After identifying seven likely areas of potential discrimination in the home buying process, participants formed task groups to study each area. The groups were expected to review and evaluate industry standards and practices, recommend methods and strategies for reducing discrimination, and develop educational resources for consumers, professionals, and industries.


[1] THE HOME PURCHASER’S INITIAL CONTACT WITH THE REAL ESTATE AGENT

— Task group members recommended that the term "conventional financing only" be omitted from Multiple Listing Service information because it may discourage buyers who are planning to utilize VA, FHA, and other nonconventional financing methods.
— The group agreed to urge the Ohio Real Estate Commission to adopt an additional article in its Canon of Ethics, stating that licensees shall not market property in a manner that indicates a preference for "conventional financing only."
— The task group oversaw the development of a "Fairness in Lending" continuing education class for real estate professionals.
— As a result of the task group’s suggestion, the Cuyahoga Plan of Ohio, a nonprofit organization that promotes fair housing practices, has offered to facilitate future meetings between white and minority real estate organizations.


[2] THE HOME PURCHASER’S INITIAL CONTACT WITH THE LENDER

— The "initial contact with lender" is a critical area of potential discrimination. Because insensitive or inconsistent treatment by loan originators can significantly impact the loan application process, the task group recommended the development of an industrywide training and certification program for lenders. Program curricula will include case studies on discrimination, instruction on fair lending laws and community reinvestment, and multicultural awareness and sales training.


[3] THE LENDING INSTITUTIONS’ INTERFACE WITH THE SECONDARY MARKET

— Firms that participate in the secondary mortgage market purchase a large percentage of residential loans from primary lenders. Since secondary-firm underwriting guidelines may differ from bank underwriting policies, the task group recommended ongoing training in secondary-market underwriting guidelines for primary lending institutions, underwriters, real estate agents, and community groups.
— The task group proposed that high schools implement academic curricula that educate students about the home buying process, mortgage loan programs, and the importance of a good credit rating and job history.


[4] THE APPRAISAL PROCESS

— The task group proposed that lending institutions and professional appraisal associations coordinate the development of a training and evaluation program for appraisers of urban residential properties.
— The group oversaw the publication of a reference directory of Community Development Corporations (CDCs) and city planners.


[5] PROPERTY INSURANCE

— The task group recommended that insurers eliminate potentially discriminatory criteria from their underwriting requirements, including minimum insurance amounts, age of home, and location of home. Group members also proposed that insurance companies maintain uniform, consistent company practices regarding cancellation, nonrenewal, and rejection of policies.
— The task group developed an "Insurance Rights and Obligations" educational pamphlet for consumers.
— The group recommended elimination of credit reports as an underwriting consideration.


[6] PRIVATE MORTGAGE INSURANCE

— Private mortgage insurance is designed to protect lenders against foreclosure. Task group members developed a brochure for consumers that explains the purposes of mortgage insurance and the consumer’s options to cancel the coverage.
— The task group proposed the development of a mortgage-insurance continuing education course for real estate agents.


[7] CREDIT BUREAU

— The group commissioned a consumer-oriented pamphlet that explains the function of the credit bureau and the importance of maintaining a good credit history.
— The task group urged area public utilities to report credit information to credit repositories so that low- and moderate-income individuals can demonstrate the regularity of their payments.


The Greater Cleveland Residential Housing and Mortgage Credit Project—Full text of essay
Planning Committee
Cleveland Project Sponsors
Test Project: Appraising an Urban Home
Task Group Accomplishments
Task Group Members


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