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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.
vThe 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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