The Equal Credit Opportunity Act (ECOA)
and the Fair Housing Act (FHA) protect you against discrimination when
you apply for a mortgage to purchase, refinance, or make home
Your Rights Under ECOA
The ECOA prohibits discrimination in any aspect of a credit
transaction based on:
race or color;
age (provided the applicant has the
capacity to contract);
the applicantís receipt of income
derived from any public assistance program; and
the applicantís exercise, in good
faith, of any right under the Consumer Credit Protection Act, the
umbrella statute that includes ECOA.
Your Rights Under FHA
The FHA prohibits
discrimination in all aspects of residential real-estate related
making loans to buy, build, repair,
or improve a dwelling;
selling, brokering, or appraising
residential real estate; and
selling or renting a dwelling.
It also prohibits discrimination
race or color;
familial status (defined as children
under the age of 18 living with a parent or legal guardian, pregnant
women, and people securing custody of children under 18); and
Lender Doís and Doníts
consider reliable public assistance
income in the same way as other income.
consider reliable income from
part-time employment, Social Security, pensions, and annuities.
consider reliable alimony, child
support, or separate maintenance payments, if you choose to provide
this information. A lender may ask you for proof that this income is
if a co-signer is needed, accept
someone other than your spouse. If you own the property with your
spouse, he or she may be asked to sign documents allowing you to
mortgage the property.
discourage you from applying for a
mortgage or reject your application because of your race, national
origin, religion, sex, marital status, age, or because you receive
public assistance income.
consider your race, national origin,
or sex, although you will be asked to voluntarily disclose this
information to help federal agencies enforce anti-discrimination
laws. A creditor may consider your immigration status and whether
you have the right to remain in the country long enough to repay the
impose different terms or
conditions, such as a higher interest rate or larger down payment,
on a loan based on your race, sex, or other prohibited factors.
consider the racial composition of
the neighborhood where you want to live. This also applies when the
property is being appraised.
ask about your plans for having a
family. Questions about expenses related to your dependents are
refuse to purchase a loan or set
different terms or conditions for the loan purchase based on
require a co-signer if you meet the
Strengthening Your Application
Not everyone who applies for a mortgage will get one. Lenders can use
factors such as income, expenses, debts, and credit history to
There are steps you can take to ensure
that your application gets full consideration. Give the lender all
information that supports your application.
For example, stable employment is
important to many lenders. Perhaps youíve recently changed jobs but
have been employed steadily in the same field for several years. If
so, include that information on your application.
Get a copy of your credit report
before you apply for a mortgage. Reports sometime contain
inaccurate information. For example, accounts might be reported that
donít belong to you or paid accounts might be reported as unpaid. If
you find errors, dispute them with the credit bureau and tell the
lender about the dispute.
If youíve had past bill-paying
problems, such as a lost job or high medical expenses, write a letter
to the lender explaining what caused your past credit problems.
Lenders must consider this information at your request.
Try For the Best Loan Terms
Some mortgage lenders may try to charge some borrowers more than
others for the same loan product offered at the same time. This may
include higher interest rates or origination fees or more points. Ask
the lender if the rate youíre being quoted is the lowest offered that
day. The lender is probably basing the loan offer on the list of
mortgage rates frequently issued by that institution to its loan
officers. Ask to see this list. If the lender refuses and you suspect
you are not being offered the lowest rates or points available, you
may want to negotiate for better terms or shop for another lender.
Even if you decide to accept terms that are not the lowest available,
ask the lender why you did not qualify for better terms. The answer
may help you to correct errors and to become more creditworthy.
If Your Application Is Rejected
If your mortgage is denied, the lender must give you specific reasons
why or tell you of your right to ask for them. Under the law, you have
the right to:
Know within 30 days of the date of your
completed application whether your mortgage loan is approved. The
lender must make a reasonable effort to obtain all necessary
information, such as credit reports and property appraisals. If your
application is rejected, the lender must tell you in writing.
Know specifically why your application
was rejected. The lender must tell you the specific reason for the
rejection or your right to learn the reason if you ask within 60 days.
