V. Lending - Equal Credit Opportunity Act

V. Lending — Equal Credit Opportunity Act

FDIC Consumer Compliance Examination Manual — March 2022 V–7.1

Equal Credit Opportunity Act (ECOA)

Introduction

The examination procedures in this section are primarily for

the technical compliance review. Although the fair lending

procedures are addressed under a separate section of the

Comp liance Examination M anual, findings from the technical

review may aid the review for fair lending. These procedures

should be conducted to ensure compliance with all sections of

the subject regulation.

The Equal Credit Opportunity Act (ECOA) prohibits

discrimination in any aspect of a credit transaction. It ap plies

to any extension of credit, including ext ensions of credit to

small businesses, corporations, partnerships, and trusts.

The ECOA prohibits discrimination based on

• Race or color,

• Religion,

• National origin,

• Sex,

• M arital status,

• Age (provided the ap plicant has the capacity to

contract),

• The applicant’s receipt of income derived from any

public assistance program, or

• The applicant’s exercise, in good faith, of any right

under the Consumer Credit Protection Act.

he CFPB’s Regulation B, found at 12 CFR Part 1002,

implements ECOA. Regulation B describes lending acts and

practices that are specifically prohibited, permitted, or

required. Official staff interpretations of the regulation are

found in Sup plement I to 12 CFR Part 1002.

In January 2013, the CFPB amended Regulation B to reflect

the Dodd-Frank Act amendments requiring creditors to

provide ap plicants with free copies of all appraisals and other

written valuations develop ed in connection with all credit

applications to be secured by a first lien on a dwelling. This

amendment to Regulation B also requires creditors to notify

applicants in writing that copies of all ap praisals will be

provided to them promptly.

As discussed above, each aspect of the regulation discussed in

this section pertains to the technical compliance review of the

ECOA and Regulation B. The technical compliance review is

an important aspect of the consumer compliance examination.

Technical compliance reviews have led to the discovery of

substantive fair lending violations. Based on the direction

provided in the scoping section of the manual, examiners

A request for information under Regulation B does not limit or abrogate any

Federal or state law regarding privacy, privileged information, credit

should review sufficient information to ensure compliance

with the applicable provisions of Regulation B described

below. Note that the language that follows is taken directly

from the regulation, which appears in the References portion

of this section.

Rules for Taking Applications – 12 CFR § 1002.5

Under Regulation B, a creditor may request any information

connection with a credit transaction, unless the information

requested or collected concerns one or more of the specific

prohibited bases listed above. Nevertheless, the regulation

permits a creditor to collect such information when required for

monitoring or enforcing compliance with fair lending or other

laws as follows:

• Monitoring Purposes

Required by Court or an Enforcement Agency

Special Purpose Credit

In addition, Regulation B permits the collection of certain

prohibited information on a limited basis.

Limitations on Requests for Information Concerning Race,

Color, Religion, National Origin, or Sex — 12 CFR §

1002.5(b)

In cases where it is not required to collect information, a

creditor shall not inquire about the race, color, religion,

national origin, or sex of an applicant or any other person in

connection with a credit transaction, except in the following

cases:

• Self-test

• Title (such as Ms., Miss, Mr., or Mrs., so long as

designation is optional on application form)

Limitations on Requests for Information Concerning a

Spouse or Former Spouse — 12 CFR § 1002.5(c)

Regulation B limits the information that a creditor may collect

from an applicant’s spouse or former spouse to the following

circumstances:

• The spouse will be permitted to use the account;

• The spouse will be contractually liable on the

account;

• The applicant is rely ing on the sp ouse's income as a

basis for repayment of the credit requested;

• The applicant resides in a community prop erty state

or is relying on property located in such a state as a

basis for repayment of the credit requested; or

• The applicant is relying on alimony, child support, or

separate maintenance p ayments from a sp ouse or

reporting limitations, or similar restrictions on obtainable information.

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former spouse as a basis for repayment of the credit

requested.

A creditor may request that an applicant list any account on

which the applicant is contractually liable and to provide the

name and address of the person in whose name the account is

held. A creditor may also ask an applicant to list the names in

which the applicant has previously received credit.

Limitations on Requests for Information Concerning Marital

Status — 12 CFR § 1002.5(d)(1)

Regulation B also limits inquiries about an applicant’s marital

status to the following:

• Individual unsecured credit - If an ap plicant applies for

individual unsecured credit, a creditor may inquire about

the ap plicant's marital status if the ap plicant resides in a

community property state or is relying on property

located in such a state as a basis for rep ayment of the

credit requested.

• Other credit - If an application is for other than individual

unsecured credit, a creditor may inquire about the

applicant's marital status, but shall use only the terms

married, unmarried, and separated. A creditor may

explain that the category unmarried includes single,

divorced, and widowed persons.

Limitation on Disclosure of Income From Alimony, Child

Support, or Separate Maintenance — 12 CFR § 1002.5(d)(2)

A creditor shall not inquire whether income stated in an

application is derived from alimony, child support, or separate

maintenance p ayments unless the creditor discloses to the

applicant that such income need not be revealed if the ap plicant

does not want the creditor to consider it in determining the

applicant's creditworthiness.

