Author: Dan Rafter / Source: Wise Bread
In late February, the city of Sacramento filed a lawsuit in federal court against Wells Fargo, claiming that the lending giant has been discriminating against black and Latino mortgage borrowers since 2004. The suit says that Wells Fargo steered these clients into loans that had higher interest rates and were more expensive than the mortgages the company made available to white borrowers.
Wells Fargo isn’t the only big lender to face charges of mortgage discrimination. Last year, JPMorgan Chase & Co. agreed to pay $55 million to the U.S. Department of Justice after being accused of pushing more expensive mortgage loans on minority borrowers. JPMorgan, in a statement released after reaching the settlement, denied that it had done anything wrong.
And in February of this year, Reveal from the Center for Investigative Reporting released a report saying that African-American and Latino homebuyers are denied conventional mortgage loans at rates far higher than white borrowers. According to the study, black borrowers were denied mortgages at higher rates than white borrowers in 48 cities, while Latinos were denied at higher rates in 25.
It’s clear that mortgage discrimination exists and is a problem. If you’re ready to apply for a mortgage loan, you might be worried that you, too, will face this discrimination, especially if you’re black or Latino.
How can you recognize mortgage discrimination? And, just as importantly, how can you fight against it?
Recognizing discrimination
The first step toward fighting back against mortgage discrimination is to recognize when it happens to you. Unfortunately, recognizing discrimination isn’t always easy.
You’re not necessarily a victim of mortgage discrimination simply because you’re denied a mortgage loan. But you are a victim if the reason you are denied is based on your race, religion, gender, age, or sexual orientation. The Equal Credit Opportunity Act forbids lenders from denying borrowers based on those factors. Lenders must have a financial reason for denying a loan application.
For instance, if a lender denies your application for a mortgage because your credit score is just 500, that’s not discrimination. A low FICO score means that you have a history of struggling to pay your bills and manage your credit. That’s a legitimate reason to be denied a loan….
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