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Knowing Your Rights as a Borrower

Several federal laws provide you with protection during the processing of your loan. These laws prohibit discrimination and provide you with rights to certain information. Here are some of your basic rights.

Discrimination
The Equal Credit Opportunities Act (ECOA) prohibits lenders from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, martial status, or age. The Act also prevents discrimination resulting from the applicants income source, if said income comes from any public assistance program. Finally, ECOA prevents discrimination based on the fact that the applicant has exercised any right under any federal consumer protection law.

It’s important however to note the following distinction – This does not mean that the lender won’t ask for certain information such as race, sex, age, and marital status when taking your application. In fact, they frequently must do so in order to help government agencies monitor ECOA compliance.

Your local or state government will likely also have laws in place prohibiting discrimination. While overall very similar, these laws can and do vary from state to state.

Prompt Action/Notification of Action
Once you have submitted your completed application, your lender or mortgage broker must act on it and inform you of the action taken no later than 30 days after it is received. Note: your application will not be considered “complete” until you have submitted all of the material and information requested.

Statement of Reason for Denial
If your application is denied, the lender must give you a statement of specific reasons why you were denied, or at the very least tell you how you can acquire such a statement. If it was due to information obtained on your credit report, the Fair Credit Reporting Act (FCRA) requires the lender to give you information on how you can obtain a free copy of your credit report. You always have the right to dispute the accuracy or completeness of any information found on your credit report, but such disputes typically happen begin with you and the credit reporting agency that provided the report. The agency will provide you with the steps you’ll need to take to clean up your report. The three major credit reporting agencies are:

  • Experian 1-800-682-7654
  • Equifax 1-800-685-1111
  • Trans Union 1-800-916-8800

Obtaining Your Appraisal
The lender needs to know the value of your home to determine if it is enough to secure the loan. To do this, the lender typically hires a professional appraiser to give their opinion on the value of the home. ECOA requires the lender to tell you that you have a right to get a copy of the appraisal report, as well as how and when you can obtain it.

If you feel that you have been discriminated against by a lender or anyone else in the home buying process, you may want to talk to an attorney; or ask the federal agency that enforces ECOA (the Board of Governors of the Federal Reserve System) or the Fair Housing Act (HUD). For more information or to download a complaint form, visit http://www.hud.gov/fhe/fheact.html.

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