Limitation on Requests for Information Concerning

Childbearing or Childrearing — 12 CFR § 1002.5(d)(3)

A creditor shall not inquire about birth control practices,

intentions concerning the bearing or rearing of children, or

capability to bear children. A creditor may inquire about the

number and ages of an applicant's dependents or about

dependent-related financial obligations or expenditures,

provided such information is requested without regard to sex,

marital status, or any other prohibited basis.

Permanent Residency and Immigration Status — 12 CFR §

1002.5(e)

A creditor may inquire about the permanent residency and

immigration status in the United States of an applicant or any

other person in connection with a credit transaction.

Rules Concerning Evaluation of Applications — 12 CFR

§ 1002.6

General Rule — 12 CFR § 1002.6(a)

Except as otherwise provided for in the ECOA and Regulation

B, a creditor may consider any information obtained to

evaluate an applicant’s credit worthiness, so long as the

information is not used to discriminate against the applicant on

a prohibited basis.

Specific Rules Concerning Use of Information — 12 CFR §

1002.6(b)

In any system of evaluating the creditworthiness of an applicant,

a creditor may not:

• Consider any of the prohibited bases, including age

(provided that the ap plicant has the cap acity to enter

into a binding contract) and the receipt of public

assistance. Certain exceptions to the limitations on a

creditors use of information on the ap plicant’s age

and income derived from public assistance are

described in the following section;

• Use childbearing or childrearing information to make

assumptions or use aggregate statistics to determine

whether the ap plicant’s income will be diminished or

interrupted in the future;

• Take into account whether there is a telephone

listing in the name of an applicant for consumer

credit but may take into account whether there is a

telephone in the ap plicant's residence;

• Discount or exclude from consideration the income

of an applicant or the spouse of an applicant because

the income is derived from part-time emp loy ment or

from other sources, such as an annuity, pension, or

other retirement benefit; but may consider the amount

and probable continuance of any income in

evaluating an applicant's creditworthiness.

Limitations on the Use of an Applicant’s Age or whether

Income Derives from an Publ ic Assistance Program — 12

CFR § 1002.6(b)(2)

Although generally prohibited, a creditor may take into

account an applicant’s age or whether an ap plicant’s income

derives from any p ublic assistance program in the following

limited circumstances, when using such systems for analy zing

credit:

Empirically Derived Credit Scoring System. In an emp irically

derived, demonstrably and statistically sound, credit scoring

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system, a creditor may use an ap plicant's age

as a predictive

variable, provided that the age of an elderly applicant is not

assigned a negative factor or value.

Judgmental Systems. In a judgmental system of evaluating

creditworthiness, a creditor may consider an applicant's age

whether an applicant's income derives from any public

assistance program

only for the purpose of determining a

pertinent element of creditworthiness.

Any System of Evaluating Creditworthiness. In any system of

evaluating creditworthiness, a creditor may consider the age

of an elderly applicant when such age is used to favor the

elderly app licant in extending credit.

Use of Credit History Information — 12 CFR § 1002.6(b)(6)

To the extent that a creditor considers credit history in

evaluating the creditworthiness of similarly qualified

applicants for a similar type and amount of credit, in

evaluating an applicant's creditworthiness a creditor shall

consider:

• The credit history, when available, of accounts

designated as accounts that the ap plicant and the

applicant's spouse are permitted to use or for which

both are contractually liable;

• On the applicant's request, any information the

applicant may present that tends to indicate the credit

history being considered by the creditor does not

accurately reflect the applicant's creditworthiness;

and

• On the applicant's request, the credit history, when

available, of any account reported in the name of the

applicant's spouse or former spouse that the applicant

can demonstrate accurately reflects the ap plicant's

creditworthiness.

According to the official staff commentary for Regulation B, age may be

taken directly into account in a credit scoring system that is “demonstrably and

statistically sound,” as defined in § 1002.2(p), with one limitation: Applicants

age 62 years or older must be treated at least as favorably as applicants who are

under age 62. If age is scored by assigning points to an applicant's age category,

elderly applicants must receive the same or a greater number of points as the

most favored class of nonelderly applicants.

According to the official staff commentary for Regulation B, in a judgmental

system, defined in § 1002.2(t), a creditor may not decide whether to extend

credit or set the terms and conditions of credit based on age or information

related exclusively to age. Age or age-related information may be considered

only in evaluating other “pertinent elements of creditworthiness” that are drawn

from the particular facts and circumstances concerning the applicant. For

example, a creditor may not reject an application or terminate an account

because the applicant is 60 years old. But a creditor that uses a judgmental

system may relate the applicant's age to other information about the applicant

Use of Information Concerning Immigration Status — 12

CFR § 1002.6(b)(7)

A creditor may consider the applicant's immigration status or

status as a permanent resident of the United States, and any

additional information that may be necessary to ascertain the

creditor's rights and remedies regarding repayment.

Use of Information Concerning Marital Status — 12 CFR §

1002.6(b)(8)

Except as otherwise permitted or required by law, a creditor

shall evaluate married and unmarried applicants by the same

standards; and in evaluating joint applicants, a creditor shall

not treat applicants differently based on the existence, absence,

or likelihood of a marital relationship between the parties.

Use of Information Concerning Race, Color, Religion,

National Origin, or Sex — 12 CFR § 1002.6(b)(9)

Except as otherwise p ermitted or required by law, a creditor

shall not consider race, color, religion, national origin, or sex

(or an applicant's or other person's decision not to provide the

information) in any aspect of a credit transaction.

