Know Your Rights as a Mortgage Applicant

Published by nora | Filed under Buyer / Seller Tips, Mortgage / Finance, Real Estate, Shout Outs

You can’t be discriminated against when you apply for a mortgage. Your lender can’t ask your religion or can’t ask if you’re pregnant. Your mortgage application should be approved or rejected based only on your financial and employment records.

There are at least three federal laws that were designed to protect you against mortgage discrimination. In addition, there are federal agencies that ensure you’re protected from discrimination and that will help resolve discrimination cases.

The Equal Credit Opportunity Act (ECOA)

The ECOA prohibits credit discrimination based on color of skin, race, religion, sex, age, country of origin, marital status, or on the fact one is handicapped, receiving public financial assistance, pregnant, or has children aged below 18. Under this law, your lender is not allowed to do the following:

• Impose different terms, such as higher loan fees or higher interest rates, based on your national origin, race, sex, religion, color of skin, age, marital status or whether you’re on welfare.  Your lender, however, may ask things such as your immigration status to ascertain whether you have the right to stay in the U.S. to be able to pay your loan.
• Ask if you’re divorced or widowed. Your lender can ask only whether you’re married, unmarried, or separated.
• Ask about your spouse or marital status if you’re applying for a separate loan account.
• Ask if you’re planning to have children. Your lender however can ask about your expenses allocated to dependents.
• Ask if you’re receiving child support, alimony, or separate maintenance payments.

The Fair Housing Act (FHA)  

The FHA prohibits discrimination in all residential real estate processes and transactions such as:

• home loan application and underwriting for buying, building, repairing or improving a home
• appraisal, brokerage or sale of residential real estate
• house sale or rental

The Fair Credit Reporting Act (FCRA)

Under the FCRA, each of the three credit reporting agencies – Experian, Equifax and Transunion – is required to send you a free copy of your credit report once every 12 months if you request it. You just need to file your request at annualcreditreport.com or through phone number 1-877-322-8228. You can also visit ftc.gov/credit, print the request form, and send it to Annual Credit Report Request Service.

What to Do If Your Home Loan Application Is Denied

You have the right to know the specific reason why your loan application is rejected. Your bank cannot just say you failed to meet mortgage application standards; it must be able to tell you why you didn’t meet the standards, such as your earnings are far below the minimum income requirement.

If your loan is rejected because of low appraisal, review the appraisal, and check if the appraiser committed an error or overlooked something. If the reason is your credit report, ask your lender the specific negative information on your report so you can file a dispute with the credit reporting agency and the company that provided the information.

If you believe you’ve been discriminated against, file a complaint with the lender, or ask help from the Federal Trade Commission or the Housing and Urban Development’s Office of Fair Housing and Equal Opportunity.