After the application of a home loan, you will receive two documents, a loan estimate, and closing disclosure. On the surface, these documents are identical but they both serve slightly different purposes. Up Next: Expenses To Expect In The First Year Of Homeownership Here is what you need to know about the differences between these […]
The Equal Credit Opportunity Act vs. The Federal Fair Housing Act
No matter where you come from or who you are, no one should have to worry about not being accepted for credit or a mortgage in KC based on their:
- National origin
- Marital status
Thankfully, there are two major laws designed to work together to help protect you against discrimination when you go in to apply for credit or a mortgage in KC:
While these two laws are very similar in design and purpose, each deals with different issues. ECOA deals with credit discrimination, while the FFHA deals with discrimination in housing and mortgages in KC.
Equal Credit Opportunity Act
The Federal Trade Commission (FTC) is a consumer protection agency that protects consumers from unfair and predatory business acts. It enforces the Equal Credit Opportunity Act and helps ensure that everyone has an equal chance to obtain credit and own a home. If there has been a pattern of discrimination, the Department of Justice may file a lawsuit under the ECOA, even if a discriminatory act happened only once.
Federal Fair Housing Act
Where the ECOA protects borrowers from discrimination when applying for credit, the Federal Fair Housing Act prohibits discrimination in the sale, rental, and financing of homes, among other housing-related transactions. Companies are prohibited from:
- Refusing to make a mortgage loan
- Refusing to provide information regarding loans
- Imposing different terms or conditions on a loan, such as different interest rates, points, or fees
- Discriminating in appraising property
- Refusing to purchase a loan
- Setting different terms or conditions for purchasing a loan
Failure to comply with the ECOA and FFHA could result in fines and lawsuits for the offending company. Remember that not every rejected application is discrimination. If you believe you have been a victim of discrimination when applying for credit or a mortgage in KC, contact the appropriate regulatory agency.