Reg B

Question 1

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

Answer 1

An adverse action notice must be sent to a member whenever: (1) adverse action is taken on an initial loan application or (2) adverse action is taken on an existing credit account.

Question 2

If an application for a loan is denied, the adverse action notice must be sent to the applicant within 30 days of receipt of a complete application. What are three of the five required items for this notice?

Answer 2

The adverse action notice must contain: (1) a statement of the action taken; (2) name and address of the credit union; (3) the required ECOA nondiscrimination statement; (4) the NCUA address; and (5) either statement of the specific reasons for the action or a disclosure of the applicant’s right to a
statement of those reasons

Question 3

The courts have recognized three methods to prove lending discrimination under the fair lending laws. List them and give a brief description of each.

Answer 3

The courts have recognized three methods to prove lending discrimination under the fair lending laws:
1) Overt evidence of discrimination — a lender blatantly discriminates on a prohibited basis.
2) Evidence of disparate treatment — a lender treats applicants differently based on one of the prohibited factors.
3) Evidence of disparate impact — a lender applies a practice uniformly to all applicants, but the practice has a discriminatory effect on a prohibited basis and
is not justified by business necessity.