In 1974, Congress passed the Equal Credit Opportunity Act (ECOA) to prohibit discrimination as part of any credit transaction including mortgage loans based on the following
- national origin
- marital status
- receipt of income from any public assistance program.
Several federal agencies were created to enforce this act. Consumers would file complaints and one or more of these agencies would then follow through on behalf of the consumer.
Agencies such as the US Federal Trade Commission and the Consumer Financial Protection Bureau have, over all these years, been instrumental in both advocating for consumers against predatory lenders and in achieving financial settlements on behalf of consumers who had been defrauded by those lenders.
Think of the financial crisis in 2008 and lenders such as Countrywide. And think more recently of JP Morgan Chase settling charges that it had discriminated against thousands of African American and Hispanic mortgage holders by agreeing to pay out $55M while denying any wrongdoing.
In January 2018, the acting director of the CFPB, Nick Mulvaney, stripped the CFPB of its enforcement power. Additionally, Mr. Mulvaney requested $0, zero dollars, for the agency’s budget in 2018. All lawsuits previously filed by the CFPB against mortgage, auto and payday lenders were dropped.
Obviously, the results of Mr. Mulvaney’s actions and policies make disadvantaged borrowers more vulnerable. Lenders now have free rein to overcharge minorities at higher rates than white despite both consumers having the same qualifications. In other words, a Hispanic homebuyer with an annual income of $100,000 would be charged a higher mortgage rate than a Caucasian homebuyer with an annual income of $100,000.
Consumer and fair housing advocates are outraged. Christopher Peterson, the former senior counsel for CFPB enforcement, told Intercept, “This minimizes the importance of fair lending…any and all ‘protected’ consumers under both the Fair Housing Act and the ECOA have more hoops to jump through in their efforts to access resources…all of that is, of course, the point…” of Mulvaney’s and the Trump Administration’s policies.
Now, consumers have only one option available to them for representation in the event they experience discriminatory lending practices by an institutional or private lender, the Federal Trade Commission.
Asking whether or not the National Association of REALTORS intends to lobby on behalf of home buying consumers who might be affected by these new policies of non-enforcement and zero budgeting to counteract discriminating lending practices, Sara Wiskerchen, NAR spokeswoman, indicated that “NAR does not plan to comment.”