1
Q
- ECOA stands for the
A
Equal Credit Opportunity Act (ECOA)
2
Q
- The Consumer Financial Protection Bureau (CFPB) enforces ECOA.
A
3
Q
- ECOA is regulation “B” and it requires that creditors do not discriminate when granting credit – they must “Be Equal”.
A
4
Q
- ECOA primarily deals with
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“credit applications”.
5
Q
- The Equal Credit Opportunity Act (ECOA) prohibits discrimination by lenders in any part of a credit transaction based on
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race, color, religion, national origin, sex, marital status, age (provided the applicant has attained the minimum legal age in the state), the receipt of income from a public assistance program, or having exercised any rights under the Consumer Credit Protection Act.
6
Q
- ECOA (Regulation B) also specifies that the borrower is entitled to a copy of the residential property appraisal report at least 3 business days before closing (loan consummation).
A
7
Q
- Copies of Appraisals - upon receipt of an application, lenders have three days to notify a borrower of their right to receive a copy of any appraisal or valuation
A
8
Q
- ECOA Requires credit bureaus to maintain separate credit files for married spouses, if requested.
A
9
Q
- ECOA Allows credit applicants to file discrimination complaints or bring a civil lawsuit for alleged discrimination.
A
10
Q
- ECOA prohibits a creditor from inquiring about a consumer’s
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marital status or
intentions related to having or raising children
11
Q
- ECOA also prohibits creditors from making any oral or written statement, in advertising or otherwise, to applicants or prospective applicants that would –
A
discourage them from making or pursuing an application on a prohibited basis, such as membership in a protected class.
12
Q
- ECOA has eight (8) Protected classes:
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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.)
13
Q
- ECOA prohibits creditors from refusing to consider or discounting income from alimony, child support, maintenance if borrower chooses to disclose it.
A
14
Q
- It is because of ECOA that lenders cannot ask if a borrower is single, widowed or divorced. They can only ask if
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the person is married, unmarried or separated and these are the only choices on the loan application.
15
Q
- It is permissible to ask a client about marital status, since this likely impacts the loan and/or documents needed at closing; however, if an applicant is NOT legally married, it is NOT permissible if he/she is divorced, widowed, etc
A
16
Q
- A loan originator should not ask an applicant how many children they have (or plan to have) – the proper way to obtain this information is —
A
"”How many dependents do you have?”
Instead of How many mouths you feed?
17
Q
- According to ECOA, a creditor also may 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.
A
18
Q
- ECOA dictates the collection of demographic information to monitor the lenders’ compliance with the law. Specifically, on the bottom of the 8th page of the 1003 loan application, the interviewer MUST specify the applicant’s race, ethnicity, and sex when the loan application is taken face-to-face.
A
19
Q
- ECOA requires credit bureaus to keep separate files on married spouses, if requested
A
20
Q
- ECOA notification of adverse action (denial letter) must be in _______.
A
writing; a telephone call is not sufficient
21
Q
- ECOA states that a creditor must provide an ______ on a credit application 30 days after receipt of an application. The answer could result in approval, adverse actions(denial) or request for additional information
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answer
22
Q
- ECOA states that a creditor must notify the application of action taken on an application within 90 days after notifying the application of a counteroffer if the application does not expressly accept the offer.
A
23
Q
- The notice of adverse action must contain
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a statement of the action taken, contact information for the lender, the name and address of the federal agency with jurisdiction, and the reasons for the decision or a statement advising the borrower of their right to receive the reasons
24
Q
- An applicant can request a statement of reasons within 60 days of receiving the original adverse action notice. When adverse action is taken - an application has been denied, the applicant was offered less favorable terms than those applied for, or there was a change in terms of an existing credit agreement - the creditor must either provide notice of the specific reasons for the decision or inform the applicant of his right to request specific reasons for the decision within 60 days
A
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200. ECOA prevents creditors from discriminating against a borrower’s SOURCE of income; however, the creditor can discriminate against their AMOUNT of income.
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201. In order to make sure that the Loan Originator is not violating ECOA, he/she should refrain from asking questions that may be construed as discriminatory; for example, a loan originator should never ask a borrower whether any portion of his income is derived from alimony, child support, or public assistance.
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202. If an application for credit is DENIED based on the Appraisal- under ECOA (Reg B)says borrower has 90 days to request a copy/Lender has 30 days deliver.
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203. ECOA prohibits a lender from discouraging individuals from applying for a mortgage or reject their application because of their -
race, color, religion, national origin, sex, marital status, age, or because they receive public assistance
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204. Childbearing, childrearing - About plans for having children, childbearing capabilities, or birth control practices. ECOA states that lender/MLOs are not allowed to ask borrowers questions related to how many children they are planning on having in their family. A creditor shall not inquire about birth control practices, intentions concerning the bearing or rearing of children, or the capability to bear children. A creditor may inquire about the number and ages of an applicant's dependents or about dependent-related financial obligations or expenditures, provided such information is requested without regard to sex, marital status, or any other prohibited basis.
30
205. Overt Discrimination – is discrimination that is explicit or obvious. An example would be advertising that indicates members of a protected class are not welcome at the institution. Alternatively, overt discrimination might exist if there is a widespread understanding in the community that members of a protected class will not be served by an institution
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206. Disparate Treatment – is discrimination that is defined by differences in the way a member of a protected class (race, religion, sex, etc.) are served by an institution. Disparate Treatment is discrimination that is defined by differences in the way members of a protected class are served by the institution. For example, an individual may been gaging in disparate treatment by shaking the hand of members of one race or gender and not following the same procedure with members of another race or gender. Disparate treatment can also occur if members of a protected class are charged higher rates and/or fees than similarly situated members of a non-protected class
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207. Disparate Impact is a method of identifying discrimination through statistical analysis. It occurs when a practice or policy that appears to be non-discriminatory on its face has a disproportionately negative effect on members of a particular race, gender or other protected class. Unlike other forms of discrimination, discrimination identified via disparate impact is often illegal even if the discrimination is unintentional. For example, one of the largest fair-lending settlements based on disparate impact theory alleged that a creditor’s minimum credit score policies resulted in a disproportionate number of minority applicants receiving FHA loans instead of less expensive conventional loans.
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208. HMDA/ECOA – Government Monitoring Information Section (Section 8) of the1003 requirements – (Demographic Information) HMDA requires that this section be completed to comply with the government monitoring requirements. The applicant should be informed that this information is only used to assure that the lender is not discriminating against applicants and is not considered when determining whether to grant a loan. Under ECOA – if the application is taken face-to-face, this section should be completed based on “visual observation” or “surname”.
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209. Creditors may not issue revisions to a Loan Estimate due to technical errors, miscalculations, or underestimations of charges — whether the creditor is making the disclosure, or a mortgage broker is making a disclosure on the creditor’s behalf
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210. The Loan Estimates must be given to the borrower no later than four business days before consummation or placed in mail no later than three business days after the creditor receives information sufficient to justify a revision. This is to ensure that seven business days must pass between delivering or mailing the Loan Estimate (or revised Loan Estimate) before the loan may close. Three (3) days + Four (4) days =Seven (7) days.
36
211. . ECOA records must be 𝗸𝗲𝗽𝘁 for
25 months.
37
212. A consumer can be 𝙨𝙪𝙚𝙙 for a violation of ECOA for up to
24 months
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213. The penalty for violating ECOA is
$10,000.
