The Fair Housing Act and Loan Modification
HandelontheLaw.com Staff Writer
Mortgage loan modification does not usually conjure up visions of civil rights; however, America’s civil rights protections can greatly influence loan modification. The Fair Housing Act, the familiar name of the 1968 Civil Rights Act’s Title VIII, prohibits discrimination based on national origin, race, religion, gender, disabilities and families with children in the sale, rental and/or financing of housing. While “fair housing” and “civil rights” may seem limited to small protected classes, those terms actually refer to a large percentage of the population, encompassing veterans, the disabled, white, black, brown, male, female, the elderly, and so forth.
The Fair Housing Act focuses on at least 2 aspects of mortgages: predatory loans and discouragement or obstruction of loan modification. Predatory mortgage loans are high-rate, high-cost loans targeting and manipulating the “least sophisticated debtor,” one who lacks the knowledge and experience to understand the loan terms. These unsophisticated debtors are often members of a class protected by the Fair Housing Act; consequently, a “civil rights avenue” through the Act can compel loan modification, easing the undue burden of a predatory mortgage. Discouragement or obstruction of loan modification can encompass many acts and omissions, such as: telling the borrower that he/she should not or cannot obtain loan modification; repeatedly “losing” required paperwork; and repeatedly requesting the same documentation from the borrower. Many borrowers discouraged or obstructed from loan modification belong to a class protected by the Fair Housing Act. If you suspect that you are being unduly discouraged or prevented from obtaining a mortgage loan modification, a lawyer experienced in loan modification can explore the “civil rights avenue” to obtaining your loan modification.
DO’S AND DON’TS
DO consult/retain a lawyer experienced in loan modification.
DO determine whether you belong to one of the Fair Housing Act’s protected classes, based on national origin, race, religion, gender, disabilities and families with children.
DO use the Fair Housing Act to compel a loan modification if you:
a. received a predatory mortgage loan;
b. have been discouraged or otherwise prevented from obtaining a loan modification.
By Kathy Catanzarite
Note from HandelontheLaw.com: This article is to be used as an educational guide only and should not be interpreted as a legal consultation. Readers of this article are advised to seek an attorney if a legal consultation is needed. Laws may vary by state and are subject to change, thus the accuracy of this information can not be guaranteed. Readers act on this information solely at their own risk. Neither the author, handelonthelaw.com, or any of its affiliates shall have any liability stemming from this article.
LOAN MODIFICATION DOS AND DON'TS