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Equal Credit Opportunity Act - PowerPoint PPT Presentation


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Equal Credit Opportunity Act. 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

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scope
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
types of discrimination
Types of Discrimination
  • Prohibits both intentional and unintentional discrimination.
  • Violation can occur without a conscious intent to discriminate.
types of discrimination1
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
protected classes
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
limits on information
Limits on Information
  • Sex
  • Marital Status
  • Spousal Information
  • Childbearing Intentions or Capabilities
  • Race, Religion or National Origin
  • Age
  • Income
  • Credit History
  • Monitoring Information
signature rules
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.
joint intent
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.
notification of action taken
Notification of Action Taken
  • Timing
  • Disposition:
    • Incomplete Application
    • Approval
    • Counteroffer
    • Withdrawal
    • Denial
adverse action notice
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
e sign
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.
appraisals
Appraisals
  • Applicants have a right to their appraisals
  • Notification of the right is required
  • Provide appraisals upon request
  • Special Rules for Federal Credit Unions
record retention requirements
Record Retention Requirements
  • Hint . . . . . 25 months
self testing
Self-Testing
  • Voluntary
  • Privileged
  • Self-corrective action is required
  • Exceptions apply . . . of course.