Lender discrimination used to be a very common practice back in the day – one that there was no check against. Buying luxury real estate was only left to those that proved that they aren’t high risk or are from a city with a low risk-level. However, today there are laws that protect borrowers from the same.
When looking to buy a home in Las Vegas, it is important to know your rights as a borrower. If you have reason to believe that a lender is discriminating against you, you are well within your rights to file a lawsuit.
What Is Lender Discrimination?
The concept of lender discrimination is simple; if a lender bases mortgage extending-decisions based on any fact other than creditworthiness, i.e., gender, preference, ethnicity, skin color, religion, or anything of the sort, discrimination is being practiced.
There are three major laws that protect homeowners looking for mortgages against such discrimination:
The Fair Housing Act (FHA) (1968)
The Fair Housing Act (FHA) aims to protect you from when you are looking for a mortgage for luxury homes in Las Vegas, or anywhere in the US for that matter. The act is applicable whether you are looking to buy, rent, maintain, or improve your house.
Equal Credit Opportunity Act (ECOA) of 1974
The Fair Housing Act was, unfortunately, not as thorough with its anti-discriminatory lending practices – even when it comes to housing. The Equal Credit Opportunity Act (ECOA) forbade the same practice, with the addition of a clause dictating that creditors can ask for information, except religion, as they see fit. However, they can’t use the same to impact creditworthiness or terms of credit.
Community Reinvestment Act (CRA) of 1977
The first two legislations managed to reduce racial discrimination when it came to housing loans, but the same continued for low-to-moderate-income (LMI) neighborhoods. Due to this, the state of Illinois passed a law prohibiting redlining, requiring banks to disclose lending practices, i.e., eligibility criterion.
This was done via the Home Mortgage Disclosure Act on a national scale not soon after. This soon turned into the Community Reinvestment Act (CRA), signed by President Carter, encouraging banks to help different communities and neighborhoods, including LMI with their financial needs.
Discriminatory Lending & Its Impact on Mortgages
Although despite the FHA, ECOA, and CRA, there are some instances where lender discrimination still takes place – especially where consumers aren’t aware of their rights. Some of the effects of lender discrimination include:
Increased Interest Rates
Banks often charge higher interest rates when discriminating. A study by the University of California showed that Black and Latin applicants ended up paying 0.8% (average) more interest on loans, compared to white borrowers.
Lower Approval Rates
The number of luxury home loans given to people of color was significantly less in the US, especially to Black applicants.
Lower Homeownership Rates & Personal Wealth
Those experiencing lender discrimination often find themselves struggling to generate enough personal wealth or be able to buy homes, let alone luxury homes in Las Vegas. There is a significant gap in homeownership because of the discrimination that took place almost 4 to 5 decades ago, showing how lasting the effects of this can be.
Disclaimer: There are numerous factors to consider in every investment, including real estate. The information provided above is just a matter of opinion and can change with time. It shouldn’t be construed as legal or tax advice; neither does the report constitute a financial promotion or investment advice. It is general information and before making any such decision, you should seek out licensed professionals and see all ends.