Lenders who provide mortgage loans on a discriminatory basis may incur liability under the Equal Credit Opportunity Act, which punishes discrimination in credit. The Equal Credit Opportunity Act (ECOA) prohibits a wide array of discriminatory lending on the basis of several factors. These include race, color, religion, national origin, sex, and marital status. Violations of the ECOA may also be violations of the Fair Housing Act.
Redlining and reverse redlining are practices that are prohibited by the ECOA. These involve providing different credit terms (or restricting lending products) to certain areas based on racial characteristics. Red lining is when a mortgage company sections off certain neighborhoods or communities for restricted lending or higher cost loans on the basis of race or other discriminatory standards. In effect, the bank draws a “red line” around such communities and potential loan applicants from these areas are denied credit.
Reverse redlining works in the opposite manner. A mortgage company or bank would establish lending practices that encouraged many more loans to flow into a certain area or demographic. This may be part of a devious pump and dump scheme, where lenders work to inflate the value of homes and provide funds to borrowers who can not pay them back. The lender then forecloses and is able to take the properties. Both throne rush hack cheats tool redlining and reverse redlining are financially destructive to both borrowers and lenders, which is why the practice is somewhat rare.
Borrowers may have a very difficult time showing they have been the victim of discrimination in a foreclosure case. If they suspect this, however, it may be worth their while to consult an attorney who specializes in such cases. This is because liability under the ECOA may result in lenders being responsible for actual damages suffered by borrowers, punitive damages up to $10,000, and attorney fees. Some attorneys may take a case on contingency if a special case of discrimination can be shown. It may be best at least to consult with an attorney before raising this defense in an answer to a foreclosure complaint.
The statute of limitations for violations of the Equal Credit Opportunity Act throne rush hack cheats tool is two years. If borrowers obtained their mortgage more than two years ago, this law may not apply to their mortgage. Again, the best option in the case of suspected discriminatory lending would be for homeowners to consult with an attorney who specializes in this area of lending law.
The Home Mortgage Disclosure Act (HMDA) requires financial institutions to publicly release information related to ECOA lending. These reports are available online and offer information on the percentage of loans extended to minorities by different lenders in various markets throughout the country. The general public is able to search zip codes, how many applications each lending institution took in the area, the racial characteristics of various groups, and the interest rate offered to each group. This can be a starting point for borrowers researching potential discriminatory or predatory lending practices.
Despite the fact that violations of the Equal Credit Opportunity Act may be somewhat uncommon in the mortgage lending industry, homeowners click more details may want to become more familiar with the law. However, the real estate boom of the past decade had been more a result of all markets being artificially pumped up and anyone who could operate a pen was given a loan. This makes actual discrimination more unlikely, as the Wall Street investment firms set up the markets for bad investment and banks simply took advantage of any borrower coming through the door.