The Fair Housing Act (FHA) prohibits discrimination in the sale, rental, and financing of dwellings—and in other housing-related transactions—based on race, color, national origin, religion, sex, familial status (including children younger than age 18 living with parents or legal custodians, pregnant women, and people securing custody of children younger than age 18), and disability (or “handicap”).
In addition, the Equal Credit Opportunity Act (ECOA) prohibits discrimination with respect to any aspect of a credit transaction on the basis of sex, race, color, religion, national origin, marital status, age, receipt of public assistance, and the exercise in good faith of rights granted by the Consumer Credit Protection Act.
Any credit union that provides real estate-related loans is subject to both statutes and is, therefore, prohibited from discriminating on any of these bases.
The U.S. Department of Housing and Urban Development (HUD) has primary FHA regulatory and enforcement authority over credit unions.
HUD’s regulations are located at 24 CFR Parts 100, 103, and 110, and you can find guidance on discriminatory advertising practices on the agency’s website.
Federal credit unions also must comply with NCUA Rules and Regulations Section 701.31 (12 CFR 701.31).
NCUA and state regulatory authorities refer matters to the U.S. Department of Justice (DOJ) when they have a reason to believe that a credit union has engaged in a pattern or practice of discrimination on a prohibited basis. Agencies assess FHA compliance, but HUD and DOJ enforce the act.
The FHA prohibits any lender from denying a loan or other financial assistance for the purpose of purchasing, constructing, improving, repairing, or maintaining a dwelling because of the race, color, religion, national origin, sex, familial status or disability of the loan applicant, any person associated with the loan applicant, any person or prospective owner of the dwelling, any lessees, or any tenants or occupants.
In other words, lenders cannot take any of the following actions on a prohibited basis:
In addition, consideration of the following factors generally has a discriminatory effect:
To avoid a potential FHA violation, a credit union shouldn’t rely on an appraisal that is based on any prohibited bases or factors listed previously.
Advertising and lobby notices
Credit unions that engage in real estate-related lending must display a notice of nondiscrimination.
The credit union must place the “Equal Housing Lender” (EHL) or “Equal Housing Opportunity” (EHO) notice with the prescribed logo and language in the public lobby and public areas of each office where the credit union makes real estate loans. The notice must be clearly visible to the general public.
Lenders can’t directly or indirectly engage in any form of advertising of real estate-related loans that implies or suggests the institution discriminates.
Advertisements must not contain any words, symbols, models, or other forms of communication that suggest a discriminatory preference or policy of exclusion in violation of the FHA or the ECOA. Visual advertisements (e.g., print, website) of real estate products must include a facsimile of the EHL or EHO logo.
Federal charters may use either the EHL or EHO logo. State charters generally display the EHO logo.
Audio advertisements (e.g., radio broadcast) may satisfy this requirement by a spoken statement that the credit union is an “Equal Housing Lender” or an “Equal Opportunity Lender.”
Discriminatory lending practices
Courts have determined that a number of lending practices are illegal under the FHA, including:
In addition, both the FHA and ECOA prohibit certain identified lending practices that specifically discriminate against women.
For example, refusing to provide a mortgage or mortgage insurance because a woman is pregnant or on family leave violates the FHA’s prohibition against gender and familial status discrimination, which includes discrimination against individuals who have or are expecting a child.
Additional unlawful practices include: