There are several federal laws which provide you with protection during
the processing of your loan. The Equal Credit Opportunity Act ("ECOA"),
the Fair Housing Act, and the Fair Credit Reporting Act ("FCRA")
prohibit discrimination and provide you with the right to certain
credit information.
No Discrimination. ECOA prohibits lenders
from discriminating against credit applicants on the basis of race,
color, religion, national origin, sex, marital status, age, the
fact that all or part of the applicant's income comes from any public
assistance program, or the fact that the applicant has exercised
any right under any federal consumer credit protection law. To help
government agencies monitor ECOA compliance, your lender or mortgage
broker must request certain information regarding your race, sex,
marital status and age when taking your loan application.
The Fair Housing Act also prohibits discrimination in residential
real estate transactions on the basis of race, color, religion,
sex, handicap, familial status or national origin. This prohibition
applies to both the sale of a home to you and the decision by a
lender to give you a loan to help pay for that home. Finally, your
locality or state may also have a law which prohibits discrimination.
Frequently, there are differences in the types and amounts of settlement
costs charged to the borrower -- for example, some borrowers are
charged greater fees for mortgages depending on their credit worthiness.
These differences may be justified or they may be unlawfully discriminatory.
It is important that you examine your settlement documents closely,
especially lines 808-811 on the HUD-1 settlement statement, and
do not hesitate to compare your settlement costs with those of your
friends and neighbors.
If you feel you have been discriminated against by a lender or
anyone else in the home buying process, you may file a private legal
action against that person or complain to a state, local or federal
administrative agency. You may want to talk to an attorney; or you
may want to ask the federal agency that enforces ECOA (the Board
of Governors of the Federal Reserve System) or the Fair Housing
Act (HUD) about your rights under these laws.
Prompt Action/Notification of Action Taken.
Your lender or mortgage broker must act on your application and
inform you of the action taken no later than 30 days after it receives
your completed application. Your application will not be considered
complete, and the 30 day period will not begin, until you provide
to your lender or mortgage broker all of the material and information
requested.
Statement of Reasons for Denial. If your
application is denied, ECOA requires your lender or mortgage broker
to give you a statement of the specific reasons why it denied your
application or tell you how you can obtain such a statement. The
notice will also tell you which federal agency to contact if you
think the lender or mortgage broker has illegally discriminated
against you.
Obtaining Your Credit Report. The Fair
Credit Reporting Act ("FCRA") requires a lender or mortgage
broker that denies your loan application to tell you whether it
based its decision on information contained in your credit report.
If that information was a reason for the denial, the notice will
tell you where you can get a free copy of the credit report. You
have the right to dispute the accuracy or completeness of any information
in your credit report. If you dispute any information, the credit
reporting agency that prepared the report must investigate free
of charge and notify you of the results of the investigation.
Obtaining Your Appraisal. The lender needs
to know if the value of your home is enough to secure the loan.
To get this information, the lender typically hires an appraiser,
who gives a professional opinion about the value of your home. ECOA
requires your lender or mortgage broker to tell you that you have
a right to get a copy of the appraisal report. The notice will also
tell you how and when you can ask for a copy.
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