ECOA (Regulation B) Flashcards
What is ECOA?
The Equal Credit Opportunity Act (ECOA) prohibits lenders from discriminating, in any aspect of a credit transaction, based on any of the following factors: -Race -Color -Religion -National origin -Sex -Marital status -Age (unless borrower is too young to sign a contract, or lacks legal capacity) -Receipt of income from a public assistance program -Exercise of rights under the Consumer Credit Protection Act
What does ECOA stand for and what is also known as?
ECOA - The Equal Credit Opportunity Act (Regulation B)
True or False: Refusing to contract with a consumer who is under the age of 18 is not discrimination.
True because rejecting an attempted application submitted by a minor is not treating them unfairly due to their age, it is compliance with laws related to competency to enter legal contracts.
In compliance with what act can a lender request information about an applicant’s race, color, and sex?
The Home Mortgage Disclosure Act
What must a lender tell a borrower when they ask about race, color and sex according to the Home Mortgage Disclosure Act for monitoring purposes?
-He or she is not required to provide the information -If he or she chooses not to provide the information, it will be collected based on visual observation or the applicant’s surname -Approval of the application is not based on the applicant’s agreement to provide the information -The information is being requested to monitor compliance with federal fair housing laws
What can a creditor NOT ask an applicant?
-If any income stated on the application is derived from alimony or child support, unless the applicant wishes that income to be considered in determining eligibility for the loan -About plans for having children, childbearing capabilities, or birth control practices -If the applicant is divorced or widowed -For information about a spouse’s income if the spouse is not a co-applicant
When must a lender notify an applicant of any action taken on their application?
-30 days after receiving the completed application, concerning the approval, counteroffer, or rejection of the application -30 days after taking adverse action, including on an incomplete application -90 days after notifying the applicant of a counteroffer if the applicant does not expressly accept the offer
What must a notice of adverse action contain?
-A statement of the action taken -Contact information for the lender -The name and address of the federal agency with jurisdiction, and -One of the following: 1. The reason(s) for the adverse decision, or 2. A statement advising the borrower of his or her right to receive a statement of reasons within 30 days if such a statement is requested within 60 days of notification of the adverse action
What must a lender do regarding appraisals and valuations?
“Promptly” shared upon completion, or Provided at least three business days before closing Notify the borrower of their right to receive a copy of the appraisal/valuation 3 days after the application is received]
True or False: The borrower may waive the right to receive the copy before closing.
True, in which case it must be provided no later than at closing
