Tips & Special Topics
VA Loans and the Fair Housing Act
Added March 23, 2011 | Updated March 24, 2011
VA-approved lenders, by law, cannot discriminate against anyone applying for a VA-guaranteed mortgage. As part of the Civil Rights Act of 1968, fair housing laws were enacted to protect all borrowers, including VA-eligible borrowers, from biased treatment during their loan application processes.
According to VA Home Loan Guaranty Program guidelines, VA-approved lenders are prohibited from discriminating against any VA-eligible borrower for any of the following reasons:
• race
• religion
• national origin
• color
• sex
• handicap
• familial status
• receipt of public assistance
When a lender becomes VA-approved, the financial institution must pledge to adhere to the Fair Housing compliances and advertising guidelines, some of which are summarized as:
• That neither the lender nor anyone authorized to act on its behalf will deny a VA loan to a VA-eligible borrower or discriminate in the fixing of the terms or conditions of VA-backed mortgages due to race, color, religion, sex, handicap, familial status, or national origin.
• To notify everyone, including minority and female veterans, of the availability of VA financing offered by VA-approved lenders by conforming all advertising to the VA Advertising Guidelines for Fair Housing.
• To prominently display the Equal Opportunity Lender poster in each office where VA-guaranteed home loans are offered.
• To incorporate the Equal Housing Opportunity logo, slogan or statement as outlined in the VA Advertising Guidelines for Fair Housing in all advertising, including outdoor signs, radio, television, newspapers and other printed materials.
• That noncompliance with the foregoing requirements may constitute a basis for the Secretary to refuse to accept applications from the lender. The Secretary may also refuse to accept applications where the lender has been denied participation in HUD Programs.
Specifically, anyone applying for a VA mortgage is protected from discrimination under the Fair Housing law which requires all mortgage lenders to abide by the Fair Housing Act. The law makes it illegal for anyone involved in selling real estate or mortgage lending to make false claims that a home is sold or unavailable, or refuse to finance a home loan due to bias.
Regarding “familial status”, no lenders, including VA-approved lenders, can deny financing to a qualified applicant or refuse business because he or she has children under the age of 18. Also, if an applicant is a pregnant woman or is securing custody of children under the age of 18, discrimination is not tolerated.
Whether a family has children, is expecting children or has no children, it is the lender’s responsibility to ascertain (without prejudice) the incomes of borrowers to determine whether they are eligible for a mortgage loan.
If a violation of Fair Housing laws does take place within the VA loan process, it should be reported immediately to the nearest Regional VA Loan Center.
For information on obtaining a VA loan contact a qualified VA mortgage professional.
