The Real Estate Encyclopedia
What Is The Equal Credit Opportunity Act?
Category - Home Buying Questions - General Home Buying FAQ's

The Equal Credit Opportunity Act was passed to provide equal credit to borrowers and protect the consumer from discrimination based on sex or marital status.  In 1976 the Act was amended to include discrimination based on race, color, religion, national origin, age (not including minors), and receipt of income from a public assistance program and the good faith exercise of rights under the Consumer Credit Protection Act.  To protect the consumer, a creditor is prohibited from requiring certain information from the borrower, including

 

Ø       Information about a spouse or former spouse, unless that spouse will be contractually bound for repayment or if the spouse resides in a community property state.

Ø       Information regarding the applicant’s marital status unless the credit requested is for an individuals unsecured account or unless the individual resides in a community property state and the community property is to be relied upon to repay the credit.  Any enquiries about the borrower’s marital status are limited to the categories of marries, unmarried and separated. 

Ø       Information concerning the source of an applicant’s income without disclosing that information regarding alimony, child support or separate maintenance is to be furnished only at the option of the applicant. The big exception is if the applicant expects to use those funds for repayment.  If so, the lender may request the information.

Ø       Information regarding an applicant’s birth control practices or any intentions concerning the bearing or rearing of children, although a lender still has the right to ask an applicant about the number and ages of any dependents or about dependent-related financial obligations.

Ø       Questions regarding race, color, religion or national origin of the applicant.

 

There are many exceptions if a real estate loan is involved.  These exceptions are allowed to provide the federal government for the purposes of monitoring conformance with the Equal Credit Opportunity Act.  When the information is requested, the lender must inform the applicant that the information is needed for the purpose of monitoring the lender’s compliance and is requested on a voluntary basis. 

 
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Home Buying Questions - General Home Buying FAQ's
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