The Equal Credit Opportunity Act, which is part of the Consumer Credit Protection Act, was adopted on May 29, 1968. The law is designed to promote credit availability to all credit-worthy applicants, regardless of race, color, religion, national origin, sex, marital status or age.
We recommend that every financial institution take a couple minutes to review the "most frequently cited Regulation B violations" in order to compare their existing Fair Lending compliance management system: Common Violation #1: Discrimination on a prohibited basis in a credit transaction.
Regulation B covers the actions of a creditor before, during, and after a credit transaction. The CFPB protects the following credit applications and transactions for consumers: Consumer credit. Business credit.
For businesses with gross annual revenues greater than $1 million, Regulation B requires only that a creditor provide notice within a reasonable time. A creditor must notify the applicant of adverse action within: 30 days after receiving a complete credit application.
Institutions that lend money, such as banks, are legally required by the Fair Credit Reporting Act to send out an adverse action notice any time they deny an application for credit, lower account limits or change the account terms due to credit information.
The Dodd-Frank Act granted rule-making authority under ECOA to the CFPB and, with respect to entities within its jurisdiction with over $10 billion in assets, granted authority to the CFPB to supervise for and enforce compliance with ECOA and its implementing regulation.
Final answer: The inquiries that are not permitted under REG B are marital status, number of dependents, and age.
Examples of consumer credit transactions are loans, credit cards, credit sales, second mortgages, and leases.
Some examples of violations are the improper disclosure of the amount financed, finance charge, payment schedule, total of payments, annual percentage rate, and security interest disclosures.
Regulation B applies to all persons who, in the ordinary course of business, regularly participate in the credit decision, including setting the terms of the credit. The term “creditor” includes a creditor's assignee, transferee, or subrogee who so participates.
Three pieces of information that should not affect the loan decision include whether she receives any form of public assistance, her national origin, or her gender. It is crucial that you evaluate June's creditworthiness based on her financial capacity and credit history.
On the one hand, Regulation B generally prohibits creditors from collecting information about race, color, religion, national origin, or sex “to discourage discrimination, based on the premise that if creditors cannot inquire about or note applicants' personal characteristics, such as national origin or race, they are ...
7. Relation to Regulation B. In considering an application or credit line increase on the credit card account of a consumer who is less than 21 years old, card issuers must comply with the applicable rules in Regulation B (12 CFR part 1026).
There are four main types of consumer credit: installment credit, non-installment credit, revolving credit, and open credit.
The term “covered credit transaction” does not cover the purchase of an originated credit transaction, the purchase of an interest in a pool of credit transactions, or the purchase of a partial interest in a credit transaction such as through a loan participation agreement.
It is lawful for creditors to ask you for personal information, such as employment and residence history, in order to determine your creditworthiness.
Regulation B prohibits creditors from requesting and collecting specific personal information about an applicant that has no bearing on the applicant's ability or willingness to repay the credit requested and could be used to discriminate against the applicant.
(b) Limitation on information about race, color, religion, national origin, or sex. A creditor shall not inquire about the race, color, religion, national origin, or sex of an applicant or any other person in connection with a credit transaction, except as provided in paragraphs (b)(1) and (b)(2) of this section.
For example, if a lender refuses to make a mortgage loan because of your race or ethnicity, or if a lender charges excessive fees to refinance your current mortgage loan based on your race or ethnicity, the lender is in violation of the federal Fair Housing Act.
Within limits, lenders are allowed to consider other factors, such as your income, debt, and credit history, when they decide whether to offer you credit and what terms to offer you. ECOA is a federal law, enacted in 1974. It makes credit discrimination illegal and holds lenders responsible if they break the law.
Explanation: An example that is NOT a prohibited basis for the Equal Credit Opportunity Act is annual income and military status.