When you apply for a mortgage and then go to meet the mortgage broker, it may seem a bit like a credit interrogation. When you take into account the dizzying array of questions being asked of you, and the fact that your whole financial history is up for the lender's review, it may make you wonder just how much information they are entitled to.
Fortunately, the Equal Credit Opportunity Act (ECOA) provides a guide to the types of information that must remain off-limits to your prospective lender. This law places a prohibition on credit discrimination related to:
That means that any questions from your lender concerning the above topics are not allowed if the intent is to discriminate against your credit worthiness. In some cases, this can be a difficult issue to prove. For example, a creditor may inquire about your marital status, though only for the purpose of establishing the rights and remedies that apply to granting you a loan.
Age and Marital Status
Questions concerning age and marital status are only relevant if determining income, and projecting whether that level of income will remain consistent. Even if you are married, you could take out a mortgage on your own, in which case the creditor would not have the right to ask questions about your spouse's financial history.
The lender may only consider age as a factor if the system used for establishing credit worthiness does not prejudge the applicant's age as a negative factor. And if the applicant is receiving public assistance income, the creditor may not reject an application for credit on that basis.
However, a lender who insists on asking questions about religion, national origin, or other personal information during the initial application process may actually be violating the ECOA--and may not be a lender you would want to do business with.
The best advice may be to interview different lenders to comparison shop, bringing along a copy of your credit report from each of the three major credit bureaus and proof of income. If you are turned down for a loan, the lender must tell you why if you ask.
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