December 16, 2010
One of the things a first time home buyer notices about the FHA loan process is the abundance of rules and regulations designed to protect the borrower from unscrupulous lending practices. Some of those rules are to prevent a buyer from getting cheated or enter into a predatory lending arrangement. But other FHA requirements are in place to make a level playing field for all applicants; all qualified FHA loan applicants must have access to the same industry-standard terms, conditions and quality.
But sometimes the rules get broken. The FHA and HUD have procedures and a process to investigate all legitimate complaints of fraud, unethical lending practices and discrimination against qualified applicants. In December of 2010, HUD announced that system was at work in an ongoing investigation on 22 banks for allegedly discriminating against African-American and Latino FHA loan applicants.
According to a press release from the Department of Housing and Urban Development, “The investigations are in response to 22 complaints the National Community Reinvestment Coalition (NCRC) filed with HUD alleging that the loan activities of the mortgage originators showed that their home lending practices deny FHA- insured loans to African Americans and Latinos with credit scores as high as 640.
Federal Housing Administration (FHA) guidelines allow mortgages to borrowers with credit scores above 580, provided the borrowers have down payments equaling 3.5 percent of the loan amount, or above 500, provided the borrowers have down payments equaling 10 percent of the loan amount.”
HUD Assistant Secretary for Fair Housing and Equal Opportunity John Trasvi
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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