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Mortgage Lending Discrimination

Mortgage Lending Discrimination

Individuals have the right to apply for and obtain mortgage loans without discrimination. Mortgage lenders must evaluate applicants based on financial qualifications and may not treat applicants differently because of protected classes.

Under federal and Indiana civil rights laws, discrimination in mortgage lending may violate the law when lenders deny loans, offer different loan terms, or discourage applicants because of protected characteristics.

These protections help ensure that individuals have equal access to home financing.

What is Mortgage Lending Discrimination?

Mortgage lending discrimination occurs when a lender treats a person differently during the home loan process because of a protected class.

This discrimination may occur at different stages of the lending process, including:

  • Applying for a mortgage loan
  • Evaluating loan applications
  • Determining interest rates or loan terms
  • Approving or denying a loan
  • Refinancing an existing mortgage

Lenders must base these decisions on financial qualifications rather than protected characteristics.

What is Redlining?

Redlining is a form of mortgage lending discrimination that occurs when lenders avoid providing loans or financial services in certain neighborhoods because of the characteristics of the people who live there.

Historically, redlining involved denying loans in communities based on race or ethnicity.

Redlining may occur when lenders:

  • Avoid offering loans in certain neighborhoods
  • Refuse to provide services in areas with specific demographic characteristics
  • Offer fewer loan opportunities in certain communities

These practices may violate fair lending laws.

Examples of Mortgage Lending Discrimination:

Mortgage lending discrimination may take many forms. Examples may include:

  • Denying a mortgage loan because of an applicant’s race or national origin
  • Charging higher interest rates based on a protected class
  • Offering different loan terms to similarly qualified applicants
  • Discouraging someone from applying for a loan
  • Steering applicants toward certain loan products based on protected characteristics

Lenders must evaluate applicants based on financial qualifications such as income, credit history, and ability to repay the loan.

Fair Treatment in the Mortgage Application Process:

Applicants should be treated fairly throughout the mortgage lending process.

This includes:

  • Providing consistent information about loan products
  • Evaluating applications based on financial criteria
  • Applying lending standards consistently
  • Communicating decisions clearly to applicants

Fair lending practices help ensure equal access to homeownership opportunities.

If You Believe You Experienced Mortgage Lending Discrimination

If you believe you were denied a mortgage loan or treated differently because of a protected class, you may be able to file a discrimination complaint.

The Indiana Civil Rights Commission investigates complaints involving discrimination in credit, housing, employment, education, and public accommodations.

To learn more about filing a complaint, visit the How to File a Discrimination Complaint page.