Obtain and review policies and procedures, training materials, and a sample of loan files, audits related to disclosures, and disclosures. Identify whether the creditor purports to conduct self-tests. On discovering an inadvertent error under 12 CFR To determine whether an error is inadvertent, you should consult with your supervisor. To the extent there is an appropriately established and administered special purpose program under which any otherwise restricted information was requested, obtaining such information should not constitute a violation, your supervisor should be consulted.
The federal agency that administers compliance with this law concerning this creditor is [name and address as specified by the appropriate agency listed in appendix A of this regulation]. Print Feedback opens new window.
Examination Objectives To determine whether the credit union has established policies, procedures, and internal controls to ensure that it is in compliance ECOA and its implementing Regulation B. To determine whether the credit union discriminated against members of one or more protected classes in any aspect of its credit operations.
To determine whether the credit union is in compliance with those requirements of ECOA that are set forth in Regulation B. Examples: i The credit union establishes most of its branches in predominately non-minority neighborhoods and does not have a presence in nearby minority neighborhoods; or ii Spanish and English advertisements emphasize different credit products.
Does the credit union allow exceptions to its underwriting, pricing, or product recommendation policies and procedures to be made subjectively or without clear guidance? Even if the policies and procedures are clear, does the credit union make a large number of such exceptions?
Does the credit union give its employees significant discretion to decide what products to offer or the price to offer, including both interest rates and fees? Does any employee receive incentives depending, directly or indirectly, on the terms or conditions of the credit product sold or the price including both interest rates and fees charged? Does the credit union rely on third parties for a significant part of its credit operations?
Section B: Fair Lending Examination Procedures Pre-Examination Procedures — Data Request Review that all of the information from the first day letter and request list has been provided by the credit union. Import HMDA data and any additional information into the fair lending software program and run analysis. Review the results of analysis from the fair lending software to identify possible examination focal points. Review information from previous examinations that could inform potential focal points of the current examination.
Assess possible violations and discuss results with the credit union, including sharing the statistical analyses with the credit union and asking for comments and explanations. Section C: Regulation B Examination Checklist The ECOA and its implementing Regulation B not only prohibit discrimination in credit transactions, but also set forth additional requirements, such as requiring adverse action notices in appropriate circumstances.
Comment The creditor shall not deem the submission of a joint financial statement or other evidence of jointly held assets as an application for joint credit.
Notifications Obtain and review policies and procedures, training materials, a sample of loan files, and audits pertaining to notifications including, but not limited to those that pertain to prequalification and preapproval processes, incomplete applications, counteroffers, loan modifications, and those that apply when there are third parties or multiple creditors.
Although the creditor may inform the applicant orally of the need for additional information, if the application remains incomplete it must provide either notice within the specified time period. A creditor may charge a reasonable fee to reimburse for the cost of the appraisal or other written valuation unless otherwise provided by the law but a creditor may not charge an applicant for providing a copy of appraisals and other written valuations.
Close popup. Does the creditor not make any oral or written statements, in advertising or otherwise, to applicants or prospective applicants that would discourage on a prohibited basis a reasonable person from making or pursuing an application? Does the creditor not use statements that the applicant should not bother to apply based on a prohibited basis e. Does the creditor not use words, symbols, models or other forms of communication in advertising that express, imply, or suggest a discriminatory preference or a policy of exclusion in violation of the ECOA?
Does the creditor not use scripts that discourage applications on a prohibited basis? Are the criteria used for prescreened solicitations not discriminatory on a prohibited basis? Does the text of any prescreened solicitations avoid statements that would tend to discourage, on a prohibited basis, a reasonable person from making or pursuing an application? Does the creditor use written applications for credit that is primarily for the purchase or refinancing of dwellings that are occupied or to be occupied by the applicant as a principal residence and where the credit will be secured by the dwellings?
If a designation of title, such as Ms. Does the creditor only request any information concerning the spouse or former spouse of an applicant when:. The applicant resides in a community property state or is relying on property located in such a state as a basis for repayment of the credit requested; or. The applicant is relying on alimony, child support, or separate maintenance payments from a spouse or former spouse as a basis for repayment of the credit requested? Regulation B was originally enforced by the Fed.
Regulation B provides for both actual damages and punitive damages. You may also be entitled to compensation for court costs or attorney fees. You can report suspected violations to the CFPB by calling , or by submitting a complaint online. Under Regulation B, lenders cannot discriminate on the basis of prohibited factors, including:.
Pre-screening tactics that might weed out applicants based on a prohibited factor are also not allowed. Lenders are required to provide written notice of any action taken on a request for credit within 30 days of the time they receive a credit application.
Regulation B, which is enforced by the CFPB now, tells lenders what they can and cannot do, and establishes penalties for violations of the law. Regulation B implements the ECOA, which is just one law designed to ensure that financial institutions follow fair lending practices. Another fair lending law is the Fair Housing Act. Both the ECOA and Fair Housing Act prohibit lenders from discriminating on the basis of certain factors such as race, color, national origin, religion, sex, familial status, disability, age, or use of public benefits.
Electronic Code of Federal Regulations. Board of Governors of the Federal Reserve System. Actively scan device characteristics for identification. Use precise geolocation data. Select personalised content. Create a personalised content profile. These choices will be signaled globally to our partners and will not affect browsing data.
We and our partners process data to: Actively scan device characteristics for identification. I Accept Show Purposes. Your Money. Personal Finance. Your Practice. Popular Courses. Key Takeaways All lenders are required to comply with Regulation B, which protects applicants from discrimination.
Reg B mandates that lenders provide explanations to rejected applicants within 30 days of receiving their completed applications. Article Sources. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear.
Investopedia does not include all offers available in the marketplace. What Is Redlining? Redlining is the discriminatory practice of denying services typically financial to residents of certain areas based on their race or ethnicity. What Is Credit Denial? Credit denial is the rejection of a credit application by a prospective lender, usually due to its assessment that the applicant is not creditworthy.
Effects Test The effects test is a method to assess the discriminatory impact of credit policies using demographic and statistical data. Derogatory Information Derogatory information is information that appears on a credit report which can be legally used to turn down a loan application.
0コメント