ECOA and Reg B: Key Points - 12 CFR 1002.1 through 1002.6; 1002.13 Flashcards
Coverage, Applications for credit, Discrimination, Spousal signature rules
Which statute serves as the primary fair lending rule?
ECOA
What’s covered under ECOA (4 key things)?
1) All loan types - Secured/Unsecured, Consumer/Commercial, Closed-End/Open-End
2) All parties involved in a credit decision
3) All methods of evaluating credit
4) All aspects of the transaction
What are the 9 prohibited bases under ECOA?
- Race
- Color
- Religion
- National origin
- Sex (includes sexual orientation and gender identity)
- Marital status
- Age
- Income from public assistance
- The exercise of rights under the Consumer Credit Protection Act (CCPA)
Name the 3 types of discrimination and define each.
1) Overt - Blatant, obvious discrimination
2) Disparate Treatment - members of a protected class are treated less favorably (even if the result is the same)
3) Disparate Impact - no intent to discriminate, but the implementation of a neutral policy or procedure has discriminatory impact (or effect) on members of a protected class
When does discrimination occur (define the scenario that is considered discrimination)?
Discrimination occurs when a creditor’s actions result in a disproportionate, unfavorable impact on a protected class
An application can be oral or written, but when are written applications REQUIRED?
Required for loans to purchase or refinance a principal dwelling and secured by the dwelling
Under which circumstance(s) is it appropriate to request information on a spouse?
1) When the spouse will be contractually liable
2) When the applicant is relying on the spouse’s income or is relying on alimony, child support, or separate maintenance payments from the spouse
3) When the applicant resides in a community property state
Do the spousal signature rules apply to business-purpose loans too?
Yes, when requiring the signature of the spouses of officers, directors and shareholders
