The National Community Reinvestment Coalition has filed fair lending complaints against 22 lenders for allegedly requiring high credit scores on Federal Housing Administration-insured loans and refusing to extend credit to qualified borrowers.

The coalition contends that lenders are discriminating against minority borrowers by requiring a minimum credit score of 620 when FHA underwriting standards only require a 580 score for its standard mortgage with a 3.5% down payment.

NCRC president and chief executive John Taylor also is urging federal regulators to compel lenders to offer FHA-insured loans to qualified borrowers.

"The decision by some banks to not follow the FHA's policy is cutting qualified borrowers off from accessing credit, and in doing so, causing harm to their ability to prosper, build wealth and for our economy to grow," Taylor said.

Many lenders have raised their minimum credit score requirements to reduce defaults and buyback risk. Today, the average FICO score in a FHA-insured loan is 700.

Lenders began raising their credit standards in 2007 and 2008 when FHA still allowed borrowers with 500 credit scores to qualify for government insured loans.

If lenders had made those loans, "FHA would be toast today," said mortgage banking consultant Brian Chappelle. Currently, FHA is in the black with a razor thin 0.5% capital reserve.

Among the firms named in the administrative complaints filed by the non-profit with the Department of Housing and Urban Development are: American Equity Mortgage, American Financial Resources, Bank of the West, Banco Bilbao Vizcaya, Citizens Financial, Envoy Mortgage, First Residential Mortgage, Franklin American Mortgage, MetLife, and others.

Among the firms called for comment, a MetLife spokesman had not heard of the complaint, and Franklin American did not return a telephone call about the matter.

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