The Federal Trade Commission has begun a study to determine whether companies and government agencies that insure lenders against losses resulting from mortgage foreclosures comply with the Equal Credit Opportunity Act.
Although the mortgage insurers do not grant credit, the FTC staff is proceeding on the theory that mortgage insurance is a necessary link in many home loan transactions and thus would be subject to FTC's jurisdiction under the equal credit act.
The study, which an FTC staff member described as a "non-public" inquiry, has thus far touched only one private mortgage insurer - the Mortgage Guaranty Insurance Co. of Milwaukee (MGIC). MGIC is the largest private mortgage insurer.
"The FTC has asked MGIC for information as to its underwriting guidelines as they apply to ECOA," said John Galanis, vice president and general counsel of MGIC's parent company.
John Williamson, executive vice President of Mortgage Insurance Companies of America (MICA), the trade association representing private mortgage insurers, said he does not believe any other companies have been asked for information.
The Equal Credit Opportunity Act prohibits grantors of credit from discriminating against individuals because of sex, marital status, race, national origin and, in most cases, age. The ETC has responsibility for ECOA enforcement in the case of a wide variety of non-deposit business firms, including the mortgage banking industry.
Williamson said private mortgage insurance companies insured mortgages on 617,000 single-family homes in 1977 and wrote more than $22 billion in new mortgage insurance.