State Property Laws — 12 CFR § 1002.6(c)

A creditor's consideration or application of state property laws

directly or indirectly affecting creditworthiness does not

constitute unlawful discrimination for the purposes of the

ECOA or Regulation B.

Rules for Extensions of Credit — 12 CFR § 1002.7

Regulation B has specific provisions regarding extensions of

credit.

Individual accounts. A creditor shall not refuse to grant an

individual account to a creditworthy applicant on the basis of

sex, marital status, or any other prohibited basis.

that the creditor considers in evaluating creditworthiness.

According to the official staff commentary for Regulation B, when

considering income derived from a public assistance program, a creditor may

take into account, for example: the length of time an applicant will likely

remain eligible to receive such income; whether the applicant will continue to

qualify for benefits based on the status of the applicant's dependents (as in the

case of Temporary Aid to Needy Families, or social security payments to a

minor); whether the creditor can attach or garnish the income to assure payment

of the debt in the event of default.

According to the official staff commentary for Regulation B, any system of

evaluating creditworthiness may favor a credit applicant who is age 62 or older.

A credit program that offers more favorable credit terms to applicants age 62 or

older is also permissible; a program that offers more favorable credit terms to

applicants at an age lower than 62 is permissible only if it meets the special-

purpose credit requirements of § 1002.8.

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Designation of name. A creditor shall not refuse to allow an

applicant to open or maintain an account in a birth-given first

name and a surname that is the ap plicant's birth-given

surname, the spouse's surname, or a combined surname.

Action Concerning Existing Open-End Accounts — 12 CFR

§ 1002.7(c)

Limitations. In the absence of evidence of the applicant's

inability or unwillingness to repay, a creditor shall not take any

of the following actions regarding an applicant who is

contractually liable on an existing open-end account on the

basis of the applicant's reaching a certain age or retiring or on

the basis of a change in the ap plicant's name or marital status:

• Require a reapplication, except as provided under §

1002.7(c)(2);

• Change the terms of the account; or

• Terminate the account.

Requiring Reapplication — 12 CFR § 1002.7(c)(2)

A creditor may require a reapplication for an open-end account

on the basis of a change in the marital status of an applicant

who is contractually liable if the credit granted was based in

whole or in part on income of the applicant's spouse and if

information available to the creditor indicates that the

applicant's income may not support the amount of credit

currently available.

Signature Requirements — 12 CFR § 1002.7(d)

Rule for qualified applicant. Except as provided in this

paragraph, a creditor shall not require the signature of an

applicant's spouse or other person, other than a joint applicant,

on any credit instrument if the applicant qualifies under the

creditor's standards of creditworthiness for the amount and

terms of the credit requested. A creditor shall not deem the

submission of a joint financial statement or other evidence of

jointly held assets as an application for joint credit.

Unsecured credit. If an applicant requests unsecured credit

and relies in part upon property that the applicant owns jointly

with another person to satisfy the creditor's standards of

creditworthiness, the creditor may require the signature of the

other person only on the instrument(s) necessary, or reasonably

believed by the creditor to be necessary, under the law of the

state in which the property is located, to enable the creditor to

reach the property being relied upon in the event of the death

or default of the applicant.

Unsecured credit—community property states. If a married

applicant requests unsecured credit and resides in a community

property state, or if the applicant is relying on property located

in such a state, a creditor may require the signature of the

spouse on any instrument necessary, or reasonably believed by

the creditor to be necessary , under ap plicable state law to make

the community property available to satisfy the debt in the

event of default if:

• Applicable state law denies the ap plicant p ower to

manage or control sufficient community property to

qualify for the credit requested under the creditor's

standards of creditworthiness; and

• The applicant does not have sufficient sep arate

property to qualify for the credit requested without

regard to community property.

Secured credit. If an applicant requests secured credit, a

creditor may require the signature of the applicant's spouse or

other person on any instrument necessary, or reasonably

believed by the creditor to be necessary, under applicable state

law to make the property being offered as security available to

satisfy the debt in the event of default, for example, an

instrument to create a valid lien, p ass clear title, waive

inchoate rights, or assign earnings.

Additional parties. If, under a creditor's standards of

creditworthiness, the personal liability of an additional party is

necessary to support the credit requested, a creditor may

request a cosigner, guarantor, endorser, or similar party. The

applicant's spouse may serve as an additional party, but the

creditor shall not require that the spouse be the additional

party.

Rights of additional parties. A creditor shall not impose

requirements upon an additional party that the creditor is

prohibited from imposing upon an applicant under this section.

Insurance. A creditor shall not refuse to extend credit and

shall not terminate an account because credit life, health,

accident, disability, or other credit-related insurance is not

available on the basis of the ap plicant's age.

Notifications — 12 CFR § 1002.9

Regulation B provides specific requirements for creditors

regarding notification of action taken, ECOA notices, and

statement of specific reasons to ap plicants.

Notification of Action Taken, ECOA Notice, and Statement

of Specific Reasons — 12 CFR § 1002.9(a)

When Notification is Required — 12 CFR § 1002.9(a)(1)

A creditor shall notify an applicant of action taken within:

• 30 days after receiving a comp leted ap plication

concerning the creditor's approval of, counteroffer to,

or adverse action on the application;

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• 30 days after taking adverse action on an incomplete

application, unless notice is provided in accordance

with the requirements for incomplete applications

under § 1002.9(c);

• 30 days after taking adverse action on an existing

account; or

• 90 days after notifying the applicant of a counteroffer

if the ap plicant does not expressly accept or use the

credit offered.

