What Is the Purpose and Relevance of Fair Lending and Anti-Discrimination Laws

If you are experiencing housing discrimination, go to the HUD website and search your state for a fair housing program in your area. In July 2012, the Department of Justice reached a settlement of more than $175 million with Wells Fargo Bank for a discriminatory lending model or practice: African-American and Hispanic borrowers who qualified for loans were charged higher fees or interest rates, or they were improperly included in subprime loans, which are also more expensive. In January 2017, a $53 million settlement was reached with Chase Bank for loans. As Preet Bharara, the U.S. Attorney for the Southern District of New York, explained at the time, „the settlement will compensate thousands of African-American and Hispanic borrowers who paid higher interest rates and fees on Chase mortgages than similar white borrowers.“ The Fair Housing Act (FHA) and the Equal Credit Opportunity Act (ECOA) protect consumers by prohibiting unfair and discriminatory practices. Read occ`s „Consumer Credit Responses“ and „Mortgage and Home Loan Responses“ for more information. The OCC has taken the initiative among the Bundesbank`s supervisors to develop an approach to combat unfair and misleading commercial practices. These practices are often an element of predatory loans. The OCC has taken a number of enforcement actions against banks that have engaged in abusive practices and, in one landmark case, one bank demanded that more than $300 million in compensation be paid to its customers. Unlawful unequal treatment occurs when a lender bases its credit decision on one or more of the prohibited discriminatory factors covered by fair lending laws, such as when a lender offers a credit card with a limit of $750 for applicants aged 21 to 30 and $1,500 for applicants over 30. This Directive infringes ECOA`s prohibition of discrimination on grounds of age. In addition to ECOA, which protects home buyers looking for a mortgage, the Fair Housing Act (FHA) prohibits discrimination in renting, buying or obtaining housing finance.

This means that mortgage owners, brokers and brokers must all follow anti-discrimination laws. If you feel you have been treated unfairly in a loan application, there are several steps you can take. After a home, a car is usually the second most important purchase a consumer will make. According to the Consumer Financial Protection Bureau (CFPB), discriminatory auto loan markups can cause consumers tens of millions of dollars in losses each year. Often, discrimination takes the form of „trader markup“ policies, which allow traders to add points to the base interest rates they charge consumers. The CFPB says research suggests that minorities are charged higher margins than white consumers in a similar situation. When a borrower applies for a loan, the lender may request some of the personal facts prohibited by ECOA for use in credit decisions. While these questions may not be part of the analysis for approval – and answering them is optional – this information helps federal agencies enforce anti-discrimination laws. If you feel you have been discriminated against in your search for fair housing, you can take the following steps: Landlords: The Mortgage Disclosure Act (HDMA) requires financial institutions to disclose data about their public loans to ensure that they do not engage in discriminatory lending practices. Since its adoption in 1975, federal agencies have used the AMMH to study lending models to identify financial institutions that engage in discriminatory lending practices. Loan officers are allowed to ask questions that help them determine your ability to repay your loan.

In other words, they collect information about your income, assets, debts, and credit history to determine if you have good credit risk and, if so, what the terms of your loan will look like. They must apply their standards impartially and without discrimination. You can ask about your own: There are three types of discriminatory practices described in recent FDIC laws: overt discrimination, unequal treatment, and unequal impact. Lenders who violate ECOA can face Department of Justice (DOJ) class action lawsuits if the DOJ or affiliated organizations recognize a pattern of discrimination. In July 2020, the Consumer Financial Protection Bureau (CFPB), which takes the lead in monitoring compliance and enforcement of the ecoa Law, issued a request for information asking for public comments to identify ways to improve ECOA`s efforts to ensure non-discriminatory access to credit. .