Equal Credit Opportunity Act

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Equal Credit Opportunity Act

Legislation in the United States passed in 1974, outlawing discrimination against race, sex, national origin, age, welfare status, and other identifiers in the extension of credit. That is, the Act forbids banks and other financial institutions from using these factors when it decides whether or not to make a loan or open a line of credit for a client. Under the Act, the creditor can only consider the individual's creditworthiness. It also requires potential creditors to approve or deny applications for credits within 30 days and to explain why upon request. It is enforced by the Federal Trade Commission.
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Equal Credit Opportunity Act (ECOA).

The Equal Credit Opportunity Act (ECOA) is designed to ensure that all qualified people have access to credit.

It forbids lenders from rejecting credit applicants on the basis of race, gender, marital status, age, or national origin and requires lenders to consider public assistance in the same light as other forms of income.

The act says that creditors must approve or reject your application within 30 days if you've filed a complete application, and, if you ask within 60 days, must provide an explanation for turning you down. The ECOA requires creditors to provide specific reasons for rejecting you and forbids indefinite or vague explanations.

If you feel you're being discriminated against and the lender does not respond to your complaints, you can contact the attorney general of your state or the government agency that oversees the creditor. By law, the creditor must provide that information. If you can't get the information from the creditor, you can contact the Federal Trade Commission at www.ftc.gov.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.

Equal Credit Opportunity Act

A federal law that ensures all consumers and businesses are given an equal chance to obtain credit, assuming they meet legitimate and legal underwriting guidelines. Enforcement is by a number of different agencies depending on the identity of the credit grantor.The FTC may bring an enforcement action against retail stores, utilities, and small loan companies,to name a few.The Office of the Comptroller of the Currency would be responsible for bank violations. No agency will intervene in private disputes, but it will monitor the patterns of violation and could make a decision to take action. Private individuals who believe they have been victims of a violation may bring private or class-action lawsuits against offenders. Among other things, it is illegal to

• Discourage an applicant because of sex, marital status, age, race, or national origin, or because they receive public assistance

• Ask an applicant to reveal his or her sex, race, national origin, or religion, except that it

may ask that this information be voluntarily revealed in connection with a mortgage loan in order to compile statistics to assist the government in making sure discrimination does not take place

• Inquire about an applicant's plans to have or raise children

• Ask if an applicant receives alimony or child support, unless the applicant intends to rely on that income in order to qualify for the extension of credit

• Consider sex, marital status, race, national origin, or religion in making a decision to grant credit

• Consider whether you have a phone listing in your own name, although a creditor may consider whether you have a phone or not

• Consider the race of people in the neighborhood where the applicant wants to buy, refinance, or improve a house with borrowed funds

• Refuse to consider public assistance income the same as any other income

• Refuse to consider alimony or child support the same as any other income

It is not illegal to consider military status, citizenship, or sexual orientation, although specific state
laws may extend protections to such groups. For more information, visit the FTC Web site at

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
References in periodicals archive ?
Under the Equal Credit Opportunity Act, the age of someone 62 or older can't be a negative factor, but it can be a positive factor," says Detweiler.
The new rule implements changes to the Equal Credit Opportunity Act made by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
Lenders have requested clarification on whether offering only qualified mortgages would leave creditors open to challenges under the disparate impact doctrine of the Equal Credit Opportunity Act. The law prohibits creditors from making lending decisions on the basis of such characteristics as race, religion, marital status, color, national origin, sex, and age.
CFPB originally had proposed changing the definition of valuation by deleting the words "or opinion" from two comments included in the 2013 Final Rule of the Equal Credit Opportunity Act. However, in a July 22 comment letter, AI encouraged CFPB to keep the definition as is.
At the top of her list was the Equal Credit Opportunity Act of 1974 that barred discrimination in lending based on age, race, creed, gender or marital status.
The FTC was created in 1914, its purpose was to prevent unfair methods of competition in commerce as part of the battle to “bust the trusts.” Since then, the Commission also has been directed to administer a wide variety of other consumer protection laws, including the Telemarketing Sales Rule, the Pay-Per-Call Rule and the Equal Credit Opportunity Act, (sources: The FTC Official Website).
By enforcing certain statutes that govern these behaviors, including the Consumer Financial Protection Act, the Truth in Lending Act, the Equal Credit Opportunity Act and Section 5 of the Federal Trade Commission Act, the CFPB can take action against companies that it determines are misleading consumers.
It begins with an overview of mortgage lending and how the mortgage market works, then covers the license requirements in all 50 states; compensation and how originators make money in the mortgage market; federal regulations, including the Truth-in-Lending Act, the Equal Credit Opportunity Act, the Real Estate Settlement and Procedures Act, and other regulations; the underwriting and approval guidelines for conforming loans; non-traditional and government loans; and general real estate purchase information.
The Red Flag Rule uses the Equal Credit Opportunity Act's (ECOA) definition of creditor which states that a creditor is "any entity that regularly extends, renews, or continues credit; any entity that regularly arranges for the extension, renewal, or continuation of credit; or any assignee of an original creditor who is involved in the decision to extend, renew, or continue credit." 15 U.S.C.
The Rule itself defines these terms by making reference to their meaning under the Equal Credit Opportunity Act. In this article, I do not address nonprofit organizations, which may be considered by the FTC to be a "creditor" under the Rule, depending upon the manner in which the organization operates (e.g., is paid for services rendered).

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