What is ECOA and Regulation B for Mortgage

• Discriminatory lending practices that Congress sought to discourage by adopting ECOA

• The broad scope of ECOA and its implementing regulations, Regulation B

• The complex division of regulatory and enforcement responsibilities between the Consumer Financial Protection Bureau, the federal banking agencies, the Federal Trade Commission, and the Department of Justice

• Requirements that creditors must meet when taking applications from credit applicants and prohibited practices during the credit application process, such as discouragement

• Information that creditors may and may not request about a credit applicant’s spouse and how certain types of credit transactions determine the scope of these limitations

• Prohibited considerations that creditors may not use and assumptions that they may not make when evaluating credit applicants

• Prohibited practices when extending credit

• Exceptions to ECOA prohibitions when extending credit to underserved consumers through special credit programs

• Disclosure and notice requirements

• Incentives that ECOA creates for self-testing to identify and correct discriminatory practices

• The interaction of state and federal laws against discriminatory practices in offering credit to consumers

• In 1974, Congress enacted the Equal Credit Opportunity Act (ECOA) to eliminate discriminatory treatment of credit applicants (15 U.S.C. Section 1691). ECOA is located in Title 15 of the United States Code under Title VII of the Consumer Credit Protection Act. The primary reason for the enactment of ECOA was anecdotal evidence that women were not treated on an equal basis with men when applying for credit. This discriminatory treatment extended to transactions in which women applied for loans to purchase homes. Before ECOA made it illegal for creditors to use discriminatory practices in the extension of credit, women, including those who earned their own incomes or who functioned as the primary breadwinners for their families, could not secure credit without asking their husbands or male relatives to cosign their applications.

One practice that witnesses reported during Congressional hearings that preceded the enactment of ECOA “…was something called ‘income discounting’; that is, when a lender would devalue a woman’s income when she applied for a loan based on the assumption that women were unlikely to remain in the workforce.” [1] Even when married couples completed joint applications for credit, such as applications for home loans, the income of a working wife was devalued or even disregarded unless the couple wrote a “baby letter,” stating that they were incapable of having children or that they were using birth control.


[1] Cyr, Maureen. “Gender, Maternity Leave, and Home Financing: A Critical Analysis of Mortgage Lending Discrimination Against Pregnant Women.” University of Pennsylvania Journal of Law and Social Change.

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