VA guidelines

VA Loans and Fair Housing Laws

September 29, 2010


VA Loans and Fair Housing Laws

Every so often, the Department of Veterans Affairs issues sanctions against a lender or group of lenders for violating VA regulations. One set of regulations lenders are required to follow in order to be qualified to issue VA home loans? Fair Housing laws. These were passed as part of the Civil Rights Act of 1968 and anyone applying for a VA mortgage is protected from discrimination under Fair Housing rules.

According to the VA, lenders are prohibited from refusing to deal, falsely stating that a property is not available for sale, discriminating when it comes time to finance a VA home loan (or any other type of federally assisted housing loan including FHA loans) and advertising that discriminates.

But what constitutes discrimination? The most obvious infractions are based on race, handicap, religion and sex. But did you know a lender cannot deny financing to a qualified applicant or refuse to deal based on what the VA calls “familial status”? In short, a VA loan may not be refused or delayed based on the pregnancy status of a couple or individual.

Why would a loan officer be tempted to discriminate based on a pregnancy, planned or current? The good ones don’t, obviously. But in cases where discrimination against a borrower happens on the basis of pregnancy, it’s often because the lender questions the borrower’s ability to pay based on family leave that could be taken once a child is born. Will the mother earn or be able to return to work?

The Department of Housing and Urban Development issued a statement in the summer of 2010 addressing this issue specifically. HUD secretary Shaun Donovan said, “”Lenders have every right to ascertain the incomes of families to determine whether they are eligible for a mortgage loan but they have no right to use a pregnancy or a short-term disability as a cause to deny that family a mortgage they would otherwise qualify for.”

A HUD press release stated, “The Fair Housing Act prohibits discrimination against a borrower on maternity leave if she can demonstrate that she intends to return to work and can meet the income requirements of a loan while on leave. ”

It’s that simple. VA loans and other federally assisted home loan programs do not allow discrimination in any form as defined by the Fair Housing Act. Those who feel they may have a case against a lender should contact the Department of Veterans Affairs immediately to get guidance and help.

  1. Donald Good

    In Sarasota and Manatee counties, FL there are over 300 condominium associations representating over 12,000 living units. In Sarasota and Manatee Counties, only 17+/- condominium associations have applied for and received approval from the VA/FHA to get on the list of units available for the veteran to purchase using a VA or FHA loan. The other 280+/- (over 11,000 living units) cannot be financed by a VA or FHA loan. That greatly reduces the "good deals" available to the vet. The lack of approval is not based on condition but in the majority of cases based on the "first right of refusal" clause in their bylaws. Until January 2010, this was 'overlooked' by the VA. This simple clause has greatly increased the price a vet must play because of the reduced units available. Please investigate.

  2. McEndree Gale L.

    I have a mortgage that I have paid on time every month, it was purchased by Bank of America about two years ago. They say that the payment made to the original lender at time of purchase is late and then they sent back a payment and said that we were late and it was not applied. They tell me one thing and then they do another. What if any recourse do I have, I would like to refinance but can not as long as they keep pulling this slite of hand. HELP

    • Joe Wallace

      Is your mortgage a VA home loan? If so, contact your nearest VA Regional Loan Center and ask for assistance dealing with this issue--the VA can help or at the very least advise you as to your options. One thing that you should do in the meantime is to pull any documentation you have regarding payments made--check images, checks that have cleared the bank, etc. that you can use as evidence in proving your case. You may need to contact your bank to get check images and other information if you don't have them already in your files. The list of regional VA loan centers can be found at

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