Consumer Lending Regs/ Equal Credit Opportunity Act

Question 1

What is the regulation for equal Credit opportunity act?

Answer 1

Regulation B

Question 2

When was equal credit opportunity act enacted?

Answer 2

1974

Question 3

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

Answer 3

Purpose

Question 4

Who has rule making authority for the equal credit opportunity act?

Answer 4

CFPB

Question 5

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

Answer 5

General rules

Question 6

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?

Answer 6

Possible liability for violations of the equal credit opportunity act

Question 7

What are examples of prohibited bases for the equal credit opportunity act?

Answer 7

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

Question 8

What are the three types of discrimination?

Answer 8

Overt
Disparate treatment
Disparate impact

Question 9

Match the definition to the correct type of discrimination: blatant discrimination on a prohibited basis
Overt
Disparate treatment
Disparate impact

Answer 9

Overt

Question 10

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

Answer 10

Disparate treatment

Question 11

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

Answer 11

Disparate impact

Question 12

Advertising can not use what?

Answer 12

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

Question 13

True or false you can ask applicant to designate a title on the application (mr. Ms. Mrs.) as long as it is optional.

Answer 13

True

Question 14

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

Answer 14

True

Question 15

True or false you can not ask permanent residence and immigration status?

Answer 15

False you may ask about that

Question 16

True or false you may consider and deny credit based on the fact that the applicant is not a U.S. citizen

Answer 16

True as long as you’re denying all non U.S. citizens

Question 17

True or false you can deny minors credit based on inability to enter binding contracts

Answer 17

True

Question 18

True or false a credit program that offers more favorable credit terms to applicants age 62 or older is permissible

Answer 18

True

Question 19

True or false you may consider the adequacy of security when the term of the credit extension exceeds applicants life expectancy

Answer 19

True

Question 20

What is a self test?

Answer 20

A program, practice or study that is used specifically to determine the extent or effectiveness of a creditors compliance with ecoa

Question 21

How long must self test information be retained for?

Answer 21

25 months

Question 22

Under Reg B what does application mean?

Answer 22

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

Question 23

What are the options of response after evaluating a completed application?

Answer 23

Deny
Counteroffer
Approve

Question 24

Within how many days do you have ti notify applicant of action taken?

Answer 24

30 days after receiving a completed application to notify of approval, denial or counter offer

Question 25

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

Answer 25

True

Question 26

What must a denial adverse action include?

Answer 26

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

Question 27

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?

Answer 27

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

Question 28

There are 4 circumstances where it is appropriate to gather information on a spouse or former spouse. What are they?

Answer 28

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

Question 29

What must a applicant be told before making inquiries about receipt of alimony, child support, or separate maintenance payments?

Answer 29

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

Question 30

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?

Answer 30

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

Question 31

When inquiring about a loan applicant’s nationality what types of inquiries are you allowed to make under reg B?

Answer 31

You may inquire about applicants permanent residence and immigration status

Question 32

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?

Answer 32

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

Question 33

When is a credit Union required to send an adverse action notice to the member?

Answer 33

Whenever adverse action is taken on an initial loan application or when adverse action is taken on an existing credit account

Question 34

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?

Answer 34

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