Equal Credit Opportunity Act (ECOA)
A lender is prohibited from asking about income received from alimony by: The GLB Act Privacy laws ECOA Regulation Z
ECOA. A loan originator is precluded from making certain inquiries, in order to prevent discrimination against a loan applicant based on his or her age or marital status. Asking whether an applicant receives alimony or child support if such payments are not necessary to qualify the applicant for the loan is prohibited. However, if such payments are to be included in the applicant's qualifying income, he or she may be asked to provide proof of its regular receipt.
Regulation C requires lenders to: Report the race of its borrowers to HUD Provide free credit reports to declined borrowers and advise credit counseling If the borrower declines to self-report, indicate the borrower's race based on visual observation Disclose the APR to the borrower three days after application
if the borrower declines to self-report, indicate the borrower's race based on visual observation. Regulation C (HMDA) has the purpose of identifying discrimination by requiring originators to request the race, ethnicity and sex of each applicant. If a loan applicant does not disclose his or her personal information with regards to ethnicity, race, or sex, HMDA requires a loan originator to note that information in the application based on visual observation or surname.
Which of the following is true under ECOA? Lenders can use racial redlining as a business practice Lenders cannot request information about race unless the information is used for government monitoring purposes Covered lenders must report all loan activity on an annual basis Lenders must give borrowers a free copy of their credit report if requested
lenders cannot request information about race unless the information is used for government monitoring purposes. For the sole purpose of monitoring compliance with fair lending laws, a creditor may ask about a loan applicant's ethnicity, race, and sex. While the applicant is not required to provide that information, if he or she declines to do so, the loan originator may note that information based on visual observation of the applicant.
Which of the following best describes a lender's obligation under the Equal Credit Opportunity Act? The lender must deny the loan after 90 days if it has not been approved The lender must notify the borrower within three days of declining a loan application The lender must notify the borrower within 60 days of receipt of an application on the status of the file The lender must take some form of action within 30 days of receipt of a completed application
the lender must take some form of action within 30 days of receipt of a completed application. Pursuant to Regulation B, a creditor must, within 30 days after receipt of a completed application, advise the loan applicant of action taken, whether it is a decision to grant credit or the denial of the application. An application is considered received when it includes the consumer's name and Social Security Number, income, the address of the property serving as collateral for the loan, an estimate of the value of the subject property, and the amount of the mortgage loan sought.