In other words, the nation-wide mortgage and housing crisis that has affected thousands of Americans, may have been made even worse for some people of race and color, who were illegally made to pay an even higher price for their home than others.Just as big banks and other lending institutions have been vilified for the lax lending practices that got us into this mess in the first place, some have also been accused of discriminatory lending practices known as 'redlining.'
The latter is an illegal form of lender discrimination that centered on the denial, or the restriction of mortgage loans to certain low-income, and minority communities. The practice can take on many forms. However, in California—a state that has defined the practice of redlining as a violation of the Fair Housing Act—redlining has been brought to bear in order to deny loans with regard to properties in older, changing urban areas.
Such areas often feature large minority populations, and these denials are made essentially due to a higher perceived lending risk without due consideration given to actual credit worthiness.
Redlining has been found to take on many forms, but the end result is the same—the discrimination of qualifying loan applicants on the basis of their ethnic origin. Various practices are brought to bear in an attempt to make it harder on the minority loan applicant to acquire, or even maintain a mortgage loan. Take that one step further, and the loan applicant is faced with so many barriers that it is virtually impossible for him or her to the secure the financing for a home, regardless of an individual's actual ability to pay.
Redlined loans have been known to feature excessive fees built into loans, or the charging of higher interest rates than a borrower's credit rating might warrant. Borrowers have reported facing balloon payments and have been saddled with pre-payment penalties.
Another form of redlining, it has been reported, is the issuance of a loan at a percentage that exceeds a ratio of 100 percent loan-to-value. The latter, one might argue, could be undertaken in the cruel hope that the borrower might default, force a foreclosure and see a visible minority family ousted from the neighborhood.
The good news is that Congress and state legislators have worked to enact robust legislation and statutes designed to shield consumers from such abusive lending practices. Statutes such as the Home Ownership Equity Protection Act (HOEPA), the Community Reinvestment Act (CRA), and the Home Mortgage Disclosure Act (HMDA) were designed to protect borrowers stuck in, or forced into high-cost home loans—not to mention encouraging banks and lending institutions to help meet the credit needs of their respective communities.
In other words, to inject some fairness into the real estate housing industry, and to level the playing field.
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Time will tell. In the meantime, homeowners who feel they may have been discriminated against by being charged high real estate closing fees, or other real estate unfairness may want to consult a real estate housing lawyer. This may be especially true if such unfairness and discrimination cost you your home in foreclosure.
You could qualify for compensatio