Consumer Lending Regs/ Equal Credit Opportunity Act Flashcards
What is the regulation for equal Credit opportunity act?
Regulation B
When was equal credit opportunity act enacted?
1974
To promote the availability of credit to all credit worthy applicants without regard to race, color, religion, national origin, sex, marital status or age.
This is the ______ of the equal credit opportunity act
Purpose
Who has rule making authority for the equal credit opportunity act?
CFPB
Can not discriminate against an applicant on a prohibited basis regarding any aspect of a credit transaction
Cannot discourage someone from applying for credit on a prohibited basis
Required disclosures must be clear and conspicuous and in a form the applicant may retain
These are the _________ of the equal credit opportunity act
General rules
Punitive damages called at 10k plus actual damages in individual actions
Lesser of 500K or 1% of the credit unions net worth in class action
Additional damages/penalties may be imposed
Costs if the action and reasonable attorneys fees can be awarded
These are example of what?
Possible liability for violations of the equal credit opportunity act
What are examples of prohibited bases for the equal credit opportunity act?
Race
Color
Religion
National origin
Sex
Marital status
Age
Income derived from public assistance
Applicant has in good faith exercised any right under the consumer protection act
What are the three types of discrimination?
Overt
Disparate treatment
Disparate impact
Match the definition to the correct type of discrimination: blatant discrimination on a prohibited basis
Overt
Disparate treatment
Disparate impact
Overt
Match the definition to the correct type of discrimination:
Applicants are treated differently based on a prohibited factor(no credible, no discriminatory explanation)
Overt
Disparate treatment
Disparate impact
Disparate treatment
Match the definition to the correct type of discrimination:
Practice is applied uniformly but has a discriminatory effect tied to a prohibited factor, and is not justified by business need
Overt
Disparate treatment
Disparate impact
Disparate impact
Advertising can not use what?
Words, symbols models or other forms of communication that express, imply, or suggest a discriminatory preference or that would discourage a reasonable person from applying
True or false you can ask applicant to designate a title on the application (mr. Ms. Mrs.) as long as it is optional.
True
Applicant resides in a community property state
Property located in a commercial property state is a basis for repayment of the credit
If applications is for joint credit
These are instances that you can ask about marital status true or false
True
True or false you can not ask permanent residence and immigration status?
False you may ask about that
True or false you may consider and deny credit based on the fact that the applicant is not a U.S. citizen
True as long as you’re denying all non U.S. citizens
True or false you can deny minors credit based on inability to enter binding contracts
True
True or false a credit program that offers more favorable credit terms to applicants age 62 or older is permissible
True
True or false you may consider the adequacy of security when the term of the credit extension exceeds applicants life expectancy
True
What is a self test?
A program, practice or study that is used specifically to determine the extent or effectiveness of a creditors compliance with ecoa
How long must self test information be retained for?
25 months
Under Reg B what does application mean?
An oral or written request for an extension of credit made in accordance with procedures used by a creditor for the type of Credit requested
What are the options of response after evaluating a completed application?
Deny
Counteroffer
Approve
Within how many days do you have ti notify applicant of action taken?
30 days after receiving a completed application to notify of approval, denial or counter offer
True or false you have 90 days to notify applicant of action taken after notifying them of a counter offer if they do not expressly accept or use the credit offered
True
What must a denial adverse action include?
Must be in writing
Include a statement of the action taken
The name and address of the creditor
A statement of the provisions of section 701 ecoa statement
The name and address of the federal agency that administers compliance for the creditor (Ncua)
A statement of the specific reason for the action taken
A disclosure of the applicant ls right to a statement of the specific reasons within 30 days if request is made within 60 days of notice
There are 3 steps in the effects test used to determine if there is a case disparate treatment or disparate impact. The first is to prove that a loan criteria or practice has a disproportionate adverse impact. What are the other 2?
The credit Union must prove that the criteria or practice served a business necessity.
The claimant must be able to prove that there are other criteria or practices that would have achieved that business necessity equally as well if used instead
There are 4 circumstances where it is appropriate to gather information on a spouse or former spouse. What are they?
The spouse will be contractually liable for or a user of account
Member is relying on spouse income to repay debt
Member is relying on child support, alimony payments to repay the debt
The member resides in a community property state or is relying on property located in a community property state for repayment
What must a applicant be told before making inquiries about receipt of alimony, child support, or separate maintenance payments?
Lender must tell the applicant that this information need not be disclosed if the applicant does not wish to rely on it as a basis for repayment
Under Reg B, credit unions are restricted in the types of information that can be requested in regard to childbearing intentions or capabilities, what types of information are you allowed to gather?
You may inquire regarding the applicants ability to repay the debt such as probability of continuing employment as long as the same request is made of all similarly situated applicants
When inquiring about a loan applicant’s nationality what types of inquiries are you allowed to make under reg B?
You may inquire about applicants permanent residence and immigration status
When considering Income that is protected income and has been disclosed by the loan applicant for consideration in evaluating the loan application what are the five factors credit unions can look at?
Payments are received pursuant to a written agreement or court order
The length of time payments have been received
If the payments are received regularly
The credit worthiness
If courts are available to compel payment
When is a credit Union required to send an adverse action notice to the member?
Whenever adverse action is taken on an initial loan application or when adverse action is taken on an existing credit account
If an application for a loan is denied the adverse action must be sent to the applicant within 30 days of the recook the complete application. What are the 5 required items for this notice?
Statement of action taken
Name and address of the credit Union
The required ECOA non discrimination disclosure
The NCUA address
Statement of specific reasons for the action or a disclosure of the members right to a statement of those reasons
