Mortgage Discrimination: What to Do If It Happens to You

It’s hard enough to buy a home, without someone gaming the system against you. Although the predatory and discriminatory lending practices that fueled the 2008 housing crisis have since been forbidden under the Dodd-Frank Act, today mortgage loan discrimination is subtler, more insidious — and perhaps just as costly.

Loosening the grip of tight lending standards

After the housing collapse, a tight credit environment reduced the number of mortgage loans issued to potential homeowners with less-than-perfect credit, especially minorities. Research conducted by the Urban Institute in 2014 found a drop of as many as 1.2 million loans could be attributed to tightening credit, with African-American and Hispanic borrowers disproportionately affected.

Even now that some lending restrictions have been eased, a credit gap persists in America.

“Equal access to mortgage credit for minorities remains a serious issue,” Laurie Goodman, director of the Housing Finance Policy Center at the Urban Institute, tells NerdWallet. “In fact, equal access to credit for all creditworthy borrowers is a major challenge. And, since minorities generally have lower credit scores than white, non-Hispanic Americans, this challenge disproportionately affects minority borrowers.”