Fair Housing Act
The Fair Housing Act is a federal civil rights law (Title VIII of the Civil Rights Act of 1968) that prohibits discrimination in the sale, rental, and financing of housing based on race, color, national origin, religion, sex, familial status, and disability. In mortgage lending, the Act makes it unlawful to deny credit or impose different terms based on any of these protected classes.
What This Means
Protected Classes
The Fair Housing Act identifies federally protected classes in housing transactions:
- Race
- Color
- National origin
- Religion
- Sex (including sexual orientation and gender identity, per HUD guidance)
- Familial status (families with children under 18, pregnant women)
- Disability (physical or mental)
Many state and local jurisdictions add additional protected classes, such as age, marital status, source of income, or military/veteran status. Mortgage lenders must comply with both federal and applicable state fair housing laws.
How It Applies to Mortgage Lending
In the mortgage context, the Fair Housing Act prohibits lenders from:
- Refusing to make a mortgage loan or provide information about loans based on a protected class
- Imposing different terms, conditions, or rates (such as higher interest rates or larger down payment requirements) based on a protected class
- Appraising a property differently based on the racial or ethnic composition of the neighborhood
- Engaging in redlining, the practice of refusing to lend in specific geographic areas based on the demographic characteristics of the residents
Enforcement and Complaints
The Fair Housing Act is enforced by the U.S. Department of Housing and Urban Development (HUD) and the Department of Justice. Borrowers who believe they have experienced discrimination can file a complaint with HUD within of the alleged violation. HUD investigates complaints at no cost, and cases may be referred to the DOJ for prosecution if a pattern of discrimination is found.