Fair Lending and Equal Credit Opportunity Flashcards

What does the Community Reinvestment Act (CRA) require of depository institutions?

Answer: They must meet the credit needs of their entire community, including low- and moderate-income areas

The CRA requires banks to meet the credit needs of all areas in their assessment area, including LMI communities, consistent with safe and sound operations.

Which agency primarily enforces fair lending laws for national banks?

Answer: Office of the Comptroller of the Currency (OCC)

The OCC is the primary federal regulator for national banks and enforces fair lending laws including ECOA and the Fair Housing Act.

'Steering' in fair lending means:

Answer: Directing qualified minority borrowers to higher-cost loan products

Steering involves directing creditworthy borrowers who qualify for prime products into higher-cost or subprime products based on protected characteristics.

Under HMDA (Home Mortgage Disclosure Act), financial institutions must collect and report data to:

Answer: Identify possible discriminatory lending patterns and community credit needs

HMDA data is used by regulators and the public to identify discriminatory lending patterns and assess whether institutions are meeting community credit needs.

Which of the following is an example of 'disparate treatment' in lending?

Answer: Charging minority applicants higher rates than similarly qualified non-minority applicants

Disparate treatment involves treating similarly situated applicants differently based on a protected characteristic, such as charging higher rates to minorities.

The CFPB's UDAP authority under Dodd-Frank prohibits:

Answer: Unfair, deceptive, or abusive acts or practices (UDAAP)

The CFPB enforces UDAAP standards, which prohibit unfair, deceptive, or abusive acts or practices in consumer financial products and services.