Credit Discrimination Law

In response to recent inquiries, the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) issues this bulletin to provide guidance about compliance with the fair lending requirements of the Equal Credit Opportunity Act (“ECOA”), and its implementing regulation, Regulation B. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act” or “Act”) granted CFPB authority to supervise and enforce compliance with the ECOA for entities within CFPB’s jurisdiction and to issue regulations and guidance to interpret the ECOA.

This bulletin provides guidance about compliance with the fair lending requirements of the Equal Credit Opportunity Act (ECOA) and its implementing regulation, Regulation B, for indirect auto lenders that permit dealers to increase consumer interest rates and that compensate dealers with a share of the increased interest revenues. This guidance applies to all indirect auto lenders within the jurisdiction of the Consumer Financial Protection Bureau (CFPB), including both depository institutions and nonbank institutions.

The Consumer Financial Protection Bureau (Bureau) issues this compliance bulletin to remind creditors of their obligations under the Equal Credit Opportunity Act (ECOA) and its implementing regulation, Regulation B, to provide non-discriminatory access to credit for mortgage applicants using income from the Section 8 Housing Choice Voucher (HCV) Homeownership Program.

The Bureau of Consumer Financial Protection (Bureau) is issuing this interpretive rule to clarify that, with respect to any aspect of a credit transaction, the prohibition against sex discrimination in the Equal Credit Opportunity Act (ECOA) and Regulation B, which implements ECOA, encompasses sexual orientation discrimination and gender identity discrimination, including discrimination based on actual or perceived nonconformity with sex-based or gender-based stereotypes and discrimination based on an applicant’s associations.

This is a November 14, 2014, letter from a number of consumer groups and law firms representing consumers to the Director of FHFA concerning the fact that that Fannie Mae’s and Freddie Mac’s then current guidelines regarding the treatment of credit reporting disputes impinges on the rights of consumers under the Equal Credit Opportunity Act (ECOA). More importantly, lenders who reject applicants because of disputed tradelines because they are unwilling to manually underwrite the loan appear to be directly violating the ECOA.

Description: This CFPB circular states that creditors may not rely on the checklist of reasons provided in the sample forms (currently codified in Regulation B) to satisfy their obligations under ECOA if those reasons do not

specifically and accurately indicate the principal reason(s) for the adverse action. Nor, as a general matter, may creditors rely on overly broad or vague reasons to the extent that they obscure the specific and accurate reasons relied upon.