(ECOA) Equal Credit Opportunity Act (Regualtion B)

Question 1

ECOA - Equal Credit Opportunity Act ( Reg B)

Answer 1

ECOA deals with “discrimination” when granting “CREDIT” (Fair Housing deals with discrimination in the Sale/Lease of property)

• ECOA is a federal law that ensured that all consumers are given an “equal chance to obtain credit”
• Creditors must notify applicants of their lending decision - “within 30 days” of the filing of complete application. “Adverse Action Notice” = Denial Letter
• “A Protected Class” is a “class of individuals” that cannot be used as a source of discrimination/denial when approving a credit application.

ECOA has eight (8) Protected classes: sex, race, religion, color, national origin, (age, marital status & public assistance)

• The first five (5) are also protected by the Fair Housing Act
• The last three (3) - *age, marital status & public assistance- are “Only” protected by ECOA
• Examples of “public assistance” includes: social security income, child support, alimony, etc - (any type of non-taxed income

** Under ECOA you can’t be denied under “source” of income, but can be denied based on the “amount” of income.

• According to ECOA (Reg B) - the only correct way to ask about marital status is, are you: married, unmarried, (which refers to single, divorced, widowed) or separated.

Question 2

ECOA - Equal Credit Opportunity Act ( Reg B)
Continued

Answer 2

• Under ECOA - creditors “CANNOT” consider age unless the applicant is under 18 or the applicant is at least 62 for a reserve mortgage
• ECOA Disclosures must be retained for “25 months” Civil action may be filed for ECOA violations for up to “24 months” (2 years) for if a consumer believes his/her rights have been violated.
• Penalties for noncompliance is $10,000 for each individual action.
• If an applicant is denied based on the appraisal report - the consumer has the right to request appraisal report used within “90 days” of credit decision - Lender must provide within “30 days”.
• If the application was actually approved - they should receive the appraisal no later than (3) business days prior to the close of the first lien loan.