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 improvements.
Your Rights Under
The ECOA prohibits
discrimination in any aspect of a credit transaction based on:
- race or color;
- national origin;
- marital status;
- age (provided the applicant has the
capacity to contract);
- the applicant’s receipt of income
derived from any public assistance program; and
- the applicant’s exercise, in good
faith, of any right under the Consumer Credit Protection Act, the
umbrella statute that includes ECOA.
Your Rights Under
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 based
- race or color;
- national origin;
- 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 Do’s and
- 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 received
- 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 debt.
- 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
Not everyone who
applies for a mortgage will get one. Lenders can use factors such as
income, expenses, debts, and credit history to evaluate
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 you’ve 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 don’t
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
If you’ve 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
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 you’re 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
If Your Application Is
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
haven’t been employed long enough." A response of "you didn’t 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 lender’s 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
- 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 bureau’s 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
Take action if you
think you’ve been discriminated against.
- Complain to the lender. Sometimes you
can persuade the lender to reconsider your application.
- Check with your state Attorney
General’s 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 lender’s conduct
was willful. You also may recover reasonable lawyers’ fees and court
costs. You also might consider joining with others to file a class
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
Washington, DC 20580
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 Wide
For violations of the FHA:
Office of Fair Housing and Equal
US Department of Housing and Urban
Washington, DC 20410-2000
You have one year to file a complaint with
HUD, but you should file as soon as possible. Your complaint to HUD should
- 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
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
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
Federal Deposit Insurance
Consumer Affairs Division
For federally-chartered or
federally-insured savings and loans:
Office of Thrift Supervision
Washington, DC 20552
For federally-chartered credit
National Credit Union
Consumer Affairs Division
For state member banks of the Federal
Consumer and Community Affairs
Governors of the Federal Reserve System
20th & C Streets,
Washington, DC 20551
For discrimination complaints against all
kinds of creditors:
Department of Justice
Washington, DC 20530