Fair Housing Act
General
The Fair Housing Act (FHA) prohibits unlawful discrimination in housing-related lending
activities based on:
 Race

Color

National origin

Religion

Sex

Handicap

Familial status
Discrimination in Financing
General

Section 805 of the FHA prohibits discrimination in “residential real estate-related
transactions” which includes loan originations and sales of mortgages on the
secondary market.

The prohibition against discrimination applies not only to the applicant but also to:
o Any person associated with the applicant (co-borrowers, co-signers).
o The present or prospective occupants of the area where the property to be
financed is located.
Prohibitions
Based on any of the prohibited factors, lenders may not:
 Express preferences orally or in writing.

Indicate in any manner that applicants will be treated differently.

Fail to provide information or services or provide different information or services
regarding any aspect of the lending process.

Discourage or selectively encourage applicants with respect to inquiries about or
applications for credit.
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Fair Housing Act

Refuse to extend credit or use different standards for determining whether to
extend credit.

Vary the terms of credit offered, including the amount, interest rate, duration or
type of loan.

Use different standards to evaluate collateral.

Treat a member/borrower differently in servicing a loan or invoking default
remedies.

Use different standards for pooling or packaging a loan in the secondary market.
Access for Consumers with Disabilities
Credit Unions must make reasonable accommodations for persons with disabilities when
those accommodations are necessary to afford an equal opportunity to apply for credit.
Rental Housing
Based on any prohibited basis, it is unlawful to:
 Refuse to sell or rent a dwelling after receiving a bona fide offer.

Discriminate in the terms, conditions, or privileges of a sale or rental of a dwelling,
or in providing services or facilities in connection with the sale or rental.

Make, print, or publish any notice, statement, or advertisement about the sale or
rental of a dwelling indicating any preference, limitation, or discrimination.

Indicate that a dwelling is not available for inspection, sale, or rental when in fact it
is.
Prohibited Activities

Racial Steering: Deliberately guiding potential buyers of housing property either
away from or to specific areas because of race.

Redlining: Delineating a geographic area as a poor risk area solely because of the
concentration of minorities or low-income households.

Using or making excessively low appraisals: Making excessively low appraisals to
force minority applicants to make larger down payments than other applicants.

Using racially exclusive images: Using words or pictures in advertising or credit
union literature to indicate a preference of one race or class of people over another.
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Fair Housing Act

Discouraging Applications: Using any practice that has the effect of discouraging or
denying applications for credit based on any of the prohibited bases.

Imposing excessively burdensome standards: The use of excessively burdensome
loan qualification standards that have the effect of denying loans to minority
applicants.

Imposing more onerous terms or conditions: Imposing more onerous terms and
conditions on minority loan applicants in any stage of the credit process.

Employing practices that discriminate against women: Imposing different
application processes, underwriting standards or loan terms or conditions based on
the sex of a borrower.
Self-Testing for Compliance
Self-testing is any program, practice, or study a lender voluntarily conducts or authorizes
that is designed and used specifically to determine the extent or effectiveness of
compliance with the Fair Housing Act, including:
 Using testers or fictitious credit applicants

Conducting surveys with loan applicants
Protected Results
A report or the results of a self-test can be protected by a statutory privilege, if:
 The self-test is thorough enough to determine the level of effectiveness of
compliance with the requirements of the FHA.

The person conducting or authorizing the self-test identifies any possible violation
of the FHA and takes appropriate corrective action to address any violations.
Outside Access to Results
Access to the report or the results can be obtained in a court proceeding or civil action if:
 The self-test report or results are voluntarily released or disclosed by the credit
union.

The self-test report or results are referred to, described, or used as a defense against
charges of an FHA violation.

The report or results of the self-test are sought “in conjunction with an adjudication
or admission of a violation of FHA for the sole purpose of determining appropriate
penalty or remedy.”
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Fair Housing Act
NCUA Nondiscrimination Rules
General

Applies only to federally-chartered credit unions.

Applies to lending, appraisals, and advertising of real estate-related loans.

Prohibits discrimination on the basis of race, color, national origin, religion, sex,
handicap, or familial status.

Similar to ECOA and FHA requirements
Nondiscrimination in Lending

FCUs may not consider a lending criterion or exercise a lending policy with respect
to a real estate-related loan that has the effect of discriminating on the basis of
protected classes.

FCUs may not consider the following factors in connection with a real estate-related
loan:
o The age or location of the dwelling.
o The zip code of the loan applicant’s current dwelling.
o Previous home ownership.
o The age or location of other dwellings in the neighborhood of the dwelling
subject to the loan application.
o The income level of the residents in the neighborhood of the dwelling subject
to the loan application.

Certain factors concerning location of the dwelling can sometimes be considered in
an appraisal if they are specifically documented, and accompanied by a brief
statement demonstrating the necessity of using the factor.
Nondiscrimination in Appraisals
General
A FCU may not rely on an appraisal if it knows or should know that:
 The appraisal is based upon consideration of any of the protected classes.

The appraisal is based upon consideration of a criterion that has the effect of
discriminating on the basis of the protected classes.
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Fair Housing Act
Appraisal Copies
Upon request, FCUs must make a copy of the appraisal used in connection with a member’s
real estate-related loan application available to the member/applicant.
Nondiscrimination in Advertising
FCUs are prohibited from directly or indirectly engaging in any form of advertising of real
estate-related loans that implies or suggests that the credit union discriminates in violation
of the provisions of the Fair Housing Act or the NCUA Nondiscrimination requirements.
Use of Equal Housing Lender Logo
Advertisements for real estate-related loans must prominently indicate that the credit
union makes loans without regard to race, color, religion, national origin, sex, handicap, or
familial status.
 Ads broadcast on the radio may indicate that the credit union is an “Equal Housing
Lender” or an “Equal Opportunity Lender.”

Television and print ads may include a copy of the Fair Housing logo with the legend
“Equal Housing Opportunity” from the fair housing poster (other methods in lieu of
logo may also be used)
Lobby Notice and Poster
 All FCUs are required to display a fair housing poster or notice in the lobby and in
areas where real estate-related loans are made.

The poster and/or notice must be displayed in a manner that makes it clearly visible
to the general public.

Use of model poster is required.
Enforcement and Penalties for Noncompliance

Anyone who feels they have been the victim of discriminatory housing practices
may file a complaint with:
o
The Secretary of the Department of Housing and Urban Development within
one year of the date of the alleged violation.
o A United States district court or a State court within two years from the date
of the alleged violation.

If a lender is found guilty of engaging in a pattern or practice of discriminatory
housing practices the following penalties can be levied:
o Any preventive relief including permanent or temporary injunction,
restraining order, or other reasonable order to correct the action.
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Fair Housing Act
o An award of monetary damages to the aggrieved person.
o A fine up to $50,000 for a first violation and up to $100,000 for any
subsequent violations.
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