Content of Notification When Adverse Action is Taken — 12

CFR § 1002.9(a)(2)

A notification given to an applicant when adverse action is

taken shall be in writing and shall contain a statement of the

action taken; the name and address of the creditor; a statement

of the provisions of section 701(a) of the ECOA; the name and

address of the Federal agency that administers comp liance

with respect to the creditor; and either:

• A statement of specific reasons for the action taken;

(§ 1002.9(a)(2)(i)) or

• A disclosure of the applicant's right to a statement of

specific reasons within 30 days, if the statement is

requested within 60 days of the creditor's notification.

The disclosure shall include the name, address, and

telephone number of the person or office from which

the statement of reasons can be obtained. If the

creditor chooses to provide the reasons orally, the

creditor shall also disclose the ap plicant's right to

have them confirmed in writing within 30 days of

receiving the applicant's written request for

confirmation. (§ 1002.9(a)(2)(ii))

Notification to business credit applicants. For business credit,

a creditor shall comply with the notification requirements of §

1002.9 in the following manner:

Businesses with gross revenues of $1 million or less

(§ 1002.9(a)(3)(i)) – Businesses that had gross

revenues of $1 million or less in its preceding fiscal

year (other than an extension of trade credit, credit

incident to a factoring agreement, or other similar

types of business credit), a creditor shall comply with

the timing and content requirements of action taken,

except that:

• The statement of the action taken may be given

orally or in writing, when adverse action is

taken;

• Disclosure of an applicant's right to a statement

of reasons may be given at the time of

application, instead of when adverse action is

taken, provided the disclosure contains the

information required by § 1002.9(a)(2)(ii) and

the ECOA notice specified in § 1002.9(b)(1);

• For an application made entirely by telephone, a

creditor satisfies the requirements of §

1002.9(a)(3)(i) by an oral statement of the action

taken and of the applicant's right to a statement

of reasons for adverse action.

Businesses with gross revenues in excess of $1

million - Businesses that had gross revenues in excess

of $1 million in its preceding fiscal year or an

extension of trade credit, credit incident to a factoring

agreement, or other similar types of business credit, a

creditor shall:

• Notify the applicant, within a reasonable time,

orally or in writing, of the action taken; and

• Provide a written statement of the reasons for

adverse action and the ECOA notice specified in

§ 1002.9(b)(1) if the applicant makes a written

request for the reasons within 60 days of the

creditor's notification.

Form of ECOA Notice and Statement of Specific Reasons —

12 CFR § 1002.9(b)(1)

ECOA notice. To satisfy the disclosure requirements of the

notice of adverse action regarding the prohibited basis for

discrimination of section 701(a) of the ECOA, the creditor

shall provide a notice that is substantially similar to the

following:

The Federal Equal Credit Opportunity Act

prohibits creditors from discriminating

against credit ap plicants on the basis of race,

color, religion, national origin, sex, marital

status, age (provided the applicant has the

capacity to enter into a binding contract);

because all or part of the ap plicant's income

derives from any public assistance program;

or because the applicant has in good faith

exercised any right under the Consumer

Credit Protection Act. The Federal agency

that administers comp liance with this law

concerning this creditor is [name and address

as specified by the ap prop riate agency or

agencies listed in Appendix A of Regulation

B].

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Statement of Specific Reasons — 12 CFR § 1002.9(b)(2)

The statement of reasons for adverse action required must be

specific and indicate the principal reason(s) for the adverse

action. Statements that the adverse action was based on the

creditor's internal standards or policies or that the applicant,

joint applicant, or similar party failed to achieve a qualifying

score on the creditor's credit scoring system are insufficient.

Note: According to the staff commentary, a creditor must

disclose the principal reasons for denying an application or

taking other adverse action. The regulation does not mandate

that a specific number of reasons be disclosed, but disclosure

of more than four reasons is not likely to be helpful to the

applicant.

Incomplete Applications — 12 CFR § 1002.9(c)

Notice alternatives. Within 30 days after receiving an

application that is incomplete regarding matters that an

applicant can complete, the creditor shall notify the ap plicant

either:

• Of action taken, in accordance with § 1002.9(a); or

• Of the incompleteness, in accordance with §

1002.9(c)(2)

Notice of Incompleteness — 12 CFR § 1002.9(c)(2)

If additional information is needed from an applicant, the

creditor shall send a written notice to the applicant specifying

the information needed, designating a reasonable period of

time for the applicant to provide the information, and

informing the applicant that failure to provide the information

requested will result in no further consideration being given to

the application. The creditor shall have no further obligation

under this section if the applicant fails to respond within the

designated time period. If the applicant supplies the requested

information within the designated time period, the creditor

shall take action on the application and notify the applicant in

accordance the requirements of § 1002.9(a) described above.

Oral Request for Information — 12 CFR § 1002.9(c)(3)

At its option, a creditor may inform the applicant orally of the

need for additional information. If the application remains

incomplete, the creditor shall send a notice in accordance with

the notice alternatives for incomp lete app lications.

Oral Notifications by Small-Vol ume Credi tors — 12 CFR §

1002.9(d)

In the case of a creditor that did not receive more than 150

applications during the preceding calendar year, the

requirements of this section (including statements of specific

reasons) are satisfied by oral notifications.

