HOME Equity Loan Information - A Consumer Guide To Home Equity

Lender Discrimination

Protection Against Discrimination

When you apply for a home equity or refinancing loan, you are protected against discrimination by Equal Credit Opportunity Act (ECOA) and the Fair Housing Act (FHA). These acts protects you against discrimination based on race, color, religion, national origin, sex, marital status, age, familial status (defined as children under the age of 18 living with a parent) and handicap.

Lenders cannot treat the following sources of income any differently: income from public assistance, part-time employment, Social Security, pensions, annuities, alimony, child support, or separate maintenance payments. If a co-signer is needed, the lender must 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.

For appraisal or any other purpose, the lender cannot be consider the racial composition of the neighborhood where the property is in. A lender cannot ask about your plans for having a family. A lender cannot set different terms or conditions for the loan based on discriminatory factors.

If your loan is denied.
If your loan 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.

You also have the right to 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.

You also have the right to 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.

You also have the right to get a copy of the property appraisal from the lender. Mortgage loan 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 discrimination.

The Basics
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The Do's

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More Information:
Refinancing a Home Equity Loan
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Protection Against Discrimination
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Filing a complaint against a lender
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