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Credit Discrimination: 3.3.1 Race and Color

Race and color are prohibited bases under both the Equal Credit Opportunity Act (ECOA)5 and the Fair Housing Act (FHA).6 They are also prohibited bases under the federal Civil Rights Acts7 and virtually all state credit discrimination legislation.8 American Indians are a protected race.9 For example, one settled lawsuit alleged that a lender violated the

Credit Discrimination: 3.3.2 Religion, Creed, and Political Affiliation

Religion is a prohibited basis for discrimination under the ECOA,13 the federal FHA,14 and most state credit discrimination statutes.15 The only exception under the ECOA is that creditors may favor applicants of a particular religion when offering a special-purpose credit program meeting the standards set out in Regulation B.16

Credit Discrimination: 3.3.3.2 Ancestry or Country of Birth

National origin is not defined in U.S. Department of Housing and Urban Development (HUD) regulations but has been the subject of some interpretation under the ECOA. It seems clear that national origin is included as a prohibited basis to prevent discrimination based on an individual’s ancestry.

Credit Discrimination: 3.3.3.4.1 Discrimination against immigrants

Credit discrimination against immigrants occurs frequently and often overtly, especially in mortgage lending.35 Non-citizens who are not lawful permanent residents generally may be subject to heightened requirements to obtain mortgage loans, such as higher down payments and additional documentation requirements.36 They may be unable to obtain loans that conform to secondary market requirements and may be required to pay higher interest rates.37

Credit Discrimination: 3.3.3.4.3 The Fair Housing Act standard

The Fair Housing Act (FHA) is not clear as to whether its prohibition on discrimination based on national origin would apply to discrimination based on immigration status.45 Unlike the ECOA, there is no explicit exception allowing distinctions based on immigration status. Therefore, a discrimination action based on immigration status could conceivably be available under the Act.

Credit Discrimination: 3.3.4.1 General

An applicant’s sex is a prohibited basis for credit discrimination under the ECOA,47 the federal FHA,48 and many state credit discrimination statutes.49 Sex discrimination is often related to discrimination based on marital status, discussed infra.50 It is therefore important to consider both bases in any case involving one or the other.

Credit Discrimination: 3.3.4.2 Special ECOA Protections

The ECOA provides women with specific protections against creditor inquiries or credit decisions based on a woman’s childbearing or childrearing intentions, including plans for maternity leave.51 For example, a civil penalty was assessed against a credit union that denied loans to women members who anticipated taking maternity leave.52 Similarly, the FHA prohibits discrimination on the basis of familial status, which includes discrimination against women who are pregnant.

Credit Discrimination: 3.3.4.3 Sexual Orientation

In light of the Supreme Court’s landmark decision in Obergefell v. Hodges,58 which granted same-sex couples the fundamental right to marry, questions of discrimination on the basis of sexual orientation take on two forms. The first concerns discrimination based on an individual’s sexual orientation, and the second involves treating same-sex married couples differently than opposite-sex married couples.

Credit Discrimination: 3.4.1 Marital Status

Marital status is a prohibited basis under the Equal Credit Opportunity Act (ECOA)65 and many state credit discrimination and fair housing statutes.66 Generally, marital status as a prohibited basis includes any discrimination against an individual because that individual is single, divorced, separated, married, or widowed.

Credit Discrimination: 3.4.2 Age

The ECOA81 and a number of state credit discrimination laws82 list age as a prohibited basis. In practice, however, the ECOA mainly prohibits discrimination against older consumers.

Credit Discrimination: 3.4.3 Public Assistance Status

The ECOA lists as a prohibited basis for discrimination that “all or part of the applicant’s income derives from any public assistance program.”93 This is an important category of prohibited discrimination for low-income consumers. It is not found in the federal Fair Housing Act (FHA). It is sometimes found in state fair housing laws and infrequently found as a prohibited basis in state credit discrimination laws.94

Credit Discrimination: 3.4.4.1 General

A prohibited basis unique to the Equal Credit Opportunity Act (ECOA) is the applicant’s good faith exercise of federal Consumer Credit Protection Act (CCPA) rights.106 Only a few states have an analogous provision listing exercise of rights under state credit legislation as a prohibited basis.107 Also, the Fair Housing Act (FHA) prohibits retaliating against any person because that person has made a complaint, testified, assisted, or participated in any manner in a proceeding under the FHA.

Credit Discrimination: 3.4.4.3 “Good Faith” Exercise of Rights

The applicant is protected only when an exercise of rights under the Consumer Credit Protection Act (CCPA) was done in “good faith.”130 As the legislative history of the 1976 ECOA amendments explains, “[t]he ‘good faith’ qualification recognizes that some applicants may engage in frivolous or nuisance disputes which do reflect on their willingness to honor their obligations.”131

Credit Discrimination: 3.4.4.4 “Applicant” Must Exercise the Rights

The applicant must have exercised the Consumer Credit Protection Act (CCPA) rights. “Applicant” is a defined term under Regulation B and includes a credit applicant, one who has been extended credit, and a co-signer or other party who is contractually obligated on the loan.136 If any of these individuals had previously exercised CCPA rights, the creditor may not use that as a basis for discrimination.

Credit Discrimination: 3.5.1 Familial Status

The federal Fair Housing Act (FHA) lists familial status as a prohibited basis for credit discrimination,137 as do most state credit discrimination and housing financing statutes.138 Generally, this prohibition forbids creditors from discriminating on the basis that applicants have children (or do not have children), are pregnant, or are legal custodians of children.

Credit Discrimination: 3.5.2.1 General

The Fair Housing Act (FHA) and many state credit discrimination statutes147 directly prohibit credit discrimination based on an applicant’s status as disabled.148 The Americans with Disabilities Act (ADA)149 also prohibits discrimination by creditors on the basis of disability. However, the Equal Credit Opportunity Act (ECOA) does not provide for an individual’s disability as a protected basis.

Credit Discrimination: 3.5.2.2 Definition of Disability

Disability is defined in the FHA and in the ADA as a physical or mental impairment which substantially limits one or more major life activity, having a record of such impairment, or being considered as having such an impairment.150 It is not enough to have an impairment. The disability also must substantially limit one or more major life activity, such as caring for oneself, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning, or working.151

Credit Discrimination: 3.5.2.3 Application of the Americans with Disabilities Act to Credit Transactions

The ADA can combat credit discrimination involving applicants with disabilities, especially for non-housing financing cases.155 Title III of the ADA prohibits discrimination by places of public accommodation on the basis of disability.156 Public accommodation is defined to include banks, retailers, and other service establishments.157 Thus, many creditors should be covered by the ADA because they constitute places of public accommodation.

Credit Discrimination: 3.6.1 Race and Ethnicity

Race is the sole prohibited basis under the federal Civil Rights Acts.188 One important issue in the definition of race under the federal Civil Rights Acts is whether racial discrimination includes discrimination against certain ethnic groups, such as Arabs, Jews, and Latinxs.

Credit Discrimination: 3.6.2 Citizenship Status

Only citizens are given the right to utilize section 1982, since the statutes state explicitly that “all citizens of the United States shall have the same right.” On the other hand, section 1981 states that “all persons within the jurisdiction of the United States shall have the same right to make and enforce contracts . . . as is enjoyed by white citizens.”196 Thus, a non-citizen can bring actions under that statute when that non-citizen does not have the same rights as White citizens.197