discouraging loan applicants based on their race, color, sex, or other prohibited basis and.requiring a spouse’s signature on a loan application when an applicant qualifies for a loan individually.placing additional burdens on minority applicants.treating minority loan applicants less favorably than non-minority applicants.Prohibitions against discriminatory lendingĭiscriminatory practices take many forms, including: guarantees home loan applicants a copy of their appraisal reports.requires lenders to provide notices and reasons for denial of credit and.In pursuing its goals, the ECOA provides three different protections. Only lenders (such as banks or direct lenders) are subject to the disclosure requirements under the ECOA. As “referrers”, they are subject only to the general prohibition against discriminatory lending practices, and not to disclosure requirements. Įditor’s note - For simplicity in discussing the discrimination laws, we’ll only refer to “lenders.” However, loan brokers are considered “referrers to creditors” since they do not make credit decisions. The anti-discrimination rules apply to lenders, loan brokers and others who make, arrange or purchase loans. For our purposes, we will focus on the issues that impact mortgage lending. If a transaction provides for the deferral of the payment of a debt, the ECOA controls. The protections of the ECOA apply to all credit - commercial, personal, loans, credit cards, mortgages, etc. Supervision and enforcement transferred to the Consumer Financial Protection Bureau (CFPB) on July 21, 2011. Originally, the ECOA was under the watch of the Federal Reserve Board. The Equal Credit Opportunity Act (ECOA) was enacted in 1974 to prohibit discrimination in lending based on race, color, religion, national origin, sex, marital status or age (provided an individual is of legal age and capacity to contract). For course credit toward renewing your NMLS license, visit. ![]() This video discusses violations of the Equal Credit Opportunity Act, examples of discrimination, and exceptions. Mortgage Concepts is a recurring video series covering best practices and compliance education for California mortgage loan originators.
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