Withdrawal of Approved Application — 12 CFR § 1002.9(e)

When an applicant submits an ap plication and the parties

contemplate that the applicant will inquire about its status, if

the creditor approves the application and the applicant has not

inquired within 30 days after applying, the creditor may treat

the application as withdrawn and need not comply with the

timing requirements of action taken under § 1002.9(a)(1).

Multiple Applicants — 12 CFR § 1002.9(e)

When an application involves more than one applicant,

notification need only be given to one of them but must be

given to the primary applicant where one is readily apparent.

Applications Submitted Through a Third Party — 12 CFR §

1002.9(g)

When an application is made on behalf of an applicant to more

than one creditor and the applicant expressly accepts or uses

credit offered by one of the creditors, notification of action taken

by any of the other creditors is not required. If no credit is

offered or if the applicant does not expressly accept or use the

credit offered, each creditor taking adverse action must comply

with this section, directly or through a third party. A notice

given by a third party shall disclose the identity of each creditor

on whose behalf the notice is given.

Furnis hing of Credit Information — 12 CFR § 1002.10

Regulation B provides specific requirements for creditors

regarding designation of accounts.

Designation of Accounts — 12 CFR § 1002.10(a)

A creditor that furnishes credit information shall designate:

• Any new account to reflect the participation of both

spouses if the applicant's spouse is permitted to use

or is contractually liable on the account (other than as

a guarantor, surety, endorser, or similar party); and

• Any existing account to reflect such participation,

within 90 days after receiving a written request to do

so from one of the spouses.

Routine Reports to Consumer Reporting Agency — 12 CFR

§ 1002.10(b)

If a creditor furnishes credit information to a consumer

reporting agency concerning an account designated to reflect

the participation of both spouses, the creditor shall furnish the

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information in a manner that will enable the agency to provide

access to the information in the name of each spouse.

Reporting in Response to Inquiry — 12 CFR § 1002.10(c)

If a creditor furnishes credit information in response to an

inquiry, concerning an account designated to reflect the

participation of both spouses, the creditor shall furnish the

information in the name of the spouse about whom the

information is requested.

Record Retention — 12 CFR § 1002.12

Regulation B provides specific record retention requirements

for creditors.

Retention of Prohibited Information — 12 CFR § 1002.12(a)

A creditor may retain in its files information that is prohibited

by the ECOA or Regulation B for use in evaluating

applications, without violating the ECOA or Regulation B, if

the information was obtained:

(1) From any source prior to M arch 23, 1977;

(2) From consumer reporting agencies, an applicant, or others

without the specific request of the creditor; or

(3) As required to monitor compliance with the ECOA and this

Regulation B or other Federal or state statutes or regulations.

Preservation of Records — 12 CFR § 1002.12(b)

Applications. For 25 months (12 months for business credit,

except as provided for in the “special rule for certain business

credit applications”) after the date that a creditor notifies an

applicant of action taken on an application or of

incompleteness, the creditor shall retain in original form or a

copy thereof:

• Any application that it receives, any information

required to be obtained concerning characteristics of

the ap plicant to monitor compliance with the ECOA

and Regulation B or other similar law, and any other

written or recorded information used in evaluating

the application and not returned to the applicant at the

applicant's request;

• A copy of the following documents if furnished to

the applicant in written form (or, if furnished orally,

any notation or memorandum made by the creditor):

o The notification of action taken; and

o The statement of specific reasons for

adverse action; and

• Any written statement submitted by the ap plicant

alleging a violation of the ECOA or Regulation B.

Existing accounts. For 25 months (12 months for business

credit, except as provided for in the “special rule for certain

business credit applications”) after the date that a creditor

notifies an applicant of adverse action regarding an existing

account, the creditor shall retain as to that account, in original

form or a copy thereof:

• Any written or recorded information concerning the

adverse action; and

• Any written statement submitted by the applicant

alleging a violation of the ECOA or Regulation B.

Other applications. For 25 months (12 months for business

credit, except as provided for in the “special rule for certain

business credit applications”) after the date that a creditor

receives an application for which the creditor is not required to

comply with the notification requirements of § 1002.9, the

creditor shall retain all written or recorded information in its

possession concerning the applicant, including any notation of

action taken.

Enforcement proceedings and investigations. A creditor shall

retain the information beyond 25 months (12 months for

business credit, except as provided for in the “special rule for

certain business credit applications” ) if the creditor has actual

notice that it is under investigation or is subject to an

enforcement proceeding for an alleged violation of the ECOA

or Regulation B, by the Attorney General of the United States

or by an enforcement agency charged with monitoring that

creditor's compliance with the ECOA and Regulation B, or if it

has been served with notice of an action filed pursuant to

section 706 of the ECOA and § 1002.16 of Regulation B. The

creditor shall retain the information until final disposition of

the matter, unless an earlier time is allowed by order of the

agency or court.

Special rule for certain business credit applications. With

regard to a business that had gross revenues in excess of $1

million in its preceding fiscal year, or an extension of trade

credit, credit incident to a factoring agreement, or other similar

types of business credit, the creditor shall retain records for at

least 60 days after notifying the applicant of the action taken.

If within that time period the applicant requests in writing the

reasons for adverse action or that records be retained, the

creditor shall retain records for 12 months.

