NCRC Calls For Federal Investigation Into Lenders' Refusal to Make Loans to Working Class Families

Files 22 Complaints With HUD Over Lenders' Unfair & Discriminatory Policies

WASHINGTON, DC -- The National Community Reinvestment Coalition (NCRC) today called on federal agencies and banking regulators to investigate the nation's largest Federal Housing Administration (FHA) approved lenders for possible violations of federal housing rules by refusing to offer loans to qualified Americans to the FHA policy of a minimum credit score of 580 and above with a 3.5% downpayment.

A recent NCRC investigation found that the majority of top FHA lenders failed to offer applications for federal-guaranteed loans to potentially qualified borrowers with credit scores below 620 or 640, even though FHA guarantees loans with credit scores to 580. These lenders have policies that establish "credit overlays" above the FHA policy, with minimum credit score requirements as high as 640. One-third of all Americans have credit scores under 620.

"Critical to our nation's economic progress is the ability of homeowners to get quality refinancing, and for homebuyers to reclaim vacant houses by accessing quality mortgage credit, " said John Taylor, president & CEO of the National Community Reinvestment Coalition.

"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. And this decision is arbitrary, because the loans are 100% 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. A lender is only at risk if they fraudulently or improperly originated the loan, against FHA's underwriting criteria. As is the case across the secondary market, in that situation, the lender can be forced to buy back the bad loan," said Taylor.

Our members include community reinvestment organizations, community development corporations; local and state government agencies; faith-based institutions; community organizing and civil rights groups; minority and women-owned business associations as well as local and social service providers from across the nation.

NCRC pursues its work through a variety of partnerships and programs. Our National Homeownership Sustainability Fund leverages the expertise of a national network of mortgage finance advisors. They work with servicers and lenders, on behalf of homeowners, to keep working families from losing their homes to foreclosure.

NCRC’s National Training Academy provides training and technical assistance on topics such as understanding how to use the Community Reinvestment Act (CRA), fair lending laws, Home Mortgage Disclosure Act (HMDA), Truth in Lending Act (TILA), Real Estate Settlement Procedures Act (RESPA), Homeownership and Equity Protection Act (HOEPA), fair housing and foreclosure prevention. Our Economic Justice Campaign sites pilot innovative community partnerships to enhance the delivery of financial, technical, and social services to individual consumers, homeowners, and small business.

NCRC’s work is enhanced by two financial service advisory councils consisting of the nation’s largest banks and mortgage finance companies. Quarterly roundtables examine issues involving responsible financial service-related policies, regulations and legislation, as well as innovative products, services and best practices.

NCRC represents its members before Congress, federal regulatory agencies and the press. NCRC routinely testifies before the U.S. Congress, and meets with the leadership of banking and lending regulatory agencies. NCRC frequently provides expert commentary on national television, and our research and policy papers have been cited in hundreds of newspapers in the US.

As part of NCRC's mission to end discrimination and to increase fair and equal access to credit and capital for underserved communities, NCRC's National Neighbors program conducts fair housing testing and investigation for government agencies, municipalities and other interested organizations.

Fair Housing Organization Initiative

Through the Fair Housing Initiative Program under a Fair Housing Organization Initiative grant awarded by the U.S. Department of Housing and Urban Development, the National Community Reinvestment Coalition (NCRC) will conduct fair lending investigative activities to identify and combat abusive foreclosure prevention scams in major metropolitan areas throughout the United States.  This 12-month project aims to support local enforcement of fair housing and fair lending laws, build the capacity and effectiveness of non-profit fair housing organizations, and aid consumers who have been victimized by foreclosure prevention provider scams.

Though the project is national in scope, it will include targeted outreach in Metropolitan Statistical Areas (MSAs) that

(1) are largely, historically segregated;

(2) have been hard-hit by the foreclosure crisis; and

(3) have minority populations that have experienced disparate levels of subprime lending

NCRC will work with local partners to review consumer documents, and identify problematic foreclosure prevention providers. Additionally, through training and collaboration, NCRC will increase the capacity of participating organizations so that they may better address systemic discrimination and consumer protections violations beyond the grant term.

Private Enforcement Initiative

Through a FHIP Private Enforcement Initiative grant awarded by the U.S. Department of Housing and Urban Development, the National Community Reinvestment Coalition (NCRC) will address systemic discrimination in mortgage lending and loan servicing. This is a 12-month project that aims to assist with the enforcement of fair housing and fair lending laws and aid distressed consumers who are facing problematic loans due to the illegal actions of lenders and servicers.

Though the project is national in scope, it will include targeted outreach in Metropolitan Statistical Areas (MSAs) that

(1) are largely, historically segregated;  

(2) have been hard-hit by the foreclosure crisis; and  

(3) have minority populations that have experienced disparate levels of subprime lending

NCRC will work with local partners in MSAs to assist in loan document review, and to identify problematic loans, servicers, and loan originators. Additionally, through training and collaboration, NCRC will increase the capacity of local fair lending and housing counseling agencies so that they can better address the issue of systemic discrimination in mortgage lending and loan servicing beyond the grant term.

If you have any questions or would like to contact our National Neighbors' team, you can contact NCRC via Contact Us or at 800-475-NCRC (6272).

Washington, DC – Today, the National Community Reinvestment Coalition applauded the U.S. Department of Housing and Urban Development’s (HUD) issuance of a rule on the “Implementation of the Fair Housing Act’s Discriminatory Effects Standard.” NCRC President and CEO John Taylor made the following statement:

“We applaud HUD for formalizing in their rulemaking that the Fair Housing Act can be violated by practices that have a disparate impact. This rule can be easily implemented by the public and private sector and is an important step to ensure equal opportunity for all. HUD should be commended for issuing a transparent rule that clearly reaffirms the established disparate impact doctrine.”

NCRC had previously called upon HUD to establish a standard that would affirm the longstanding precedent on disparate impact both in the legal system and among the regulatory agencies.

Last year at NCRC’s Annual Conference CFPB Director Richard Cordray announced that the Consumer Financial Protection Bureau (CFPB) would apply disparate impact doctrine in enforcement of the Equal Credit Opportunity Act (ECOA).

About the National Community Reinvestment Coalition (NCRC): The National Community Reinvestment Coalition is an association of more than 600 community-based organizations that promote access to basic banking services, including credit and savings, to create and sustain affordable housing, job development, and vibrant communities for America's working families.

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