Fair Housing Act (FHA)
The Fair Housing Act (FHA) is very similar to the Equal Credit
Opportunity Act by prohibiting discrimination against an applicant. The only difference is
that the FHA refers specifically to residential real estate-related transactions. The FHA
prohibits discrimination based on the following:
|
|
The FHA refers to familial status as a family or individual in the process of adopting or having legal custody of a child under the age of 18 or a woman who is pregnant. A handicap is an individual having a mental or physical impairment (such as blindness, deafness or being physically challenged), persons diagnosed as HIV positive, or recovering substance abusers.
So how does the FHA apply to you taking an application?
FHA is similar to the ECOA and Regulation B by prohibiting you from discriminating against
an applicant for a real estate-related loan for race, color, familial status, national
origin, religion, sex or handicap.
James is a client of yours and carries his home owners insurance through you. James has been open with you and has told you that he is HIV-positive and has recently entered the final stages of his disease. He wants to get a home equity loan to remodel his home so that he can live on the first level of his home and not have to take the stairs. Can you decline taking an application from James?
Again the answer is NO!
Your knowledge of his disease or "handicap" has no bearing on whether or not James can qualify for a loan. Therefore, if James wants to submit an application for a home equity loan, you need to complete the application.
A good rule of thumb to remember for both the FHA and ECOA is that you should never discriminate against an applicant or refuse to take an application based on a prohibited basis despite whether it is for a real estate loan or for an unsecured loan. Make it your practice to accept all applications.
We’ll discuss discrimination one more time at the end of this section when we talk about Fair Lending and general treatment of customers.