The National Community Reinvestment Coalition (NCRC) thinks that banks are being unfair to Latinos applying for Federally guaranteed mortgages called FHA loans and the U.S. Department of Housing and Urban Development (HUD) is investigating their claims.
Twenty-two banks are accused of not giving loans to qualified applicants. To be eligible for a FHA-insured mortgage, borrowers must have a credit score of above 580 and 3.5% down payment or a credit score of above 500 and 10% down payment. The NCRC alleges the banks that give these types of mortgages refused Latinos with credit scores as high as 640. They discovered this by sending mystery shoppers in to banks to apply for mortgages.
"The decision by some banks to not follow the FHA's policy is cutting qualified borrowers off from accessing credit, and in doing so, causing harm to their ability to prosper, build wealth and for our economy to grow," says John Taylor, president and CEO of the NCRC. "And this decision is arbitrary, because the loans are 100 percent guaranteed, whether the borrower's credit score is 580 or 780. That means the loans with lower credit scores don't pose additional risk to the company, so there's no legitimate business defense for this across-the-board practice."
For more including a list of banks go to NCRC