Legal Question in Banking Law in Georgia

I applied for a mortgage with a national bank. Though I have excellent credit, the lender's underwriters would not underwrite the loan. The official reason given was an inadequate credit score...which made no since to me given I have a credit score of 750, zero debt, no late payments or accounts in collection on my credit history.

When I pressed the loan officer about the denial, she confessed "off the record" that the real reason for the denial was due to Georgia's high foreclosure rate. In particular, the county I was buying the home in has a tremendously high foreclosure rate.

Per the loan officer, Georgia has consistently been ranked at the top or near the top of states of the list of Foreclosure Activity in the U.S. Hence, it is considered risky to lend in Georgia. Upon reviewing RealtyTrac's data, it does appear that GA has an above average foreclosure rate and ranked among one of the top in foreclosure activity in 2006, 2009, 2010, and 2012.

But how the HEY is this my fault?!?

Are Banks aloud to deny loans based on foreclosure rates of a given area?

I thought that was an illegal activity called red-lining?!?

Why are Georgia's foreclosure rate are so GOD-awful in comparison to the national average?

It would think the lenders who made all of these now foreclosed upon loans have as much culpability for the high foreclosure rate in GA as the borrowers do.

Yet it seems no one holds them accountable. To my knowledge not one lender has been investigated by the state ... unlike other states where several class-action suits have been successfully won against the self-serving banks who created this mess.

I'm beyond p*ssed. I should not have to suffer due to the dastardly deeds of unscrupulous lenders and suckered borrowers.


Asked on 11/14/13, 3:03 pm

1 Answer from Attorneys
Glen Ashman Ashman Law Office also dba Glen Ashman Attorney

I don't know of any law that would ban redlining a state as opposed to a small area (where there are limitations). I should add that most regulation of redlining concerns discrimination on primarily on the basis of race, ethnic origin, sex, age or religion. Having said that contact the federal consumer agency at http://www.consumerfinance.gov/ . They may want to look into a bank redlining a state.

One of your assumptions is wrong: Georgia's residents have shared in huge class action payouts - I suspect at least in the tens or hundreds of millions collectively. That's a good thing because the folks at Bank of America, Chase, Wells Fargo, Citibank, etc deserve punishment for their many serious misdeeds.

As for Georgia's foreclosure rate, the biggest reason it is high is that Georgia allows non-judicial foreclosure. States where the legislature has the courts monitoring foreclosure have lower rates of foreclosure. Your solution to that is political. The political party in power in Georgia is allowing the foreclosure laws in Georgia to remain very pro-lender (and should note the party that used to be in power also embraced the same laws). Your solution there is political - work for a change in the people you elect.

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Answered on 11/15/13, 3:27 pm


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