An acceptable response might be: "your income was too low" or "you
havenít been employed long enough." A response of "you didnít meet our
minimum standards" is not specific enough.
Learn the specific reason why you were
offered less favorable terms than you applied for, but only if you
reject these terms. For example, if the lender offered you a smaller
mortgage or a higher interest rate, you have the right to know why if
you did not accept the lenderís counter offer.
Find out what is in your credit report.
The lender may have rejected your application because of negative
information in your credit report. If so, the lender must tell you
this and give you the name, address, and phone number of the credit
bureau. You can get a free copy of that report from the credit bureau
if you request it within 60 days. Otherwise, the credit bureau can
charge up to $8.
If your report contains inaccurate
information, the credit bureau is required to investigate items that
you dispute. Those companies furnishing inaccurate information to the
credit bureaus also must reinvestigate items that you dispute. If you
still dispute the credit bureauís account after a reinvestigation, you
can include your summary of the problem in your credit report.
Get a copy of the property appraisal
from the lender. Mortgage applications may be turned down because of
poor appraisals. Review the appraisal. Check that it contains accurate
information and determine whether the appraiser considered illegal
factors, such as the racial composition of the neighborhood.
If You Suspect Discrimination
Take action if you think youíve been discriminated against.
Complain to the lender. Sometimes
you can persuade the lender to reconsider your application.
Check with your state Attorney
Generalís office to see if the creditor violated state laws. Many
states have their own equal credit opportunity laws.
Contact a local private fair housing
group and report violations to the appropriate government agency. If
your mortgage application is denied, the lender must give you the
name and address of the agency to contact.
Consider suing the lender in federal
district court. If you win, you can recover your actual damages and
be awarded punitive damages if the court finds that the lenderís
conduct was willful. You also may recover reasonable lawyersí fees
and court costs. You also might consider joining with others to file
a class action suit.
A number of federal agencies share
enforcement responsibility for the ECOA and the FHA. Determining which
agency to contact depends, in part, on the type of financial
institution you dealt with.
For ECOA violations involving mortgage
and consumer finance companies:
Federal Trade Commission
Consumer Response Center
Washington, DC 20580
202-326-2222; TDD: 1-866-653-4261
While the FTC generally does not
intervene in individual disputes, the information you provide may
indicate a pattern of violations requiring action by the Commission.
The Center also can provide you with a
copy of Best Sellers, a complete list of FTC consumer and
business publications. Or, visit us at ftc.gov on the World
For violations of the FHA:
Office of Fair Housing and Equal
US Department of Housing and Urban
Development (HUD), Room 5204
Washington, DC 20410-2000
Toll-free hotline: 1-800-424-8590; TDD:
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 who is the subject of the complaint;
The address or other identification
of the housing involved;
A short description of the facts
that caused you to believe your rights were violated; and
The dates of the alleged violation.
HUD will notify you when it receives
your complaint. Normally, HUD also will:
Notify the alleged violator of your
complaint and permit the person to submit an answer;
Investigate your complaint and
determine whether there is a reasonable cause to believe the Fair
Housing Act has been violated; and
Notify you if it cannot complete an
investigation within 100 days of receiving your complaint.
For violations of the ECOA and the FHA:
For nationally-charted banks:
Comptroller of the Currency
Mail Stop 7-5
Washington, DC 20219
For state-chartered banks insured by
the Federal Deposit Insurance Corporation, but not members of the
Federal Reserve System:
Federal Deposit Insurance
Consumer Affairs Division
Washington, DC 20429
For federally-chartered or
federally-insured savings and loans:
Office of Thrift Supervision
Consumer Affairs Program
Washington, DC 20552
For federally-chartered credit
National Credit Union
Consumer Affairs Division
Washington, DC 20456
For state member banks of the Federal
Consumer and Community Affairs
Board of Governors of the Federal Reserve System
20th & C Streets, NW
Washington, DC 20551
For discrimination complaints against
all kinds of creditors:
Department of Justice
Civil Rights Division
Washington, DC 20530