Topic: Equal Credit Opportunity Act (ECOA)
-
In the event that two joint loan applicants have separate assets, can we ask them if they are married to each other (as opposed to married to other spouses)?
—
by
We believe that the bank can inquire as to whether applicants are married to each other (or in a civil union together), provided that the bank needs to know about the applicants’ marital status in order to secure the loan. Generally, the bank would need to know about an applicant’s marital status if the application…
-
Under Illinois law, are we required keep open all deposit accounts with social security direct deposits, even if a customer no longer qualifies for a deposit account with us (due to a loan charge-off)?
—
by
We believe that you would be able to close a checking account that receives direct deposits of Social Security payments, provided that you follow all of the notice requirements in your account agreements and under the ACH direct deposit rules. The “Green Book” (the Treasury’s Guide to Federal Government ACH Payments and Collections) requires thirty…
-
Does Illinois law have more protected classes for fair lending purposes than federal law?
—
by
Illinois does provide broader protections against discrimination by financial institutions than federal law. The federal Equal Credit Opportunity Act prohibits discrimination the basis of an applicant’s “race, color, religion, national origin, sex or marital status, or age,” on the basis that an applicant receives public assistance income, or on the basis that the applicant has…
-
Can we charge a fee for a very short term (45–60 day) bridge loan? Or could we waive some of the fees that we would charge on a normal mortgage loan?
—
by
We do not believe that any laws or regulations would prevent you from charging the same fees and penalties on a bridge loan as you could charge on a longer-term loan. In our view, the general rule in the Illinois Banking Act, that banks may charge any fees “subject only to the provisions of [Subsection…
-
When must we notify applicants of an adverse action? We thought it was required in three days.
—
by
A creditor must notify an applicant of an adverse action with 30 days after receiving a completed application. 12 CFR 1002.9(a)(1)(i). You may be thinking of the early disclosure rules, which require banks to send out the early disclosure and good faith estimate within three business days. 12 CFR 1026.19(a)(1)(i)
-
How much detail is required in the “Description of Action Taken” section of an adverse action notice?
—
by
Neither the FCRA nor the ECOA require a description of the account transaction or request, though the ECOA regulations require adverse action notifications to include a “statement of the action taken,” which implies that the creditor would have to provide some information about the request on which the adverse action was taken. 12 CFR 1002.9(a)(2).…
-
Is it acceptable to collect government monitoring information (GMI) for construction loans if the intent is the make the loan permanent?
—
by
Whether you can collect government monitoring information (GMI) depends on whether the loan is considered a “home purchase loan,” “home improvement loan,” or a “refinancing.” Regulation B prohibits banks from collecting information about race, color, religion, national origin, or sex unless they are required to collect information required by regulations such as Regulation C (the…
-
Do you see any fair lending issues with allowing loan originators to discount loan document preparation fees for certain customers?
—
by
Allowing loan originators discretion as to pricing of the fees is an ill-advised practice. Any “substantial disparities among prices being quoted or charged to applicants” could be considered an indicator of disparate treatment in pricing or the terms and conditions of loans. FDIC Compliance Manual, Part IV, Fair Lending Laws and Regulations, pages 1.7, 1.13…
-
If our standard practice is to always to verify the income of every mortgage loan applicant, but a loan applicant’s reported income is insufficient to take out any loan, do we still have to go through the motions of documenting the applicant’s income?
—
by
First, we note that the Real Estate Settlement Procedures Act (RESPA) and its regulations do not require a bank to verify income, and they prohibit a bank from requiring income verification as a prerequisite for issuing a good faith estimate (GFE). 12 CFR 1024.7(a)(5). We understand your concern in rejecting an applicant with public assistance…
-
When we use a tri-merge credit report, which credit score should we report on an adverse action notice?
—
by
The Federal Reserve’s commentary on the new adverse action notice requirements directly addresses the issue of reporting a credit score when a bank used multiple scores, and it gives banks the choice of “disclosing any of the credit scores that it used” to comply with this requirement. See Final Rule, Equal Credit Opportunity, 67 Fed.…