Chap 13 The Equal Credit Opportunity Act

Question 1

ECOA

Answer 1

Equal Credit Opportunity Act is a federal civil rights law enacted in 1974 that forbids lenders, financial institutions to discriminate against loan borrowers for any personal reasons other than their ability to repay.
ECOA protects all borrowers of loans from discrimination based on race, religion, national origin, color, age, sex, eligibility for public assistance or exercising any rights under the consumer Credit Protection Act.

DOJ can file lawsuit under ECOA if there is evidence of a pattern of discrimination.

ECOA is supported by several federal agencies The Consumer Financial Protectional Bureau (CFPB).

Question 2

ECOA covers many types of credits, including

Answer 2

Credit Cards
Personal Loans
Small Business Loans
Student Loans
Car Loans
Loan modifications

Question 3

Special Considerations

Question 4

What happens if you are turned down for a loan?

Answer 4

1. if the borrower has been denied a loan or line of credit, the lender may reveal to you in the Adverse Action Notice.
2. Consumers have the legal right to ask the reason for a loan denial within 60 days of the receiving the rejection notifications from the creditor.

Question 5

Your ECOA Rights

Answer 5

1. When borrowers apply for credit, only relevant financial factors like credit score credit history and income are taken into account
2. All borrowers are entitled to have credit in their birth name, first name, spouse’s last name or a combination of two last names.
3. Even if you change your martial status or name, you can keep account unless you are unable to pay.
4. The creditor must inform you within 30 days whether your application was approved or not.
5. If the borrower’s application is rejected, the lender has to provide a specific reason within 60 days

Question 6

What Lenders can’t do?

Answer 6

1. Can’t impose different conditions or a term like higher interest rates based on your personal features.
2. Cannot bar you from loans just because you receive reliable public assistance.
   When you apply for an unsecured loan, the lender is not supposed to ask you about your martial status or ask if you are divorced or a widower.

Question 7

Detecting the signs of Credit Discrimination

Answer 7

You are promised the loan on the phone, but when you arrive in person, things change.
The lender discourages you from applying for any type of loan
The lender may make negative remarks about national origin, martial status, gender etc.
Even though you meet all the criteria, you are refused the loan.
Even though you qualify for a low interest rates loan, you are offered a loan with very high-interest rates.
You are denied loan without a reasonable explanation.

Question 8

What to do If you suspect Discrimination

Answer 8

Contact lender to complain.
Check with your state’s Attorney General Office to see if the creditor has violated any state equal credit opportunity laws
File complaint with CFPB
Victim does have the option to sue the lender in federal court.

Question 9

Who supports the Equal Credit Opportunity ACT

Answer 9

CFPB writes the rules to implement ECOA.
FDIC
FRB
NCUA (National Credit Union Administration
Office of the comptroller of the Currency (OCC)

Question 10

Penalty for violating the ECOA

Answer 10

Face Punitive damages and costs that have been incurred by the borrower.

Question 11

Does ECOA apply to All Lenders

Answer 11

It applies to all lenders and banks.