What are Fair Lending Laws & Regulations?
How fair lending laws help protect homebuyers and homeowners
Fair lending laws help ensure lenders treat homebuyers and homeowners fairly when they are applying for a mortgage to finance a house.
Real estate professionals often refer to the Fair Housing Act and Equal Credit Opportunity Act (ECOA) when they talk about fair lending laws. Other legislation, like the Dodd-Frank Act, can affect how lenders work with their customers too.
What is the Fair Housing Act?
The Fair Housing Act protects borrowers from discrimination in mortgage lending and any residential real-estate related transaction. These transactions include:
- Mortgages to buy a home
- Mortgages to refinance a home, including home equity loans
- Loans to build, repair, or maintain a home
- Selling or renting a home
The Fair Housing Act prohibits discrimination based on race, color, national origin, religion, sex (including gender identity and sexual orientation), family status, and disability.
The Fair Housing Act also covers mortgage brokers, property appraisals, and homeowners insurance.
What is the Equal Credit Opportunity Act (ECOA)?
The Equal Credit Opportunity Act (ECOA) protects consumers from discrimination in credit transactions, including but not limited to residential real-estate-related transactions. As a result, the ECOA is one of the laws that affects housing and residential real estate.
The ECOA prohibits discrimination on the basis of age, marital status, income from public assistance, and exercise of rights under the Consumer Credit Protection Act as well as on race, color, religion, national origin, and sex.
The ECOA applies to credit from banks, lenders, stores, and credit card companies. It also applies to businesses, corporations, partnerships, and trusts as well as individuals.
What are examples of fair lending discrimination?
Discouraging a person from applying for credit, refusing to offer credit to a person who qualifies, and offering less favorable terms to different persons with similar qualifications on the basis of race, religion, and other categories discussed above are examples of violations of fair lending laws. Other actions can also be violations of these laws.
Fair lending at Freedom Mortgage
We are committed to the fair treatment of all our customers. Please see our Legal Disclosures for more details on our policies and procedures.
Last reviewed and updated July 2023 by Freedom Mortgage Corporation.