What can lenders not do according to ECOA?

Asked by: Prof. Kevin Ryan PhD  |  Last update: March 19, 2025
Score: 5/5 (36 votes)

Under the ECOA, it is unlawful for a lender to discriminate on a prohibited basis in any aspect of a credit transaction, and under both the ECOA and the FHAct, it is unlawful for a lender to discriminate on a prohibited basis in a residential real-estate-related transaction.

What does the ECOA prohibit lenders from?

prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age, because an applicant receives income from a public assistance program, or because an applicant has in good faith exercised any right under the Consumer Credit Protection ...

Which activities are prohibited under ECOA?

  • Discriminatory Credit Practices Defined. ECOA prohibits discrimination in any aspect of a credit transaction. ...
  • Applicant Marital Status. ...
  • Applicant Age. ...
  • Income Consideration. ...
  • Redlining. ...
  • Indirect Lending.

What are the factors a lender Cannot consider according to the law when offering credit?

Regulation B of the Equal Credit Opportunity Act prohibits lenders from using ascribed characteristics of a borrower, such as their age, gender, race, ethnicity, or religion, when making credit or loan decisions.

Which of the following are prohibited factors under the ECOA?

This Act (Title VII of the Consumer Credit Protection Act) prohibits discrimination on the basis of race, color, religion, national origin, sex, marital status, age, receipt of public assistance, or good faith exercise of any rights under the Consumer Credit Protection Act.

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29 related questions found

What are violations of ECOA?

Signs You Have Been Discriminated Against

You hear the lender make negative comments about race, religion, sex, national origin, the disabled or other protected groups. You are treated differently when you go the office than you were on the phone.

What does the ECOA prohibit lenders from quizlet?

Prohibits discrimination in the lending process based on the credit applicants race, color, religion, national origin, sex, marital status, age, or receipt of public assistance. The agency that enforces ECOA depends on the type of financial institution.

What are lenders prohibited from?

Fair lending prohibits lenders from considering your race, color, national origin, religion, sex, familial status, or disability when applying for residential mortgage loans. Fair lending guarantees the same lending opportunities to everyone.

What questions should you avoid on the ECOA?

Any questions about your race, ethnicity and gender cannot be used as a reason to approve or deny your credit application. Creditors have to provide equal information to all borrowers throughout the entire transaction.

What are the limitations on lenders?

Lending limit law applies to national banks and savings associations across the nation. The federal code on lending limits states that a national bank or savings association may not issue a loan to a single borrower for more than 15% of the institution's capital and surplus.

What are the ECOA rules and regulations?

'' Moreover, the statute makes it unlawful for ''any creditor to discriminate against any applicant with respect to any aspect of a credit transaction (1) on the basis of race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to con tract); (2) because all or part ...

Which of the following is not true concerning ECOA?

Which of the following is not true concerning ECOA? The answer is it requires the disclosure of the APR on all advertisements which contain an interest rate.

Which of the following does ECOA apply to?

ECOA prohibits discrimination in all aspects of a credit transaction and applies to any organization that extends credit—including banks, small loan and finance companies, retail stores, credit card companies, and credit unions. It also applies to anyone involved in the decision to grant credit or set credit terms.

Does ECOA apply to all creditors?

The Equal Credit Opportunity Act (ECOA), which is implemented by Regulation B, applies to all creditors. When originally enacted, ECOA gave the Federal Reserve Board responsibility for prescribing the implementing regulation.

What is a red flag for an Equal Credit Opportunity Act violation?

Look for red flags, such as: Treated differently in person than on the phone or online. Discouraged from applying for credit. Encouraged or told to apply for a type of loan that has less favorable terms (for example, a higher interest rate)

What types of lending discrimination are prohibited by fair lending regulations?

Steering a borrower to a loan with less favorable terms because of his or her race, color, religion, sex (including gender, gender identity, sexual orientation, and sexual harassment), familial status, national origin or disability.

What is prohibited by ECOA?

The Equal Credit Opportunity Act (ECOA) and its implementing regulations, referred to as Regulation B, ensure that creditors do not discriminate against any applicant on the basis of race, color, religion, national origin, sex, marital status, or age.

What does the ECOA prohibit a lender from discriminating based on?

The Federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age (provided the applicant has the capacity to enter into a binding contract); because all or part of the applicant's income derives ...

What are three categories under ECOA on which creditors may not base credit decisions?

Under ECOA, creditors may not make credit decisions based on the following categories: Race, Color,Religion, National Origin, Sex, Marital Status, Age, Receipt of public assistance.

What does RESPA prohibit a lender from?

RESPA also prohibits a lender from charging excessive amounts for the escrow account. The lender may require a borrower to pay into the escrow account no more than 1/12 of the total of all disbursements payable during the year, plus an amount necessary to pay for any shortage in the account.

What can a lender not ask?

In addition, although a lender can gather factual information about some things (your gender and marital status), under the Fair Housing Act and the Equal Credit Opportunity Act, it can't discriminate based on race, religion, color, age, marital status, sex or national origin.

Which of the following is not a prohibited basis under ECOA?

An example that is NOT a prohibited basis for the Equal Credit Opportunity Act is annual income and military status. The Equal Credit Opportunity Act prohibits discrimination in credit transactions on the basis of race and skin color, national origin, sex, age, marital status, religion, and other protected attributes.

What questions are prohibited by ECOA?

We recommend that you avoid asking applicants about personal characteristics that are protected by law, such as race, color, religion, sex, national origin or age.

What are some of the prohibited factors covered under ECOA Fhact?

  • race or color.
  • national origin.
  • religion.
  • sex.
  • marital status.
  • age.*
  • applicant's receipt of income from a public assistance program.
  • applicant's exercise, in good faith, of any right under the Consumer Credit Protection Act.

Which of these questions would a lender be prohibited by the ECOA from asking a borrower?

a loan originator should never ask a borrower whether any portion of his income is derived from alimony, child support, or public assistance. borrower has 90 days to request a copy/Lender has 30 days deliver. race, color, religion, national origin, sex, marital status, age, or because they receive public assistance.