![]() The Civil Rights Act of 1866 prohibited discrimination on the basis of race in housing and employment, but it did not provide any suitable penalties for violations. If it turns out that this has a disparate impact on borrowers of one particular race, nationality, etc., and the lender cannot provide a compelling business reason for the higher credit score requirement, the policy could be unlawful.Ī Brief History of How Equal Housing Came to BeĬongress first enacted legal protections against housing discrimination shortly after the Civil War. An example might involve a lender that requires a higher credit score than the industry standard. ![]() This practice continued into the 1960s.ĭisparate impact: A policy or practice that appears neutral can still be discriminatory if it (1) has a disproportionate impact on members of protected groups and (2) has no business justification. The “redlined” areas were often neighborhoods where the majority of the population was Black. government in the 1930s used red borders or shading to indicate areas deemed too risky for mortgage loans. ![]() The term originally referred to the refusal by banks to make mortgage loans for homes in certain areas. Redlining is a major example of this type of discrimination. Overt discrimination: Open, intentional discrimination, such as flatly stating that a bank will not lend to people of a certain race or nationality.ĭisparate treatment: This can be more subtle, but no less harmful. Defining Discrimination in the Mortgage Lending Spaceĭiscrimination can take numerous forms that fall into three broad groups: ![]()
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