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California Financial Discrimination Act of 1977 (Holden Act?


California act that makes it unlawful for mortgage lenders to discriminate in the loan approval process.


The California Housing Financial Discrimination Act of 1977 promotes fair access to credit for all borrowers.

It makes it illegal for lenders to discriminate regarding the availability and approval of credit based on a prospective borrower’s race, religion, origin, sex, marital status, neighborhood of origin, or the geographic location of a business.

Provisions apply to the purchase or refinance of real estate and extend to one to four unit properties. Previous to such legislation, many lenders would not lend in certain neighborhood’s and would find ways to deny credit event to credit worthy borrowers. Such a situation prevented many consumers, investors, and homeowner’s from buying homes or starting businesses. This act was passed to put pressure on lenders to lend in all communities, including those they deemed as more risky.

The main premise behind the act was to require lenders to engage in business in communities previously overlooked and base financing decisions exclusively on a borrower’s credit and income, rather than the location in which the property is located.

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