Case Study: Compliance with the New York Fair Lending Law Alex and Azra recently

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Case Study:

Compliance with the New York Fair Lending Law Alex and Azra recently moved to Clifton Park, New York, after living for several years in Queens. Alex is a history teacher, while Azra, who emigrated from Turkey to the United States a few years ago, is a sculptor who also works as an adjunct professor at a university in Albany. After living in a small apartment for the past few months, they have found a home in a nice neighborhood and are ready to commit to the purchase. They visit Excelsior Home Loans Inc. and meet with a loan originator named Thomas. Thomas greets Alex and Azra warmly, guiding them to his office. He asks about their financial situation and helps them to complete a mortgage loan application. They are confident that their application will be accepted, since both have nearly spotless credit histories. While Azra still has two student loans, she always makes her monthly payments on time, if not early. They are also making payments on two car loans, but these are also current and in good standing. Alex and Azra each have good salaries, are very frugal in their spending, and have been putting money away for more than a year with the intention of saving for a down payment. However, while they are meeting with Thomas, he begins to ask some confusing questions. Noticing that Azra speaks with an accent, Thomas asks where she is from. Azra happily tells Thomas about her childhood in Turkey, her family members who still live there, and how she moved to the United States to attend school and decided to stay. Alex and Azra also explain that they recently got engaged and will begin making wedding plans as soon as they are in their new home. Thomas, who had been very friendly and welcoming before, suddenly seems more subdued, and even skeptical, toward the couple. He asks Azra a few more questions about her history and whether she plans to ever go back to Turkey. He asks about her personal background and beliefs, which seem unrelated to the mortgage loan application. He also asks whether the couple plans to have children, and if those children will be raised in the United States or in Turkey. Ultimately, the meeting comes to a close, and the couple leaves Excelsior Home Loans. Less than a week later, Alex and Azra get a call from Excelsior Home Loans. Thomas tells them that, unfortunately, he is unable to offer them a mortgage loan. Alex and Azra are stunned. They ask Thomas why their application has been rejected; they reiterate the financial information they gave him before, referencing their desirable salaries, near-perfect credit histories, and commitment to paying obligations on time. Thomas fails to give a solid answer to their questions. After an extended period of evading their inquiries, he finally mentions that there were concerns about Azra’s immigration status and citizenship. He offers Alex the opportunity to return to the office and apply for a mortgage loan on his own, stating that this might give him a better shot. Providing a mortgage loan to someone who is an immigrant, Thomas says, is simply not desirable to Excelsior Home Loans. Livid, Azra explains that she gained her United States citizenship more than a year ago and is quite proud of that fact. Nevertheless, Thomas says, the offer for Alex to apply on his own still stands. Thomas quickly ends the call. Furious, Alex and Azra get in touch with a close friend who is an attorney. She advises the couple that obvious discriminatory acts have occurred and that there may be options for recourse.

Now that you have read Case Study: Compliance with the New York Fair Lending Law, consider Thomas’s actions as a mortgage loan originator in his transaction with Alex and Azra. Has Thomas committed any violations of the law? Choose one, and explain what he could have done differently in order to remain in compliance.

Explanation / Answer

GIVEN CASE:- In the given case Alex and Azra were engaged and went to the Excelsier Home Loans Inc. for the loan of new home they have decided to purchase and live in. Thomas who was the originator of the mortgage was first very much influenced by the credibility of the Alex and Azra but later when he came to know that Azra is an immigrant into the New York from Turkey he refused stating that our home loan policy didn't allow immigrants to grant mortgage. Azra on the other hand had obtained citizenship from the United States.

PROVISIONS OF NEW YORK FAIR LENDING LAW

New Yorkers are protected by federal, state, and local laws prohibiting lending discrimination. The federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age, or source of income. The federal Fair Housing Act prohibits discrimination in residential real estate transactions on the basis of race, color, national origin, religion, sex, familial status or disability. The New York State Human Rights Law extends these protections by also prohibiting discrimination on the basis of age, sexual orientation, marital status, or military status; and local laws provide residents of certain New York municipalities with additional protections.

Lending discrimination may take many forms, including failing or refusing to provide credit or related services to certain individuals or communities, or providing credit to certain individuals or communities on unfavorable terms without justification. Lenders may discriminate in the provision of various types of credit products, including home purchase loans, refinance loans, home improvement loans, small business loans, auto loans, consumer loans, and student loans, among others. The Civil Rights Bureau investigates patterns and practices of lending discrimination.  

CONCLUSION:

Thomas could have asked for the related documents of Azra in relation to her citizenship. Or he can consider Alex to be the loan payer.

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