Equal Credit Opportunity Act

Applies to both consumer and non-consumer creditProhibits 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

Scope

Prohibits both intentional and unintentional discrimination.

Violation can occur without a conscious intent to discriminate.

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

Types of Discrimination

SexMarital statusRaceColorNational originAgeThe receipt of protected income Exercise of legal rights under the consumer credit lawsReligion

Protected Classes

SexMarital StatusSpousal InformationChildbearing Intentions

or CapabilitiesRace, Religion or

National OriginAgeIncomeCredit HistoryMonitoring Information

Limits on Information

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.

Signature Rules

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.

Joint Intent

TimingDisposition:

Incomplete Application

ApprovalCounterofferWithdrawalDenial

Notification of Action Taken

Must be in writingGiven to at least the primary applicantMust 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

Adverse Action Notice

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.

E-Sign

Applicants have a right to their appraisals

Notification of the right is required

Provide appraisals upon request

Special Rules for Federal Credit Unions

Appraisals

Hint . . . . . 25 months

Record Retention Requirements

VoluntaryPrivilegedSelf-corrective action is requiredExceptions apply . . . of course.

Self-Testing