Mitigating the Risks Associated With The Equal Credit Opportunity Act

Summary

This practice note provides an overview of the Equal Credit Opportunity Act (ECOA) and associated fair lending risks that impact lenders, servicers, and other similar entities. Generally, ECOA, and by extension Regulation B, 12 C.F.R. Ch. X, Pt. 1002, prohibits creditors from discriminating against credit applicants based on race, color, religion, national origin, sex, marital status, age, or the use of public assistance income. However, recent developments in the interpretation and enforcement of ECOA have seemingly expanded the scope of the Act in terms of both who it applies to and what it prohibits. Considering these recent developments and the potential legal and monetary consequences of violating ECOA, this note also provides several recommendations for how entities subject to the Act can best achieve compliance with the Act and promote fair lending to all consumers.