Self-tests. For 25 months after a self-test (as defined in §

1002.15(b)(1) of Regulation B) has been completed, the

creditor shall retain all written or recorded information about

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V–7.8 FDIC Consumer Compliance Examination Manual — March 2022

the self-test. A creditor shall retain information beyond 25

months if it has actual notice that it is under investigation or is

subject to an enforcement proceeding for an alleged violation,

or if it has been served with notice of a civil action. In such

cases, the creditor shall retain the information until final

disposition of the matter, unless an earlier time is allowed by

the appropriate agency or court order.

Prescreened solicitations. For 25 months after the date on

which an offer of credit is made to potential customers (12

months for business credit, except as provided for in the

“special rule for certain business credit applications”), the

creditor shall retain in original form or a copy thereof:

• The text of any prescreened solicitation;

• The list of criteria the creditor used to select potential

recipients of the solicitation; and

• Any correspondence related to complaints (formal or

informal) about the solicitation.

Information for Monitoring Purposes — 12 CFR §

1002.13

Information to be Requested — 12 CFR § 1002.13(a)

A creditor that receives an application for credit primarily for

the purchase or refinancing of a dwelling occupied or to be

occupied by the ap plicant as a princip al residence, where the

extension of credit will be secured by the dwelling, shall

request as part of the application the following information

regarding the applicant(s):

• Ethnicity, using the categories Hispanic or Latino,

and not Hispanic or Latino; and race, using the

categories American Indian or Alaska Native, Asian,

Black or African American, Native Hawaiian or

Other Pacific Islander, and White;

• Sex;

• Marital status, using the categories married,

unmarried, and separated; and

• Age.

Dwelling means a residential structure that contains one to four

units, whether or not that structure is attached to real property.

The term includes, but is not limited to, an individual

condominium or cooperative unit and a mobile or other

manufactured home.

Regulation B defines a valuation as “any estima te of the value o f a

dwelling developed in connection with an application for credit.” 12 CFR

Obtaining information. — 12 CFR § 1002.13(b)

Questions regarding ethnicity, race, sex, marital status, and age

may be listed, at the creditor's option, on the application form

or on a separate form that refers to the application. The

applicant(s) shall be asked but not required to supply the

requested information. If the applicant(s) chooses not to

provide the information or any part of it, that fact shall be

noted on the form. The creditor shall then also note on the

form, to the extent possible, the ethnicity, race, and sex of the

applicant(s) on the basis of visual observation or surname.

Disclosure to applicant(s) — 12 CFR § 1002.13(c)

The creditor shall inform the applicant(s) that the information

regarding ethnicity, race, sex, marital status, and age is being

requested by the Federal Government for the purpose of

monitoring compliance with Federal statutes that prohibit

creditors from discriminating against applicants on those

bases. The creditor shall also inform the applicant(s) that if the

applicant(s) chooses not to provide the information, the

creditor is required to note the ethnicity, race and sex on the

basis of visual observation or surname.

Substitute Monitoring Program — 12 CFR § 1002.13(d)

A monitoring program required by an agency charged with

administrative enforcement under section 704 of the ECOA

may be substituted for the monitoring requirements of §

1002.13(a)-(c).

Providing Apprai s al s and Other Valuations – 12 CFR §

1002.14(a)(1)

Regulation B requires that creditors provide app licants with

a copy of all ap praisals and other written valuations

developed in connection with an ap plication for credit to be

secured by a first lien on a dwelling. A creditor shall

provide the cop y of each such appraisal or other written

valuation promptly upon comp letion, or at least three

business days prior to consummation of the transaction (for

closed-end credit) or account opening (for op en-end credit),

whichever is earlier.

An ap plicant may waive the timing requirement and agree to

receive any cop y at or before consummation or account

opening, excep t where otherwise prohibited by law. Any

such waiver must be obtained at least three business days

prior to consummation or account opening, unless the

waiver pertains solely to the app licant’s receip t of a cop y of

an appraisal or other written valuation that contains only

clerical changes from a previous version provided to the

applicant or other written valuation provided to the applicant

three or more business days prior to consummation or

1002.14(b)(3). Additionally, examples of valuations can be found in the

O ffi cial Interpretations o f Regulation B at 1002.14(b)(3)(1)(i) – (v).

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FDIC Consumer Compliance Examination Manual — March 2022 V–7.9

account opening. If the ap plicant provides a waiver and the

transaction is not consummated or the account is not opened,

the creditor must provide these cop ies no later than 30 days

after the creditor determines consummation will not occur or

the account will not be opened.

Discl osure – 12 CFR 1002.14(a)(2)

A creditor shall mail or deliver a notice in writing of the

applicant’s right to receive a cop y of all written ap praisals or

valuations develop ed in connection with the ap plication, no

later than the third business day after the creditor receives an

application for credit that is to be secured by a first lien on a

dwelling. A special timing rule ap plies if an app lication for

credit is not to be secured by a first lien on a dwelling at the

time of application, but the creditor later determines that it will

be secured by such a lien. In that case, the creditor shall mail

or deliver the same disclosure in writing no later than the third

business day after determining that the loan is to be secured by

a first lien on a dwelling. If the disclosure required under

CFR 1002.14(a)(2) accompanies an application accessed by

the applicant in electronic form, it may be provided in

electronic form on or with the ap plication form, without regard

to the consumer consent or other provisions of the E-Sign Act.

(15 U.S.C. 7001 et seq.). See 12 CFR 1002.4(d)(2).

