortgage: Shop, Compare, Negotiate.
The FTC works to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. Watch a video, How to File a Complaint, at ftc.gov/video to learn more. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.