Fair Housing & Fair Lending Basics
Federal Housing and Lending Antidiscrimination Legislation:
- The Fair Housing Act: Prohibits discrimination in housing (including mortgage lending) on the basis of race, color, religion, national origin, sex, disability and familial status
- 42 U.S.C. § 3605(a) It is unlawful for any person or other entity whose business includes engaging in residential real estate-related transactions to discriminate against any person in making available such a transaction, or in the terms or conditions of such transaction, because of race, color, religion, sex, handicap, familial status, or national origin.
- Equal Credit Opportunity Act: Prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age, or because an applicant receives income from a public assistance program
- Truth in Lending Act Requires clear disclosure of key terms of the lending arrangement
- Additional federal laws: RESPA - Real Estate Settlement Procedures Act & HOPEA – Home Ownership and Equity Protection Act
Massachusetts Lending Antidiscrimination Legislation:
- MA Truth In Lending Act – 4 year right to rescission if misrepresentations
- M.G.L. c.183 §28C – Refinancing must be in the borrowers interest – burden on lender
- M.G.L. c. 183C §1 Predatory Home Loan Practices Act – prohibits high cost loans
- Chapter 206 of the Acts of 2007 – An Act Protecting and Preserving Homeownership - Requires 90 day right to cure before foreclosure initiated
- M.G.L. c.93A – Consumer Protection Act
- Attorney General Regulations – Prohibit Foreclosure Rescue Scams; Prohibit Deceptive Mortgage Practices
Why Should You Avoid Discriminating?
Because if discriminatory housing/lending practices are challenged, you could be subject to the following remedies:
- Monetary damages
- Injunctive Relief
- Civil Penalties
- Punitive Damages
- Lawyer’s fees
Lender Do’s: Best Practices to Avoid Liability
- Laws and Regulations – Comply with all applicable state and federal laws and regulations
- Confidentially – Respect borrowers’ privacy rights by complying with federal and state privacy laws.
- Equitable Treatment – Maintain a work environment that encourages compliance with these fair lending and consumer best lending practices and facilitates the fair and equitable treatment of consumers.
- Professionalism – Endeavor to employ a workforce of talented, qualified individuals with diverse backgrounds in compliance with applicable laws.
- Procedures and Training – Establish internal compliance, fair lending, servicing, quality, audit and disciplinary procedures. Provide training to employees.
- Compliance – Establish internal procedures to promote compliance with these best practices and applicable law; take appropriate steps to rectify problems.
- Report Violations – Encourage every employee to report violations to senior management.
- Internal Review – On a periodic basis review random samples of loan files to determine compliance.
- Customer Contact Employee Evaluation – Evaluate the behaviors of “customer contact employees” through appropriate measurement tools.
For additional information and guidance on your fair housing obligation contact:
The Fair Housing Center of Greater Boston works to eliminate housing discrimination and promote open communities throughout the region. We serve the communities in Essex, Middlesex, Norfolk, Plymouth, and Suffolk counties. 59 Temple Place, #1105 Boston, MA 02111 Phone: (617) 399-0491 Fax: (617) 399-0492 TTY users, please call the MA Relay Service at 1-800-439-2370 E-mail: firstname.lastname@example.org www.bostonfairhousing.org