‘Mystery shopping’ leads to complaints against 22 lenders. It’s not any secret that getting a loan is a lot harder that is was in the recent past. And considering the lender’s overzealous lending an over-reaction is not really a big surprise either.
Test cases by “mystery shoppers” have revealed that 2/3 of the lenders refused loan application for FHA guaranteed loans from applicants with credit scores under 620! These were not high risk loans. These were loans that met the qualifications and would have been guaranteed by Fannie May and Freddy Mac.
The report sited 11 lenders as refusing applications from prospective borrowers if scores were below 640! Current regulations allow potential borrowers a loan with a credit score as low as 580 if they put 3.5% down. If a buyer can manage 10% down, their credit score can be as low as 500 to qualify.
Complaints have now been filed against 22 lenders stating that this is effectively racial discrimination because the majority of minorities are in this group. That makes it a violation of the Fair Housing Laws by which ALL federally backed lenders and ALL Realtors® must abide.
Source: Inman News
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