Fair Lending

Introduction

Pine Tree Legal Assistance’s Fair Housing Initiative Project and Foreclosure Prevention Project Encourage Fair Lending Practices

Discrimination in mortgage lending is prohibited by the federal Fair Housing Act and the Maine Human Rights Act. HUD's Office of Fair Housing and Equal Opportunity and the Maine Human Rights Commission actively enforce those provisions of the law. The Fair Housing Act protects people based on race, color, national origin, religion, sex, familial status, or disability and the Maine Human Rights Act adds sexual orientation, receipt of public assistance, and ancestry.

These laws make it unlawful to engage in the following practices:

  • Refuse to make a mortgage loan 
  • Refuse to provide information regarding loans 
  • Impose different terms or conditions on a loan, such as different interest rates, points, or fees 
  • Discriminate in appraising property 
  • Refuse to purchase a loan or set different terms or conditions for purchasing a loan

Filing a Complaint

If you have experienced any one of the above actions, you may be the victim of discrimination. Recognizing the signs of lending discrimination is the first step in filing a complaint. HUD and the Maine Human Rights Commission investigate fair housing and fair lending complaints at no cost to you. If you believe you have experienced lending discrimination, contact Pine Tree Legal Assistance to learn more about the complaint process.

HUD Fair Lending Studies

Pre-application inquiries about mortgage lending financing options represent a critical phase in the homebuying process. If potential homebuyers cannot obtain full and fair access to information about mortgage financing, they may give up on their pursuit of homeownership, their housing search may be restricted, or they may be unable to negotiate the most favorable loan terms. HUD has conducted a number of studies to determine whether minority homebuyers receive the same treatment and information as whites during the mortgage lending process.

Subprime Lending

Subprime loans play a significant role in today's mortgage lending market, making homeownership possible for many families who have blemished credit histories or who otherwise fail to qualify for prime, conventional loans.

While the subprime mortgage market serves a legitimate role, these loans tend to cost more and sometimes have less advantageous terms than prime market loans. Additionally, subprime lenders are largely unregulated by the federal government. Data shows blacks are much more likely than whites to get a subprime loan, and many of the borrowers who take out these loans could qualify for loans with better rates and terms. As such, many have expressed fair lending concerns about the subprime market.

Predatory Lending

Some lenders, often referred to as predatory lenders, saddle borrowers with loans that come with outrageous terms and conditions, often through deception. Elderly women and minorities frequently report that they have been targeted, or preyed upon, by these lenders. The typical predatory loan is: (1) in excess of those available to similarly situated borrowers from other lenders elsewhere in the lending market, (2) not justified by the creditworthiness of the borrower or the risk of loss, and (3) secured by the borrower's home.

Predatory lending can include loans to buy mobile homes. In addition to mortgages, predatory lending can involve contracts for the sale of real estate and rent to own leases.

  • Mortgages are loans that result in you having ownership of the property when you take out the loan.
  • Contracts for Sale of Real Estate is an agreement in which you will own the property only after you make all of the payments called for by the contract.
  • A Lease with an option to buy is an agreement where you pay rent but you have the option to buy the property at some time after you enter into the lease.

All three types of agreement can require you to make a down payment. You should be very careful before making a down payment when you enter into a contract for Sale of Real Estate or a lease with an option to buy because you can lose your entire down payment if you miss even a single payment. Before you make a down payment when entering into either of these types of agreements you should speak to a lawyer at Pine Tree Legal Assistance or housing counselor.

Minority Homeownership

HUD is committed to increasing homeownership opportunities for all Americans. While HUD encourages home ownership for Latinos and African-Americans, whose homeownership rates lag behind white rates, HUD also wants to protect minorities from predatory and other unfair lending practices.

If you believe you have been the victim of illegal housing or lending discrimination, you can take legal action. The violator may be ordered to stop discriminating and to pay you damages.

For help contact Pine Tree Legal Assistance.

October 2017
PTLA #669