Fair Lending

by Mary Beth Guard

Be sure your loan officers all understand these federal protections against discrimination. Prevention is the key!

The term fair lending is often used to refer to lending practices that are not discriminatory in nature. There are two major federal nondiscrimination laws which affect lenders: the Fair Housing Act and the Equal Credit Opportunity Act. While the two are similar, there are some important differences every compliance officer and lender should note.

The Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, national origin, familial status, or disability by housing providers, such as landlords and real estate companies as well as other entities, such as municipalities, banks or other lending institutions, and homeowners insurance companies.

The Equal Credit Opportunity Act, a creditor may not discriminate in any aspect of credit on the basis of sex, race, color, religion, national origin, marital status, age, or source of income in any credit transaction.

When the credit involves real estate, remember that the prohibition against discrimination on the basis of familial status or disability will be applicable.

Resources: DOJ FAQ on Fair Housing and ECOA
GAO's 1996 Report on Fair Lending
FairLending.com

Originally appeared in the Oklahoma Bankers Association Compliance Informer.

First published on BankersOnline.com 12/10/01