Fair Lending and Credit Act Explained

Despite the fact that balance is always in favor of the lender in approving mortgage loans of any kind the borrower also has certain rights under the existing law of the land. In fact the laws prescribe both rights and responsibilities for the borrower as well as the lender. Laws aim at making the mortgages dealt under fair lending process and that can be ensured if the prescribed guidelines are followed. No Discrimination In essence, fair lending means that there should be no discrimination. Every prospective borrower has identical rights and privileges when he or she applies for loans.rnThey have similar rights and privileges while applying for the credit cards or mortgages.rnAny discrimination on the basis of sex, race, origin, color, age, marital status, or religion, and even the source of income is illegal.rnLaws Prohibiting Discrimination Major laws that has been put in place to prohibit discrimination are – Fair Lending Program;rnFair Housing Act; andrnEqual Credit Opportunity Act.rnAll these acts are regulated by the United States Department of Justice. How the Acts Help These acts have been promulgated in order to protect the rights and privileges of every American against any kind of discrimination;rnEveryone has identical opportunities to advance in the society.rnUnder the Fair Housing Act everyone can apply everyone should be able to apply for any mortgage finance or home loan.rnAll these programs are meant to improve or renovate the living situations.rnUnder the Equal Credit Opportunity Act provides through the Regulation B both boundaries as well as enforcement guidelines so as to ensure the fair lending processes and practices.rnSignificance of the Regulations If these laws were not put in place by the authorities, lending companies or lender groups would have been free to discriminate and exploit borrowers. Even worse, they would have the license to grant loans or refuse basing on their personal preferences. Regulations that have been put in place issued by the Board of Governors as well as the Federal Reserve System and other authorities ensure that lenders have to comply with the legal requirements while approving the loans and cannot get into any discriminatory practice. Best of all; according to provisions of these regulations, creditors must inform the applicant the reasons of rejection.