Definition
Fair lending means making credit decisions purely on creditworthiness and financial factors without discrimination. Lenders apply consistent underwriting standards to all applicants. Violations can result in substantial damages and regulatory action.
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Fair lending is a legal and ethical requirement in the mortgage industry. Lenders must apply consistent underwriting standards to all applicants. Fair lending violations can be direct (explicitly using protected characteristic) or disparate impact (policies that appear neutral but have discriminatory effects). Regulators and enforcement agencies actively monitor for fair lending violations through data analysis, mystery shopping, and complaint investigation. Fair lending is a critical consumer protection and industry expectation.
Pro Tip
Fair lending protections apply to all borrowers; if you believe you experienced discrimination, file a complaint with the CFPB or Department of Justice.
Example
A lender cannot charge a higher rate to women borrowers, require larger down payments from minority applicants, or otherwise vary terms based on protected characteristics.