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Credit Discrimination: 2.2.4.4 Applicant Need Not Be Seeking New Credit

Applicants are not just persons attempting to open a new account. The statutory definition includes a person applying for an “extension, renewal or continuation of credit” and someone who “applies to a creditor indirectly by use of an existing credit plan for an amount exceeding a previously established credit limit.”109 The regulations clarify that the term also includes any person who has requested or received an extension of credit.110

Credit Discrimination: 2.2.5.2 “Regularly” Extends, Renews, or Continues Credit

The ECOA applies to any person that “regularly” extends, renews, or continues credit.117 Regulation B interprets this definition to require participation in a credit decision, including setting the terms of credit.118 Contentious issues in this category generally involve entities such as automobile dealers arguing that they only arrange credit for consumers and do not participate in credit decisions.119

Credit Discrimination: 2.2.5.3 Arrangers of Credit

The ECOA’s definition of creditor includes persons who regularly arrange for the extension, renewal, or continuation of credit.123 Arrangers include entities that may not provide credit but whose discrimination may prevent applicants from receiving credit.

Credit Discrimination: 2.2.5.4 Participants in the Credit Decision, Including Assignees

The Regulation B definition of creditor includes any person who in the ordinary course of business regularly participates in a credit decision, including setting the terms of the credit.146 The ECOA statute also specifically includes in the definition of creditor any assignee of an original creditor who participates in the decision to extend, renew, or continue credit.147 Regulation B further clarifies that this category includes persons such as a creditor’s assignee, transferee, or sub

Credit Discrimination: 2.2.5.6 The Government As Creditor

Transactions in which credit is extended by a government or a governmental subdivision, agency, or instrumentality are subject to the provisions of the ECOA and Regulation B,170 except that no action can be brought against a governmental creditor for the recovery of punitive damages.171 However, if a government agency is operating a special purpose credit program, it is exempted from provisions of the ECOA and Regulation B that relate specifically to the program’s special purpose.

Credit Discrimination: 2.2.6.1 General

Regulation B creates partial exemptions from Equal Credit Opportunity Act (ECOA) coverage for five classes of credit: public utility credit, incidental consumer credit, business credit, securities credit, and credit extended to the government. It is important to realize that these are partial exemptions applicable to procedural ECOA requirements and that these partially exempt creditors must still comply with all other ECOA requirements.

Credit Discrimination: 2.2.6.4 Business Credit

The ECOA applies to business credit.209 Partial exemptions had been granted to credit extended primarily for business and commercial purposes,210 but the Women’s Business Ownership Act of 1988211 amended the ECOA to limit the Federal Reserve Board’s (FRB) ability to make such exemptions.

Credit Discrimination: 2.2.6.5 Securities Credit

A partial exemption from Regulation B is provided for extensions of credit subject to regulation by the Securities Exchange Act of 1934 or offered by a broker or dealer under that Act.216 The following specific provisions of Regulation B are not applicable to securities credit transactions:217

Credit Discrimination: 2.2.6.6 Credit Extended to the Government

Regulation B has exempted from ECOA procedural requirements transactions in which credit is extended to governments or governmental subdivisions, agencies, or instrumentalities. The only provision of the ECOA and Regulation B applicable to such transactions is the general rule forbidding discrimination against credit applicants on a prohibited basis.221

Credit Discrimination: 2.3.1 Overview

Three different provisions of the Fair Housing Act (FHA) may apply to credit discrimination. The first FHA provision covering credit discrimination (42 U.S.C. § 3605) applies to “residential real estate-related transactions.” A second FHA provision (42 U.S.C. § 3604) covering credit discrimination applies to the sale, rental, or advertising of dwellings. The third relevant provision (42 U.S.C.

Credit Discrimination: 2.3.2.1 General

Section 3605 of the FHA prohibits discrimination in “residential real estate-related transactions.”223 Residential real estate-related transactions are defined to include the making or purchasing of loans or the provision of other financial assistance:

Credit Discrimination: 2.3.2.3.1 General

Residential real estate-related transactions include transactions involving lenders and those providing other financial assistance related to the making of the loans.239 Thus, the Fair Housing Act (FHA) applies to loan brokers, financial consultants, or anyone else providing financial assistance related to a loan covered by the Act.

Credit Discrimination: 2.3.2.3.2 “Makers” of loans

Section 3605 applies to a wide range of actors involved in making loans or providing other financial assistance for a dwelling or financial assistance secured by a dwelling. The regulations implementing the Act identify some of the prohibited practices in this category.244

Credit Discrimination: 2.3.2.3.3 Purchasers of loans

The FHA also applies to the activities of one who purchases loans247—that is, to the activities of those who buy mortgages and other loan paper from the originating lender—as long as the loans themselves are covered by the Act.

Credit Discrimination: 2.3.2.3.4 Sellers, brokers, and appraisers

The FHA applies to persons or businesses engaging in the selling, brokering, or appraising of residential real property.255 The Act’s regulations define broker or agent to include any person authorized to act on behalf of another person regarding any matter related to the sale or rental of a dwelling.256 Brokers should also be covered under the provisions prohibiting discrimination in the terms and conditions for making loans or other financial assistance available.

Credit Discrimination: 2.3.3.1.1 General

Section 3604 is titled “Discrimination in the Sale or Rental of Housing and Other Prohibited Practices.” Of most relevance to consumer credit, the first two subsections make it unlawful:

(a) To refuse to sell or rent after the making of a bona fide offer, or to refuse to negotiate for the sale or rental of, or otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, familial status, or national origin.