The Fair Lending Laws and Their Enforcement

J ournalists, businessmen, politicians, and regulators are paying increasing attention to the subject of discrimination in lending, with particular emphasis on mortgage lending. It sometimes seems as though the main issues in antidiscrimination efforts have shifted from education and labor markets to the credit markets. Two different federal laws deal with discrimination in lending: the Fair Housing Act (FHAct) and the Equal Credit Opportunity Act (ECOA). These fair lending laws prohibit lenders from discriminating in credit transactions on the basis of race, color, national origin, religion, sex, and other specified grounds.1 But the laws provide little practical guidance for enforcement, particularly with regard to the role of the banking regulatory bodies. Congress left to these agencies and to the courts the job of working out the specifics of how to define and promote the laws’ purpose—fair lending. While discrimination has been discussed widely in the popular and professional press, an overview of the two fair lending laws and their enforcement is difficult to find. Section 1 describes these laws, their origins, and the interpretations that the courts and enforcement agencies have given some of