Agenda - 05-16-2006-5j - Laserfiche WebLink

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�� �� City of Cuyahoga Falls, Ohio 32 �nalysis of Im pediments to Fair Housing Choice ownership. These discriminatory policies are holdovers from a past that would not allow loans to people who would represent an "iDh8r[00DiOUS racial g[VUp' to neighborhoods The policies Uflocal lenders, real estate agents and even the federal government (through the Federal Housing Administration and Veterans Administration loan policies) assured that our country would grow with segregated cities The most basic right Uf all Americans, t8 live where they want and can afford, was denied throughout the housing market, EVid8UC8 that mortgage lenders continue t8 use these protected classes t0 deny housing iSrevealed. Research of the O0O|tg8g8 lending iDdUStp/ reV8@|S that lending di8C[i81iD8ti8U and "redliOiUg" continue t0h8g serious and persistent obstacle tO home ownership. Since passage 8fthe Home Mortgage Disclosure Act /UMD/\\ over twenty years ago, analyses UfHM[]/\data hy community-based organizations, academic organizations, and Ce[fQiO national origins face unequal access to housing credit. Current Studies consistently show that the income, racial, and ethnic characteristics Uf@ neighborhood 0rindividual plays significant role iD who receives loans and who does not. Under the Fair Housing Act, it is unlawful for any person who engages in the business of making or purchasing residential real estate loans, or in the selling, brokering, orappraising Of residential real property, tO discriminate 0D the basis nf the factors listed above. The Act CUDt8iAS both public and private 8Of0[C8Dl9Dt }A8Ch8niSDlS and violations may be established by proof 0f disparate treatment O[ disparate impact. Disparate treatment occurs when 8 lender treats @ credit applicant V[ borrower differently based OD one Vf the prohibited characteristics during the lending p[nC8SG. For example, requiring one applicant to make an appointment to discuss a loan application while allowing another applicant tO "drop iU anytime" would be considered disparate treatment. Steering some applicants into higher priced loan products is another example of disparate treatment, 8GiS selectively using income averaging tO improve deht't0-iDnnO1e ratios only for some applicants, Finally, requiring G change iU loan terms if the marital status 8fthe b0[[0m/e[ changes during the life of the loan, when there is no evidence of unwillingness or inability tV pay, would also be disparate treatment, Disparate impact occurs when a lender applies 8 policy 0r practice equally t0 all credit applicants, but the policy or practice has a disproportionately adverse impact on applicants from a protected group. For example, 8D institution has established @lending policy that prohibits mortgage loans below a certain dollar threshold, While this policy may have been iD effect for some time and may be applied equally t0 all applicants, such R dollar limitation may result iD discrimination against 8protected group, /\ group that may h8 more likely fV pU[Ch@S8 h8UleS priced below this threshold would be prevented from obtaining home [0Odg8g8lVaDSr Another example Of disparate impact iS the practice Ofusing gross income in underwriting decisions, but failing t0 "gross up" non-taxable income Such 8practice could have 8 disparate impact OU the elderly and individuals with disabilities The Community Reinvestment Act (CR/\) was enacted @S Title VII 8fthe Housing and Community Development Act 0f1977 CR/\ was designed tO encourage banks and other