Flashcards in ECOA Deck (41):
Congress enacted the Equal Credit Opportunity Act to eliminate:
discriminatory treatment of credit applicants.
Primary reason for ECOA enactment was:
anecdotal evidence that women were not treated on an equal basis with men when applying for credit.
_________ occurs when creditors refuse to make loans in certain neighborhoods due to the personal characteristics of the residents.
When predatory lenders target neighborhoods with elderly, immigrant, and minority populations to make risky loans.
Implementing regulations for ECOA
Office directly responsible for enforcing ECOA and FHA.
Office of Fair Lending and Equal Opportunity
ECOA applies to transactions for the extension of credit by:
any person who regularly extends, renews, or continues credit.
ECOA includes extensions of credit for:
business, commercial, and agricultural use, with the addition of those included in RESPA guidelines.
A creditor's refusal to offer credit in the amount or according to the terms requested by a loan applicant.
In opened-end transactions, adverse action includes:
The termination of an account or an unfavorable change in the terms of its use, or a refusal to approve a credit line increase.
Using a prohibited basis as a basis for treating a loan applicant less favorably than other applicants.
Race, color, religion, national origin, gender, marital status, age, receipt of income from a public assistance program, exercising of rights under CCPA
Disclosures and Notifications required by ECOA.
1. Notice of Action Taken
2. Notice of Incomplete Application
3. Valuation Disclosures
4. Disclosures Regarding Monitoring Programs
Within 30 days of receipt of a credit application, lenders must notify consumers in writing of:
If the lender takes adverse action, what must be included on the Notice of Action Taken?
1. statement of reasons for unfavorable decision
2. statement that ECOA prohibits discrimination
3. name and address of creditor
4. name of agency that enforces lenders complaiance
5. description of credit
6. credit agency that provided credit report, if applicable
Within 30 days of receipt of an application that lacks information that the applicant can provide, the credit must provide both ______________ and __________.
Notice of Action Taken
Notice of Incompleteness
A Notice of Incompleteness must include:
1. The information that is needed from the borrower
2. Reasonable time frame for submission of the information
3. a statement to advise applicant that failure to provide information will result in no further consideration of the application
When a transaction involves a mortgage loan that will be secured by a first lien on a dwelling, the creditor must provide the loan applicant with:
1. a notice of the right to receive a copy of all written appraisals associated with the transaction
2. a copy of all appraisals and other written valuations
Notice of the right to receive a copy of all appraisals is due:
within three business days of receipt of loan application.
Appraisals must be delivered to the borrower:
'Promptly' after they are completed or at least three business days before consummation if no waiver is signed.
When a transaction involves a loan applicants principal dwelling, the creditor must obtain information on the applicants:
race, ethnicity, gender, marital status, and age.
Lending Practices prohibited by ECOA
1. Overt Discrimination
2. Disparate Treatment
3. Disparate Impact
4. Prohibited Inquiries
Blatant refusal to offer credit to an individual due to his or her ethnicity or race
When a creditor treats a loan applicant who is a member of a protected class differently from other loan applicants who are 'similarly situated' but not members of a protected class.
One of the most common forms of discrimination.
When a creditor adapts a neutral policy without discriminatory intent and the policy has a discriminatory impact.
Exceptions of prohibited inquiries:
1. Information on applicants immigration status
2. an applicants personal characteristics to determine eligibility for special-purpose credit
3. questions about race, age, ethnicity, and sex to satisfy data collection requirements of ECOA and the Home Mortgage Disclosure Act
__________ requires the collection of personal information from consumers in order to ensure compliance with federal fair lending laws.
Home Mortgage Disclosure Act
Lenders may not refuse to consider what sources of income:
1. public assistance
2. pension, annuity, or retirement
3. alimony or child support
ECOA encourages ___________ to identify potential violations of the law.
Self Testing information is protected when creditors:
1. Maintain confidentiality by not sharing with the public or using it to defend actions for ECOA violations
2. take corrective action to address discriminatory acts and practices
Regulation B limits punitive damages to __________ for individual actions.
Regulation B limits punitive damages to __________ for class actions.
the lesser of $500,000 or 1% of the creditors net worth
If a consumer is successful in an action for an ECOA violation, the law authorizes the court to award:
1. Actual Damages
2. The costs of bringing the action
3. reasonable attorney fees
Statute of limitations for an ECOA violation
5 years from the date the alleged violation occurred
ECOA includes provisions allowing the _____________ to file an action when there is evidence of a pattern or practice of discrimination.
After the Attorney General has filed, consumers have how long to file a private action?
One year after the Attorney General files an action.
The unlawful practice of making statements to discourage a consumer from making a loan, based on a personal characteristic of the consumer.
ECOA stands for:
Equal Credit Opportunity Act
A person who requests or has received an extension of credit from a creditor.