Reimbursement – 12 CFR 1002.14(a)(3)

A creditor shall not charge an applicant for providing a cop y of

appraisals and/or other written valuations, but may require

applicants to pay a reasonable fee to reimburse the creditor for

the cost of the app raisal or other written valuation unless

otherwise provided by law.

Withdrawn, Denied, or Incomplete Applications

– 12 CFR

1002.14(a)(4)

The requirements to provide copies of ap praisals and other

written valuations develop ed in connection with an ap plication

for credit to be secured by a first lien on a dwelling apply

whether credit is extended or denied or if the application is

incomplete or withdrawn.

Copies in Electronic Form – 12 CFR 1002.14(a)(5)

Required copies of appraisals and other written valuations may

be provided to the ap plicant in electronic form, subject to

compliance with the consumer consent and other ap plicable

provisions of the

Electronic Signatures in Global and National

Commerce Act (E-Sign Act ) (15 U.S.C. 7001 et seq.).

Examination Procedures

• Examiners must review compliance with these

provisions in all compliance examinations that include

review of bank loan files, and they may elect to do so as

part of a regular, scheduled supervisory activity that

includes a review of fair lending risk.

• Examiners should use cop ies of the technical compliance

checklist to review in detail ap proved and denied

consumer, business, and residential real estate files. If

there appear to be any technical violations in those files,

the violations should be written up and discussed with

management. The examiners should maintain one

master checklist to note any observed recurrence of the

violations which would aid a comparative file review (if

there is one).

Technical Compliance Checklist

The worksheet beginning on the following page can be used

to review audit workpapers, evaluate bank policies, perform

transaction testing, and assess training as appropriate.

Complete those asp ects of the worksheet that sp ecifically

relate to the issue being reviewed, evaluated, or tested, and

retain those completed sections in the workpapers.

When reviewing audit or evaluating bank policies, a “No”

answer indicates a possible exception/deficiency and should

be explained in the workpapers. When performing

transaction testing, a “No” answer indicates a possible

violation and should be explained in the workpapers. If a line

item is not ap plicable within the area y ou are reviewing,

simply indicate “NA.”

Underline the applicable use:

• Audit

• Bank Policies

• Transaction Testing

References

12 CFR Part 1002

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Technical Compliance Checklist

Requirement (If answer is No, there appears to be a violation)

Ye s

Bas is for Conclusion

Information for Monitoring Purposes

1. Do files for purchase and refinance loans for primary

residences that are secured by the dwelling show that the

bank requested monitoring information (§1002.13(a) and

(b)) and that it noted this information on the ap plication

form or on a sep arate form referring to the application

(§1002.13(b)):

a. Ethnicity, using the categories “Hisp anic or Latino,”

and “Not Hispanic or Latino”; and race, using the

categories “American Indian or Alaska Native,”

“Asian,” “Black or African American,” “Native

Hawaiian or Other Pacific Islander,” and “White,”

and allowing app licants to select more than one

racial designation (Comment 13(b)-1)?

b. Sex?

c.. M arital status, using the categories married,

unmarried, and sep arated?

d. Age?

NOTE: Examiners should ensure that the bank limits

its requests for government monitoring information to

only those loans secured by the applicant’s principal

dwelling, as required in §1002.5(a)&(b); 1002.13(a).

2. Does the form used to collect monitoring information

contain written notice that it is for federal government

monitoring of compliance with federal statutes prohibiting

discrimination on those bases, and that the bank must note

ethnicity, race and sex on the basis of s ight and/or surname

if the app licant chooses not to do so, or does the loan file

indicate that the borrower was otherwise notified of this

fact? (§1002.13(c))

3. Does the bank note on the monitoring form applicant’s

refusals to disclose monitoring information? (§1002.13(b))

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FDIC Consumer Compliance Examination Manual — March 2022 V–7.11

a. If the bank takes ap plications in person (including by

electronic media that allows the bank to see the

applicant), and if the ap plicant refuses to provide the

monitoring information, does the bank, to the extent

possible on the basis of sight or surname, note on the

form the ethnicity, race and sex of each applicant?

(§1002.13(b)), Comment 13(b)-4)

b. If the bank receives applications by mail, telep hone, or

electronic media and if it is not evident on the face of

the ap plication how it was received, does the bank

indicate on the form or in the loan file how it was

received? (Comments 13(b)-3, -4)

5. Are written applications used for home purchase and

refinance transactions? (§1002.4(c), §1002.13(a))

6. Are disclosures clear, conspicuous and except for those

required by §1002.5 and §1002.13, in a form the ap plicant

can retain? (§1002.4(d))

7. Are disclosures in electronic form provided in compliance

with the consumer consent and other ap plicable provisions

of the Electronic Signatures in Global and National

Commerce (E-Sign) Act? (§1002.4(d)(2))

8. If an ap plicant accesses a credit ap plication electronically

from a p lace other than a creditor’s office, were the

required disclosures provided in electronic form?

