Mortgage loan discrimination is the technical term for someone gaming the system in order to deny equal credit to potential borrowers based solely on something like their race, sexual orientation or religion.
While federal regulations like the Dodd-Frank Act, the Fair Housing Act and the Equal Credit Opportunity Act all ban discrimination and encourage lenders to be honest in their dealings with potential borrowers, the reality is that mortgage discrimination still happens.
How do you know if you've become the target of mortgage discrimination?
It may be difficult for you to tell if you're really the target of mortgage discrimination unless you are proactive and as educated as possible about your credit history, your rights and current interest rates.
Educate yourself before seeking a loan.
In other words, it isn't always an easy task to identify discrimination when lenders are smart about it. However, you can start by doing the following:
- Get your credit reports from all three major credit reporting companies (Equifax, Experian and Transunion) before you start looking for a loan.
- Pay extra to learn what your FICO score is from each lender. That way, you have some idea of your credit-worthiness and qualifications for a loan.
- Gather proof of all of your income before you start your search for a mortgage.
- Pick your top three to five lenders to approach for a loan in order to get comparisons between lenders.
Look for these signs of discrimination.
If you notice any of the following, you should suspect lending discrimination:
- The lender makes any comments about your race, your religion, your sexual orientation, national origin, an obvious disability or the type of family you have.
- The lender discourages you from seeking a mortgage loan in a specific area without an adequate reason.
- Your lender refuses to consider your disability income as part of your application.
- Asks about a co-signer before even looking at your credit score.
- Gives you an interest rate that is wildly higher and disproportionate to the rates offered by other lenders.
If you believe that you've been a victim of mortgage discrimination, talk to an attorney with experience in real estate law about your rights as soon as possible.
Source: FindLaw, "Mortgage Discrimination," accessed Oct. 20, 2017