Fair Lending and Equal Credit Opportunity Flashcards
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Read the first 6 Fair Lending and Equal Credit Opportunity flashcards as text
The Equal Credit Opportunity Act (ECOA) prohibits discrimination in credit transactions based on which of the following?
Answer: Race, color, religion, national origin, sex, marital status, or age
ECOA prohibits credit discrimination based on race, color, religion, national origin, sex, marital status, age, and receipt of public assistance.
Under ECOA, how many days does a creditor have to notify an applicant of action taken on a completed credit application?
Answer: 30 days
Creditors must notify applicants of credit decisions within 30 days of receiving a completed application.
What is 'redlining' in fair lending?
Answer: Refusing to lend or imposing unfavorable terms in minority neighborhoods
Redlining is the illegal practice of denying credit or imposing worse terms based on the racial or ethnic composition of a neighborhood.
Which federal law specifically prohibits discrimination in residential mortgage lending based on race or national origin?
Answer: Fair Housing Act
The Fair Housing Act prohibits discrimination in residential real estate transactions, including mortgage lending, based on protected characteristics.
'Disparate impact' in fair lending refers to:
Answer: A neutral lending policy that disproportionately harms a protected class
Disparate impact occurs when a facially neutral policy has a disproportionate adverse effect on a protected class without business justification.
Under ECOA, an adverse action notice must include:
Answer: The specific reasons for denial or a statement that reasons are available upon request
Adverse action notices must state specific reasons for the adverse action or inform the applicant they may request the reasons within 60 days.
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