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Know Your Rights About Home Loans and Mortgages - Beware Discrimination

Updated on September 1, 2012

Home Loans Discrimination

It is not openly spoken about, but it does exist. Discrimination against people who apply for home mortgages is illegal and those who are applying for home loans need to be aware of their rights. The FTC (Federal Trade Commissiom) is the United States division of the government that protects consumers. The government wants you to help make you aware of the federal laws that are designed to avoid discrimination in getting home mortgages, home equity loans, refinance, or loan modifications. As you look to apply for home loans, be sure to do your research about the various types of home mortgage choices you have, know your rates, be aware of your credit score, and know your rights to protect yourself against mortgage discrimination, and what steps you can take for corrective action.

Lenders are obligated under the law to take many things into consideration when people are applying for home loans. They must treat income from public assistance the same as any other income. Income from social security, annuities, pensions, and credible part time employment in consideration for the loan. Income from child support, alimony and maintenance if supported by proof that it is received regularly, must be allowed as part of the income. Financial lending institutions must allow a co signer, even if they are not your spouse. You have the right to have credit in your birth or maiden name. You can also use your first name, combined with your maiden and married name. You can obtain a loan without a co signer, provided your income qualifies. You have the right to know your credit score and what your credit report says about you. You have the right to correct errors on your credit report. Learn more at what's my credit store

Learn how to correct your credit report at correct credit report and bank errors.

Home Mortgages and Discrimination Protection

You Have Rights!

The bank or other financial company, can not deter or dissuade you from applying for  home loans.  You can not be refused home mortgages, or your application rejected due to religion, race, color, ethnicity, gender, age, marital status, national origin, or if you are on public assistance.  Although the applicant is sometimes asked to divulge this information voluntarily, it is primarily for the purpose of the federal government to help enforce the anti discrimination rules and laws put into place to protect those seeking home mortgages.  The lender does have the right to know your immigration status to decide if you will be  staying  in the U.S. long enough to repay the loan.  A creditor is not allowed to set different standards, conditions, or terms for the loan based on any factors that could be determined to be discriminatory. If a lender is setting a higher interest rate or requiring more money for a down payment based on your race, or gender, etc, the lender is breaking the law. The financial institution is not allowed to consider the racial makeup of the community where you are looking to purchase your home.  This can only be considered with the appraisal, which would value estimate the value of the house based on set formulas and other home sales in the neighborhood.  The financial institution can not ask you about your expectations for having a family, they can only inquire about your dependent related expenses.  It is also illegal for a lender to insist upon a co signer if you meet the financial qualification for the home loans.

What to do if Your Home Loans are Turned Down

You may not get approved for a loan, and this does not mean you may have been discriminated against. Lending institutions have the right to protect their investments and to make a profit from their monetary extension for home mortgages and other types of home loans.. It is prudent of creditors to check your creditworthiness to see your credit history and payment records. They need to , have knowledge of your income and expenses, to make sure you can pay back the loan.

There are things you can do to make your application more appealing to the lender and up your odds of getting your loan approves.
If your mortgage application is turned down, the creditor has to give you the reasons why you were denied the loan. If they don’t give you the reason automatically, you have the right to get the reasons. You have the right to know if your application is approved within thirty days from the time you submitted the forms. The financial company must make a concerted effort to gather the pertinent information, do a credit check, and get the property appraised within this 30 days. Any application that is denied, must be explained in writing from the lender. You have the right to get the specific detail about why your application was denied, within 60 days. Acceptable reasons for denial have to do with income qualifications. Unacceptable reasons are vague statements like not meeting minimum requirements. You have the right to inquire deeper when you are given ambiguous statements.

Know What the Appraisal Says

If the lender changes the terms of the original application, like asking you to put down more money, or offers you a higher interest rate than when you originally applied, you have the right to know the reasons behind this change.  The lender does have the right to change these terms after you have applied, as long as it is based on  financial reasons. You have the right to refuse this altered option to home mortgages you applied for.

You have the right to get a copy of the appraisal done on the property you are looking to buy. Make sure the appraisal accurately reflects the property’s accurate value. If you diagree with their findings, and can prove the inaccuracy, they must re evaluate the appraisal, and can not refuse the home loans based on a too low appraisal. You also want to make sure the lender did not refuse the loan because of the ethnicity of the community.  Remember, it is illegal for a lender to use the racial makeup of the area.

If you were rejected because of your negative credit report, the creditor must tell you the details of the rejection.  This includes giving you the credit bureau the lender used. You are then entitled to a free credit report from that credit bureau that does not count towards your free government entitled credit reports.  Your request must be filed within 60 days.

Th U.S. Government Protects You

The government has set up several laws to protect your rights from discrimination against home mortgages.

  • ECOA -The Equal Credit Opportunity Act - you can the details of this law at  www. justice. gov. This law is designed to protect you from being discriminated against when you seek to get financing towards home loans. The lenders can not use the descriptive information that is asked on most applications, as a reason to refuse you credit, or as a basis for the terms of the home mortgages. Even real estate brokers who arrange home mortgages must abide by the ECOA regulations. 


  • FHA - The Fair Housing Act halts discrimination for all types of loans for residential property including home improvement loans, appraisals, and home mortgages. This law protects people against all types of discrimination including disabilities, and family status with children under 18 living with a legal guardian. This act protects pregnant women and individuals who are trying to get custody of their underage children.

Protection from Home Loans and Discrimination

The American Dream

You can protect yourself against discrimination. If you feel you have been discriminated against, make a complaint to the financial institution. By making them aware, they may rethink your application and consider you for approval for home loans.  You can contact your state attorney general  to see if any laws were broken. Individual states additionally have their own equality credit laws.  Go to www.naag.org. You can sue the lender in federal court.  Be sure to report your incident to  the government agency that this violation pertains to.  The lender must give you the name and address of who to contact.  
To get more information about your rights you can visit www.justice.gov . There are many government agencies that oversee the rules governing ECOA. The agency that you communicate with varies depending on the type of lending company you had the dealings with.

The American dream of owning a home is something that everyone who is credit worthy deserves. Discrimination against getting home mortgages can affect anyone.  Minoritites, women, older Americans, and foreigners all have stories to tell. The U.S, government protects eveyone’s right to apply and get home mortgages without discrimination.  Know your rights, and home loans can open up the opportunity for you to achieve the American dream of home ownership.

Comments

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    • pmccray profile image

      pmccray 

      7 years ago from Utah

      Awesome and very informative. Voted up, marked useful and shared.

    • Simone Smith profile image

      Simone Haruko Smith 

      7 years ago from San Francisco

      Thanks for outlining loaners' rights! It's easy to get victimized in the world of borrowing, so I appreciate your creating this guide.

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