November 17, 2010
The FHA and Department of Housing and Urban Development have an aggressive anti-discrimination policy. FHA home loans are meant for all qualified applicants regardless of race, color, national origin, religion, sex, familial status or disability.
Most people are aware that refusing to issue credit, show a home or approve an application for those reasons is illegal. Even in so-called gray areas such as a loan applicant on maternity leave or suffering from a temporary disability that affects the ability to earn a paycheck have been challenged successfully; a lender or real estate agent can’t refuse to do business with a qualified applicant in such cases.
But those are the more obvious cases of discrimination. Are there other situations where a lender or agent could unlawfully discriminate against a qualified FHA loan applicant?
A lender doesn’t have to refuse to issue an FHA home loan–they could simply refuse to give the information needed for an FHA loan applicant to get started. That kind of discrimination is also forbidden by the rules covering government home loans.
The FHA official site makes it clear. “Pre-application inquiries about mortgage lending financing options represent a critical phase in the homebuying process. If potential home buyers cannot obtain full and fair access to information about mortgage financing, they may give up on their pursuit of home ownership, their housing search may be restricted, or they may be unable to negotiate the most favorable loan terms.”
That’s not acceptable to the FHA.
Another area where discrimination can take place based on race, color, national origin, religion, sex, familial status or disability? When different terms or conditions on a government guaranteed home loan are offered to some people but not to others. In a legitimate FHA loan situation, a borrower may not qualify for some terms or conditions depending on the type of loan applied for, credit history or other factors.
That’s not what the FHA requirements are about. Discrimination in this sense is when a lender offers an equally qualified borrower less favorable terms based on race, color, national origin, religion, etc. It’s illegal to charge different interest rates, points, or fees based on such criteria.
As the FHA says on its official site, being able to observe the warning signs of lending discrimination is the first step in filing a complaint. If you suspect discriminatory lending practices by an FHA lender, you can file a complaint using the FHA’s online form.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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