Topic: Equal Credit Opportunity Act (ECOA)
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We request government monitoring information (GMI) on our internet mortgage loan applications. Sometimes, an applicant will check a box indicating that he or she refuses to provide GMI but goes on to complete some or all of the GMI inquiries. How should we report that on our LAR for HMDA purposes?
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We recommend reporting the any GMI that the applicant provides, even if the applicant has checked a box indicating that he or she is refusing to respond to the GMI inquiries. The FFIEC’s HMDA FAQs advise that banks should report partial GMI in this situation: FFIEC HMDA FAQs, Reporting of partial information: Question: If an…
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When we accept telephone applications, we do not obtain written applications from the customers. How should we demonstrate the loan applicants’ intent to apply for joint credit?
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We recommend that you obtain verbal confirmation of joint intent from the applicant during the telephone call in which the application is made and retain documentation of the conversation with the loan file. Regulation B does not require you to obtain written confirmation of intent to apply for joint credit; it merely suggests that an…
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Can we reject a loan application because the applicant is unable to show that he is a legal resident alien? The applicant stated on his application that he is a legal resident alien, but he later told us verbally that he is an “illegal immigrant.”
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Yes, we believe that you may reject this application for a number of reasons, and this decision would not violate the Equal Credit Opportunity Act and Regulation B’s prohibition of discrimination in loan decisions. We do recommend carefully documenting your reasons for rejecting the application and retaining a written account of the conversation in which…
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Are we required to send adverse action notices to all joint applications, or just to the primary applicant? We pull credit reports on all credit applicants.
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You should provide all of the applicants with adverse action notices, even if they had applied jointly with other applicants, because you have pulled credit reports on all of them. As explained in a helpful Federal Trade Commission (FTC) advisory opinion, while Regulation B requires that you send an adverse action notice to only the…
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When making a mortgage loan, is there any way we can ask that the borrower’s spouse be a co-borrower when the other spouse qualifies for the loan alone?
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No, the Equal Credit Opportunity Act (ECOA) and Regulation B prohibit you from requiring a borrower’s spouse to serve as co-borrower, unless the spouses jointly applied for the credit. You may not “require the signature of an applicant’s spouse or other person, other than a joint applicant, on any credit instrument if the applicant qualifies…
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How are financial institutions able to offer special loan programs only to state employees? Wouldn’t that raise fair lending concerns or UDAAP issues?
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No, the fact that a special loan program is offered only to state employees, without any other facts, would not raise fair lending or UDAAP concerns. In fact, the federal banking regulatory agencies have encouraged banks to provide special assistance to borrowers affected by government shutdowns, most recently during the 2013 federal government shutdown. Because…