Homebuyers are protected by a number of discrimination laws to ensure everyone has a fair chance of securing a mortgage loan for buying a home. For instance, the Equal Credit Opportunity Act, Fair Housing Act, and Fair Credit Reporting Act are all federal laws designed to stop discrimination while also providing you with your right to obtain your credit information.
Equal Credit Opportunity Act – This law prohibits lenders from discriminating against credit applicants based on things such as color, race, national origin, religion, marital status, gender, age, and whether the individual does in any degree, depend on public assistance for income, or exercised any rights under any federal consumer credit protection law. In this case, the lender is required to request certain information while taking the loan application such as the factors mentioned above but this information cannot be used in the decision-making process.
Fair Housing Act – This law prohibits discrimination in residential transaction on basis of color, race, gender, religion, national origin, and familial status. In addition, this law applies to the sale of a home and the decision of the lender to provide a loan in helping to pay for the home. In this case, both the city and state where you live must follow this law.
Prompt Action / Notification of Action Taken – In this case, the lender must act on your application, informing you of action taken within 30 days once the application is received. In this, the application would not be deemed complete and the 30-day period would not begin until your lender has been provided with all pertinent information as requested from you.
Statement of Reasons for Denial – If for some reason your application were denied, the Equal Credit Opportunity Act requires your lender to provide you with a statement as to why or to tell you how you can obtain a copy of the information.
Obtaining a Credit Report – The Fair Credit Reporting Act requires a mortgage lender denying anyone a home loan to let you know if the denial was based on information contained in your credit report. If this were the reason, you would be provided information on how to obtain a free copy of your credit report to dispute entries.
Obtaining an Appraisal – For this, the lender would need to know if the value of your home is enough to warrant the security of a loan. For this information, the lender would need to hire an appraisal company to help rate the value of your home.