What you can do about mortgage discrimination
I went on The Takeaway this morning to discuss a very worrisome topic: mortgage discrimination. Here’s what you should know:
A recent report examining Federal Reserve data found that African Americans and Hispanics were able to borrow 62% less to buy or refinance homes in 2009 than in 2004 (pre-crash). Mortgage dollars going to white borrowers also declined, but only by 17%. Other research, including a powerful study of foreclosure rates and segregation by two Princeton scholars, suggests that black and Hispanic potential homeowners face discrimination and difficulty at every stage of the home-buying process.
In effect, after decades of being denied loans at all and being neglected by traditional financial institutions, suddenly minorities were sold the worst loans out there.
“Obviously it’s impossible to prove an individual institution is prejudiced, but collectively they were,” said the study’s co-author Jacob Rugh. “Communities were left out to dry.”
The Equal Credit Opportunity Act bans creditors from discriminating on the basis of factors including race, religion, national origin, sex, age, or whether you receive any income from public assistance programs. If you think you’ve been discriminated against in applying for a home loan, check out the FTC’s guide to mortgage discrimination, including these helpful tips:
- Complain! You might be able to persuade your lender to reconsider.
- Check with your state Attorney General’s office (www.naag.org) to see if your creditor violated state laws in rejecting your application. (Many states have their own equal credit opportunity laws.)
- Report violations to the appropriate government agency. If a lender denies your mortgage application, by law they have to give you the name and address of the agency to contact.
- You can sue the lender in federal district court, and possibly recover damages and court fees. You could also find others with the same complaint, and join them in filing a class action suit.
Have you seen this happen in your neighborhood or to anyone you know?
