Post on 26-Dec-2015
Equal Credit Opportunity Act
Applies to both consumer and non-consumer creditProhibits discrimination on a prohibited basis regarding any
aspect of a credit transaction, including: Application procedures (including discouraging applications) Information requirements Investigation procedures Standards of creditworthiness Terms of credit Furnishing of credit Administration of credit accounts Treatment of delinquent or slow accounts Collections
Scope
Prohibits both intentional and unintentional discrimination.
Violation can occur without a conscious intent to discriminate.
Types of Discrimination
A practice is discriminatory if: It constitutes disparate treatment or has a disparate impact on
protected groups AND The credit union lacks a legitimate nondiscriminatory reason for
its action, or the asserted reason is found to be a pretext for discrimination.
Three types of discrimination: Overt Discrimination Disparate Treatment Disparate Impact
Types of Discrimination
SexMarital statusRaceColorNational originAgeThe receipt of protected income Exercise of legal rights under the consumer credit lawsReligion
Protected Classes
SexMarital StatusSpousal InformationChildbearing Intentions
or CapabilitiesRace, Religion or
National OriginAgeIncomeCredit HistoryMonitoring Information
Limits on Information
May not require the signature of an applicant’s spouse or any other person on a credit instrument where an applicant qualifies by him or herself
May require the signature of a joint owner only on the instrument that enables you to reach the property in the event the applicant dies or is in default on the loan.
May request a co-signer or a guarantor, but you cannot dictate who that person is.
Signature Rules
Loan applicants must affirmatively indicate their desire for joint credit at the time of application.
Signatures on a promissory note may not be used to show intent to apply for joint credit.
Signatures or initials on a credit application affirming applicants’ intent to apply for joint credit may be used to establish intent to apply for joint credit.
The method used to establish intent must be distinct from the means used by individuals to affirm the accuracy of information.
“Safe Harbor” model forms are available in Appendix B to Reg B.
Joint Intent
TimingDisposition:
Incomplete Application
ApprovalCounterofferWithdrawalDenial
Notification of Action Taken
Must be in writingGiven to at least the primary applicantMust contain the following items as applicable:
A statement of the action taken. The name and address of the credit union. A statement of the ECOA nondiscrimination requirements The address for NCUA. Reasons for adverse action
Can be combined with FCRA notice
Adverse Action Notice
May deliver Regulation B disclosures to consumers in electronic form, subject E-Sign rules.
Certain disclosures must be provided with an on-line application
Disclosures required on the application (for example, voluntary income disclosures) do not have to conform to ESIGN.
E-Sign
Applicants have a right to their appraisals
Notification of the right is required
Provide appraisals upon request
Special Rules for Federal Credit Unions
Appraisals
Hint . . . . . 25 months
Record Retention Requirements
VoluntaryPrivilegedSelf-corrective action is requiredExceptions apply . . . of course.
Self-Testing