Home mortgage pointers

First of two parts

When you apply for a mortgage, whether to purchase, refinance or for home-improvement purposes, two important federal laws protect you from being discriminated against. These are the Equal Credit Opportunity Act (ECOA) and the Fair Housing Act (FHA).

These two laws cover some of the same practices, but have important differences. For example, although you can’t be rejected for a mortgage because of your race or ethnic background under either law, the ECOA specifically protects you against discrimination because of your age while the FHA also protects you if you have a handicap.

The ECOA prohibits discrimination in any aspect of a credit transaction based on: race or color; religion; national origin; sex; marital status; age (provided the applicant has the capacity to contract; applicant’s receipt of income derived from any public assistance program; and the applicant’s exercise, in good faith, of any right under the Consumer Credit Protection Act, the umbralla statute that includes ECOA.

The FHA prohibits discrimination in all aspects of residential real estate-related transactions, including: making loans to buy, build, repair or improve a dwelling; selling, brokering or appraising residential real estate; and selling or renting a dwelling.

The FHA prohibits discrimination based on: race or color; national origin; religion; sex; familial status (defined as children under the age of 18 living with a parent or legal guardian, pregnant women and people securing custody of children under 18); children under the age of 18 living with a parent or legal guardian, and handicap.

Because both the ECOA and the FHA apply to mortgage lending, lenders may not discriminate in mortgage lending base or any of the prohibited factors in either list. For example, mortgage lenders:

cannot discourage you from applying or deny you a mortgage because of your race, national origin, religion, sex, marital status, age, or because you receive public assistance income;

cannot consider your race, national origin, religion or sex, although you will be asked to voluntarily disclose this information to help federal agencies enforce anti-discrimination laws. A creditor may consider your immigration status and whether you have the right to remain in the country long enough to repay the debt;

cannot impose different terms or conditions (such as a higher interest rate or larger down payment) on a loan for reasons relating to the applicant’s race or sex or other prohibited factors;

cannot consider the race of the people who live in the neighborhood where you want to buy a house;

cannot, when appraising property, consider the race of people living in the neighborhood where the property is located;

cannot ask you about your plans for having or raising children, (but may ask about dependent related expenses);

must consider reliable public assistance income employment, Social Security, pensions and annuities;

must consider reliable alimony, child support, or separate maintenance payments, if you choose to disclose this information. A lender may ask you for proof that this income is received consistently;

cannot require you to have a co-signer for the loan, if you alone meet the lender’s standards;

must accept a co-signer, if one is needed, someone other than your spouse, if you so choose.

Not everyone who applies for a mortgage will get one. Lenders can use factors such as income, expenses, debts and credit history to judge applicants.

But there are steps you can take to ensure that your application gets full consideration. Make sure to show the lender all information that supports your application.

Some mortgage lenders may attempt to charge more to some borrowers than to others for the same loan product offered at the same time. This may take the form of higher interest rates or origination fees or more points. You may want to ask the lender if the rate being quoted to you is the lowest offered that day. The loan officer is probably basing the loan offer on the list of mortgage rates issued frequently by that company to its loan officers. Ask to see the list. If the lender will not show you this, and you suspect you are not being offered the lowest rates or points available, you may want to negotiate for better terms or shop for another lender.

Consumer Forum is a collaborative effort of the Bangor Daily News and Northeast COMBAT. Send your questions to Consumer Forum, Bangor Daily News, P.O. Box 1329, Bangor 04402-1329. COMBAT is a membership organization with basic dues of $10 a year. For membership information write to the above address. Please enclose a large, stamped, self-addressed envelope.