Equal Credit Opportunity Act(ECOA) (Regulation B)

married spouses

Requires credit bureaus to maintain separate credit files for what if requested ?

alimony, child support, maintenance if borrower chooses to disclose it.

ECOA prohibits creditors from refusing to consider or discounting income from where?

24 months.

A consumer can sue for a violation of ECOA for up to how many days?

"How many dependents do you have?"

A loan originator should not ask an applicant how many children do they have (or plan to have) -what is the proper way to obtain this information?

that income to be considered in determining eligibility for the loan.

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 what?

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.

Childbearing, childrearing - About plans for having children, childbearing capabilities, or birth control practices. Why 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?

3 business days

ECOA (Regulation B) also specifies that the borrower is entitled to a copy ofthe residential property appraisal report at least how many days before closing (loan consummation)?

that creditors do not discriminatewhen granting credit - they must "Be Equal".

ECOA is regulation "B" and it requires what?

credit bureaus to keep separate files on married spouses,

ECOA requires what to separate files on married spouses, if requested?

90 days

ECOA states that a creditor must notify the application of actin taken on an application within how many days after notifying the application of a counteroffer if the application does not expressly accept the offer?

ECOA records must be kept for 25 months.

How many days ECOA records must be kept?

The Consumer Financial Protection Bureau (CFPB)

Who enforces ECOA?

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.

what creditor is making the disclosure or what mortgage broker is making?

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 waymembers of a protected class are served by the institution. For example, an individual may be engaging 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.

what is Disparate Treatment?

ECOA

which prohibits a creditor from inquiring about a consumer's marital status or intentions related to having or raising children?

30 days

ECOA states that a creditor must provide an answer on a credit application is how many days after receipt of an application? The answer could result in approval, adverse actions (denial) or request for additional information.

a civil lawsuit for alleged discrimination.

Allows credit applicants to file discrimination complaints or bring what?

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.

An applicant can request a statement of reasons within how many days of receiving the original adverse action notice?

three days

Copies of Appraisals - upon receipt of an application, lenders have how many days to notify a borrower of their right to receive a copy of any appraisal or valuation?

membership in a protected class.

ECOA also prohibits creditors from making any oral or written statement, in advertising or otherwise, to applicants or prospective applicants that would discourage them from making or pursuing an application on a prohibited basis, such as what?

on the bottom of the third 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.

ECOA dictates the collection of demographic information in order to monitor the lenders' compliance with the law. Specifically, which application?

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.

ECOA has how many Protected classes?

writing; a telephone call is not sufficient

ECOA notification of adverse action (denial letter) must be in what and what is not sufficient?

a borrowers SOURCE of income; however, the creditor can discriminate against their AMOUNT ofincome.

ECOA prevents creditors from discriminating against from what?

a "credit application".

ECOA primarily deals with what?

their race, color, religion,national origin, sex, marital status, age, or because they receive public assistance.

ECOA prohibits a lender from discouraging individuals from applying for a mortgage or reject their application because of what reasson?

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.

Explain what is Disparate Impact ?

90 days to request a copy/Lender has 30 days deliver.

If an application for credit is DENIED based on the Appraisal- under ECOA (Reg B) says borrower has how many days to request?

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

How many business days must pass between delivering or mailing the Loan Estimate (or revised Loan Estimate) before the loan may close?

The penalty for violating ECOA is $10,000. FAIR HOUSING ACT

How much panalty for 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.

How to make sure that the Loan Originator is not violating ECOA?

if the person is married, unmarried or separated and these are the only choices on the loan application.

It is because of ECOA that lenders cannot ask if a borrower is single, widowed or divorced. They can only ask when?

it is NOT permissible if he/she is divorced, widowed, etc.

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,is it permissible or not?

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.

The Equal Credit Opportunity Act (ECOA) prohibits discrimination by lenders in any part of a credit transaction on the basis of what?

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.

The notice of adverse action must contain of what?

Equal Credit Opportunity Act (ECOA).

What does ECOA mean?

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.

What is Overt Discrimination?

HMDA/ECOA - Government Monitoring Information Section (Section X) of the 1003 requirements - HMDA requires that this section be completed in order 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".

what is HMDA/ECOA ?