What is Section 704 of the Equal Credit Opportunity Act? (2024)

What is Section 704 of the Equal Credit Opportunity Act?

Section 704B of the Equal Credit Opportunity Act (ECOA), as added by Section 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act

Dodd-Frank Wall Street Reform and Consumer Protection Act
Dodd–Frank reorganized the financial regulatory system, eliminating the Office of Thrift Supervision, assigning new jobs to existing agencies similar to the Federal Deposit Insurance Corporation, and creating new agencies like the Consumer Financial Protection Bureau (CFPB).
https://en.wikipedia.org › wiki › Dodd–Frank_Wall_Street_Re...
(Dodd-Frank Act or Act), requires that financial institutions collect and report information concerning credit applications made by women- or minority-owned businesses and ...

What is the main purpose of the Equal Credit Opportunity Act?

The Equal Credit Opportunity Act (ECOA) prohibits discrimination in any aspect of a credit transaction. It applies to any extension of credit, including extensions of credit to small businesses, corporations, partnerships, and trusts.

What is a red flag for an Equal Credit Opportunity Act violation?

Look for red flags, such as: Treated differently in person than on the phone or online. Discouraged from applying for credit. Encouraged or told to apply for a type of loan that has less favorable terms (for example, a higher interest rate)

What is it illegal to ask a borrower if under the Equal Credit Opportunity Act?

prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age, because an applicant receives income from a public assistance program, or because an applicant has in good faith exercised any right under the Consumer Credit Protection ...

What is Section 701a of the ECOA?

SUMMARY: Section 701 of the Equal Credit Opportunity Act (ECOA) requires a creditor to notify a credit applicant when it has taken adverse action against the applicant. The ECOA adverse action requirements are implemented in the Board's Regulation B.

What is an example of an ECOA violation?

Imposing unfair terms or conditions on a loan (such as lower loan amount or higher interest rates) based on personal characteristics protected under the ECOA. Asking detailed personal information regarding marital status, such as whether you are widowed or divorced.

What are the major provisions of the Equal Credit Opportunity Act?

It bars lender discrimination, and guards against bias related to race, religion, national origin, gender, marital status, age, public assistance eligibility, or consumer protection rights. ECOA has broad applicability, covering various credit types and creditors.

What violates the Equal Credit Opportunity Act?

This Act (Title VII of the Consumer Credit Protection Act) prohibits discrimination on the basis of race, color, religion, national origin, sex, marital status, age, receipt of public assistance, or good faith exercise of any rights under the Consumer Credit Protection Act.

Who enforces the Equal Credit Opportunity Act?

Equal Credit Opportunity Act (ECOA)

The Dodd-Frank Act granted rule-making authority under ECOA to the CFPB and, with respect to entities within its jurisdiction, granted authority to the CFPB to supervise for and enforce compliance with ECOA and its implementing regulations.

What are the 3 types of lending discrimination?

Types of Lending Discrimination

Overt evidence of disparate treatment; • Comparative evidence of disparate treatment; and • Evidence of disparate impact.

Can you sue for being denied credit?

Consider suing the creditor in federal district court. If you win, you can recover your actual damages. The court might award you punitive damages under certain circ*mstances. You also may recover reasonable lawyers' fees and court costs.

What is an example of credit discrimination?

It's when a creditor blatantly discriminates against a borrower on the basis of their protected trait like race, color, nationality, religion, and sex. For example, a loan officer tells you outright they refuse to approve your small-business loan because you're Muslim.

What can a creditor who fails to comply with the Equal Credit Opportunity Act be civilly liable for?

(1) Sections 706(a) and (b) of the Act provide that any creditor who fails to comply with any rc'luirement imposed under the Act or, pursuant to section 702(g), this Part is subject to civil liability for actual and punitive damages in individual or class actions.

What are three things you should not consider when taking a loan application?

Here are the five things you should never do when making your application:
  • #1: Do not forget to check your credit score. ...
  • #2: Do not lie about your income and expenses. ...
  • #3: Do not forget to look for options. ...
  • #4: Do not forget to read the terms and conditions. ...
  • #5: Do not submit several loan applications at the same time.
Nov 19, 2020

What are three things you should not consider when taking June's loan application?

Final answer: Under ECOA, avoid asking questions about marital status, plans to have children, ethnicity, race, or national origin. Do not consider gender, marital status, or number of children when evaluating June's loan application.

What is the 30 day rule for ECOA?

For businesses with gross annual revenues greater than $1 million, Regulation B requires only that a creditor provide notice within a reasonable time. A creditor must notify the applicant of adverse action within: 30 days after receiving a complete credit application.

What are the prohibited practices of ECOA?

Regulation B prohibits creditors from requesting and collecting specific personal information about an applicant that has no bearing on the applicant's ability or willingness to repay the credit requested and could be used to discriminate against the applicant.

What can result from failure to comply with ECOA?

Creditors that fail to comply with Reg B will be held liable for punitive damages up to $10,000 in individual actions. For class actions, the creditor could face a penalty of $500,000 or 1% of the creditor's net worth, whichever is lower.

What is the statute of limitations for ECOA?

Ordinarily, a civil action for compensatory damages under ECOA must be filed no later than two years from the date of occurrence of the violation.

What questions should you avoid asking based on ECOA?

Your marital status cannot be used against you when evaluating your credit application. Any questions about your race, ethnicity and gender cannot be used as a reason to approve or deny your credit application. Creditors have to provide equal information to all borrowers throughout the entire transaction.

What does ECOA mean on a credit report?

The Equal Credit Opportunity Act (ECOA), otherwise known as "Regulation B," was enacted in 1974 and falls under the larger Consumer Credit Protection Act. It exists to help individuals from being denied from accessing credit based on discriminatory factors.

What are the 3 main fair lending regulations?

Fair Lending Laws/Regulations
  • Equal Credit Opportunity Act (ECOA) This law affects every phase of the lending process and prohibits discrimination on the basis of: ...
  • Fair Housing Act (FHA) ...
  • Americans With Disabilities Act (ADA) ...
  • Civil Rights Act of 1866. ...
  • Home Mortgage Disclosure Act (HMDA)

Can a bank discriminate against you?

Federal laws such as the Equal Credit Opportunity Act of 1974 and the Fair Housing Act of 1968, as amended, prohibit discrimination in providing credit or credit-related services.

Can a person be denied credit?

Key Takeaways. Credit denial is the rejection of a credit application by a lender. Credit denial is common for individuals who miss or delay payments or default entirely on their debts. Other creditors deny consumers credit because of missing or incorrect information or a lack of credit history.

Is it illegal for banks to loan money?

Lending. One of the primary roles of banks is lending money to consumers and businesses, and U.S. law regulates many aspects of the lending process. Federal law limits the amount of money a bank can lend. The law, codified at 12 U.S.C.

You might also like
Popular posts
Latest Posts
Article information

Author: Margart Wisoky

Last Updated: 30/03/2024

Views: 6221

Rating: 4.8 / 5 (58 voted)

Reviews: 89% of readers found this page helpful

Author information

Name: Margart Wisoky

Birthday: 1993-05-13

Address: 2113 Abernathy Knoll, New Tamerafurt, CT 66893-2169

Phone: +25815234346805

Job: Central Developer

Hobby: Machining, Pottery, Rafting, Cosplaying, Jogging, Taekwondo, Scouting

Introduction: My name is Margart Wisoky, I am a gorgeous, shiny, successful, beautiful, adventurous, excited, pleasant person who loves writing and wants to share my knowledge and understanding with you.