Equal Credit Opportunity Act

1. Equal Credit Opportunity Act

2. Scope • Applies to both consumer and non-consumer credit • Prohibits 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

3. Types of Discrimination • Prohibits both intentional and unintentional discrimination. • Violation can occur without a conscious intent to discriminate.

4. 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

5. Protected Classes • Sex • Marital status • Race • Color • National origin • Age • The receipt of protected income • Exercise of legal rights under the consumer credit laws • Religion

6. Limits on Information • Sex • Marital Status • Spousal Information • Childbearing Intentions or Capabilities • Race, Religion or National Origin • Age • Income • Credit History • Monitoring Information

7. Signature Rules • 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.

8. Joint Intent • 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.

9. Notification of Action Taken • Timing • Disposition: • Incomplete Application • Approval • Counteroffer • Withdrawal • Denial

10. Adverse Action Notice • Must be in writing • Given to at least the primary applicant • Must 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

11. E-Sign • 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.

12. Appraisals • Applicants have a right to their appraisals • Notification of the right is required • Provide appraisals upon request • Special Rules for Federal Credit Unions

13. Record Retention Requirements • Hint . . . . . 25 months

14. Self-Testing • Voluntary • Privileged • Self-corrective action is required • Exceptions apply . . . of course.