Regulation B of the Equal Credit Opportunity Act mandates that lenders must not discriminate against borrowers on a range of grounds, including race, religion, national origin, sex and age, explains MortgageDashboard. Tips for compliance include avoiding prescreening tactics and scripts or rate quotes that discourage minorities from applying. Lenders must generally also be careful not to request information about individuals' minority status, unless necessary for select purposes such as determining eligibility for external, special credit programs.Continue Reading
Lenders may use subjective evaluation as an alternative to more statistical, objective measures. However, when doing so, lenders should be cognizant not to consider prohibited grounds, explains MortgageDashboard. Lenders should also retain all records associated with lending decisions for at least 25 months after an application is denied. This includes records of criteria used in the approval process. Lenders should also provide credit applicants with timely responses and indicate that the applicant can request information on their rejection within 60 days.
Other tips for lenders include to follow Regulation B in cases where it conflicts with state law, due to the supremacy of federal law, according to MortgageDashboard. Moreover, lenders should also be sure not to collect signatures from an applicant's spouse or other related party when that individual qualifies on their own for credit, even if joint financial information is provided.Learn more about Credit & Lending