Lenders ask questions to assess your risk level as a potential borrower. Lenders aren't allowed to ask questions regarding sexual orientation, medical history, disabilities, political or religious beliefs and plans for family expansion.
The Fair Housing Act and the Americans with Disabilities Act prohibit discrimination based on illness or disability. If a lender tries to feel you out to see if you're suffering from any serious health problems or questions you point-blank about a disability, that's a violation of your legal protections.
Lenders are not permitted to ask any questions that would discourage an applicant. Further, government regulations prevent mortgage lenders from denying loans based on race, color, religion, national origin, sex, marital status, age, or because you receive public assistance.
The financial exception allows a creditor to obtain and use medical information as long as the information is the "type of information routinely used in making credit edibility determination, such as information relating to debts, expenses, income, benefits, assets, collateral, or the purpose of the loan, including the ...
It's also illegal for a lender to take certain actions based on a protected trait or characteristic as defined by the federal government, including race, color, religion, national origin, sex, marital status, age or public-assistance status. Based on a protected trait, a lender can't …
You may find an employer asking you an illegal question in an interview. These questions may ask you to reveal your age, race, national origin, citizenship, gender, religion, marital status, sexual orientation, or arrest record. Knowing how to identify and respond effectively to these questions is important.
It is important to note that underwriters should not be in actual contact with you. All questions and discussions should be handled through your lender or loan officer. An underwriter talking to you directly, or even knowing you personally, is a conflict of interest.
A creditor such as a lender may ask about the number and ages of your dependents. A lender may also ask about dependent-related financial obligations or expenses. However, a lender may do so only if the creditor asks for this information without regard to sex or marital status (or any other prohibited basis).
Poor communication, or a lack of responsiveness, is the most common complaint in the mortgage lending process. Both borrowers and referral partners, namely Realtors, want to know that the lines of communication are open when they have a question or need an update.
Inconsistent Information: When information provided by an applicant contradicts itself or is inconsistent across documents, it's a clear sign of potential fraud. Lenders should closely examine discrepancies in addresses, employment history, income details, and more.
TILA disclosures include the number of payments, the monthly payment, late fees, whether a borrower can prepay the loan without penalty and other important terms.
Fair lending prohibits lenders from considering your race, color, national origin, religion, sex, familial status, or disability when applying for residential mortgage loans. Fair lending guarantees the same lending opportunities to everyone.
Mortgage underwriters will generally ask for one to two years of tax returns when you apply for a mortgage. If you are self-employed, you may be asked to provide additional documentation as proof of your income stability. Mortgage underwriters want to make sure that your income is stable before giving you a mortgage.
A lender or broker may ask whether income stated in your application comes from alimony, child support, or separate maintenance payments. However, the lender or broker must tell you that you do not have to reveal such income if you do not want it considered.
Can a mortgage be denied after the closing disclosure is issued? Yes. Many lenders use third-party “loan audit” companies to validate your income, debt and assets again before you sign closing papers. If they discover major changes to your credit, income or cash to close, your loan could be denied.
A poor credit history or low credit score can prevent you from getting approved for a personal loan. Too much monthly debt relative to your income—your debt-to-income ratio (DTI)—can lead to a lender rejecting your loan application.
There are many reasons why an underwriter may deny your mortgage loan, such as a low income, an unsatisfactory credit history or a recent change in employment.
Image. We recommend that you avoid asking applicants about personal characteristics that are protected by law, such as race, color, religion, sex, national origin or age.
A misleading question is a question that is phrased in a way that suggests a particular answer or contains a presumption that may lead the respondent to an incorrect conclusion. It often introduces bias or assumes facts not in evidence, causing confusion or influencing the respondent's answer.
Examples of Lending Discrimination
Providing a different customer service experience to mortgage applicants depending on their race, color, religion, sex (including gender identity and sexual orientation), familial status, national origin or disability.
Regulation B prohibits creditors from requesting and collecting specific personal information about an applicant that has no bearing on the applicant's ability or willingness to repay the credit requested and could be used to discriminate against the applicant.
The good news is that if you're denied, the lender must provide you with an adverse action notice explaining the information used to make the decision. 1 Below are some of the common reasons why your loan application might be denied.