ECOA

Question 1

What does ECOA stand for?

Answer 1

Equal Credit Opportunity Act

Question 2

What regulation is the ECOA?

Answer 2

Regulation B

“Protect the Borrower”

Question 3

What is the regulatory agency that governs the ECOA?

Answer 3

Board of Governors of the Federal Reserve Board (FRB)

Question 4

The ECOA is administered and enforced by who?

Answer 4

Consumer Financial Protection Bureau (CFPB)

Question 5

What is the purpose of the ECOA?

Answer 5

To eliminate discriminatory treatment of credit applicants and to promote the availability of credit to all creditworthy applicants.

*Not mortgage specific

Question 6

What is disparate treatment?

Answer 6

Essentially to not treat all applicants the same

Question 7

What does adverse action mean?

Answer 7

A denial or revocation of credit, or a change in the terms of existing credit.

Question 8

What are the three disclosures required under the ECOA?

Answer 8

• Notice of Action Taken
• Notice of Incomplete Application
• Notice of Right to Receive Appraisal Report

Question 9

What is the Notice of Action Taken Disclosure? When is it due?

Answer 9

The lender must provide a notice in writing of the status of the application within 30 days.

Question 10

What are the requirements for disclosure of an Adverse Action?

Answer 10

The creditor must provide within 30 days of adverse action, a notice to the borrower providing a statement of the unfavorable decision. It must also include a statement that the ECOA prohibits discrimination against credit applicants.

Question 11

What notice do we send out when the application is incomplete under ECOA?

Answer 11

Notice of Incomplete Application

It informs the borrower that there is information missing from their application that the consumer needs to provide within 30 days.

Question 12

When is the Notice of Right to Receive Appraisal Report due?

Answer 12

Within 3 business days of application

Question 13

How long must these disclosures be kept under ECOA?

Answer 13

25 months

Question 14

How long does an applicant have to file a complaint of discrimination under ECOA?

Answer 14

Within 2 years (24 months) of the alleged violation

Question 15

To what transactions does ECOA apply?

Answer 15

It applies to any transaction s for the extension of credit by any person who regularly extends, renews or continues credit. It also refers to persons who regularly refer applicants to creditors or selects creditors to whom requests for credit can be made

Question 16

What are the protected characteristics?

Answer 16

• *Age
• Bearing or rearing of children
• Race or color
• Marital Status
• National Origin
• Religion
• Sex

*Age applies to applicants under 18 and over 62 (where creditors can favor applicants for reverse mortgages)

Below is used for HMDA

R - Race
A - Age
M - Marital Status
S - Sex

Question 17

Lenders may not refuse to consider what sources of income?

Answer 17

• Regular alimony or child support
• Annuity, pension or retirement income
• Public assistance

*These must however still meet the 3 years continuance

Question 18

What is “redlining”?

Answer 18

When lenders refuse to lend money or extend credit to borrowers in certain geographical areas

Question 19

What is “reverse-redlining”?

Answer 19

When lenders target specific geographical areas for lending (primarily minority neighborhoods)

Question 20

Are we allowed to discourage prospective applicants from applying for credit?

Answer 20

No

Discouragement is an oral or written statement, communicated to applicants in advertising or by any other means, that deters the applicant from applying for credit on a prohibited basis.

Question 21

True or False? We can refuse credit to applicants who filed a complaint of discrimination under ECOA?

Answer 21

False

We can’t deny credit to someone who has filed a complaint, for that reason alone. If they are not eligible based on other criteria, that is acceptable.

Question 22

True or False? We can’t refuse loans to applicants who have participated in credit counseling?

Answer 22

True

Lenders may not refuse loans to applicants on the basis of them participating in credit counseling which is a right under the Consumer Credit Protection Act (CCPA)

Question 23

What are the three options you can select when determining marital status?

Answer 23

• Married
• Unmarried
• Separated

Question 24

What are the civil penalties under the ECOA?

Answer 24

$5,000 in fines per day, or if a pattern of misconduct exists then fines up to $25,000 per day are permitted.

An action may be brought within 2 years of alleged violation.

Question 25

When must the appraisal be provided to the borrower?

Answer 25

Upon completion or 3 business days prior to consummation (closing)

Question 26

True or False? The timing requirement for appraisal delivery may not be waived.

Answer 26

False

The borrower can waive their right to receive the appraisal prior to closing (3 business days before closing) and agree to receive it at any time prior to or at closing (less than 3 business days before closing or at closing). This right must be obtained at least three business days before closing.

Question 27

If the lender determines that credit will not be extended, within how many days must they deliver the appraisal to the borrower?

Answer 27

30 days

Question 28

True or False? If the borrower is declined for credit, they have 90 days from their denial to request a copy of their appraisal.

Answer 28

True

If the borrower is declined, they have this 90 day period to request a copy of their appraisal. If they withdraw/cancel their application this timing requirement doesn’t apply.

Question 29

What six (6) items must be on the Notice of Action Taken statement?

Answer 29

• Date
• Applicant’s name
• Applicants address
• Description of account/transaction/requested credit
• Description of action taken
• Principal reasons for credit denial

Question 30

When a Notice of Action Taken statement is provided, if the statement includes a denial due to credit reasons (adverse action), what information must also be included on the statement?

Answer 30

Contact information for the Consumer Reporting Agency (CRA)