(Comment 4(d)-2)

Rules Concerning Requests for Information

9. Do guidance and forms exclude requests for information

relative to birth control practices, childbearing abilities, or

childbearing or child-rearing intentions of the applicant,

and does the loan file indicate that the bank did not

otherwise inquire about these top ics? (§1002.5(d)(3))

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V–7.12 FDIC Consumer Compliance Examination Manual — March 2022

10. Does the loan file indicate that the bank did not request

information about spouses except for transactions which:

a. The spouse is permitted to use the account,

b. The spouse is liable on the account,

c. The applicant is relying on the spouse’s income as a

basis for repayment of the credit requested,

d. The applicant resides in a community property state

or is relying on property in such a state for

repayment, or

e. The applicant relies on alimony, child support, or

separate maintenance payments from the sp ouse or

the former spouse to rep ay the debt? (§1002.5(c))

11. In the case of individual unsecured credit, does the

loan

file

indicate that the bank made inquiries about the marital

status of the ap plicant only when the ap plicant resides in a

community property state or when community property

basis for repayment of the debt, and do guidance and

forms for unsecured individual loans include these

inquiries? (§1002.5(d)(1))

12. For loans other than individual unsecured credit, are

inquiries into marital status no more extensive than

obtaining the app licant’s status as “married,” “unmarried,”

or “sep arated”? (§1002.5(d)(1))

13. If the loan file indicates that information was requested

regarding whether income on the ap plication is derived

from alimony, child support, or sep arate maintenance

payments, do guidance and forms ensure that the ap plicant

is informed that such income need not be revealed if the

applicant does not want the bank to consider the

information in determining the ap plicant’s

creditworthiness? (§1002.5(d)(2))

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FDIC Consumer Compliance Examination Manual — March 2022 V–7.13

14. Is any sp ecial purpose program established and

administered so as to avoid discriminating on a prohibited

basis? (§1002.5(a)(3), §1002.8(b)(2))

15. If the creditor collects information (in addition to required

government monitoring information) on the race, color,

religion, national origin, or sex of the applicant for

purposes of a “self-test”:

a. Does the “self-test” meet the requirements of

§1002.15?

b. Does the creditor disclose to the ap plicant, orally or

in writing, when requesting the information that:,

i. Applicant isn’t required to provide

information?

ii. The bank is requesting information to

monitor its compliance with ECOA?

iii. Federal law prohibits the bank from

discriminating on the basis of this

information, or on the basis of an

applicant’s decision not to furnish the

information?

iv. If applicable, certain information will be

collected based on visual observation or

surname if not provided by the ap plicant or

other person? (§1002.5(b))

16. When a title, such as M s., M iss, M rs. or M r., is requested

on the application, does the form disclose that

such

design ati o n

is op tional, and does the ap plication form

otherwise use only terms neutral as to sex? (§1002.5(b)(2))

Rules Concerning Extensions of Credit

17. For joint ap plications, do application files indicate an

applicant’s intent to apply for joint credit at the time of

application? (Supplement I to 12 CFR 1002, Staff

Commentary, comment no. 3 to §1002.7(d)(1))

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V–7.14 FDIC Consumer Compliance Examination Manual — March 2022

Notifications

18. Do files show that the bank notified non-commercial

applicants in writing of:

a. Action taken, whether approval, counteroffer, or

adverse action (within 30 days of receip t of a

completed application), unless the ap plication is

approved and the p arties contemplate that the

applicant who has yet to inquire about the status of

the ap plication, will do so within 30 days after

applying? (§1002.9(a)(1)(i), §1002.9(e))

b. Adverse action because of incomp leteness or a notice

of missing information and that the information must

be provided within a designated reasonable period for

the ap plication to be considered (within 30 day s of

receipt of the incomp lete application)?

(§1002.9(a)(1)(ii) and (c)(2))

c. Adverse action (within 30 days of taking such action)

on existing accounts? (§1002.9(a)(1)(iii))

d. Adverse action (within 90 days after notifying the

applicant of a counteroffer), if the ap plicant has not

accepted the counteroffer (unless the notice of

adverse action on the credit terms sought

accompanied the counteroffer)? (§1002.9(a)(1)(iv))

19. Do adverse action notices in denied files (as app licable)

contain:

a A written statement of action taken and the name and

address of the bank? (§1002.9(a)(2)

b. A written statement substantially similar to that in

§1002.9(b)(1)?

c. A written statement of sp ecific reasons for the action

taken or written disclosure as sp ecified in

§1002.9(a)(2)(ii)) of the ap plicant’s right to such a

statement? (§1002.9(a)(2)(i) and (ii))

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FDIC Consumer Compliance Examination Manual — March 2022 V–7.15

20. In connection with credit other than an ext ension of trade

credit, credit incident to a factoring agreement or other

similar typ es of business credit, for businesses with

revenues of $1 million or less in the p receding fiscal year,

where the reasons were not given orally or in writing when

adverse action was taken (under timeframes in

§1002.9(a)(1)), was the disclosure of the right to a

statement of reasons given in writing at the time of

application in accordance with §1002.9(a)(3)(i)(B)?

21. For businesses with revenues in excess of $1 million in the

preceding fiscal year, or for extensions of trade credit,

credit incident to a factoring agreement or other similar

types of business credit, was the notification of action

taken communicated within a reasonable time orally or in

writing, and were reasons for denial and the ECOA notice

provided in writing in response to a written request for the

reasons by the ap plicant within 60 days of the bank’s

notification? (§1002.9(a)(3)(ii)(B)):

22. Does the statement of reason(s) for adverse action contain

the p rincip al and sp ecific reason(s) for the action?

(§1002.9(b)(2))

23. When an application involves multiple applicants, does the

bank provide notification of action to the primary

applicant, when one is readily app arent? (§1002.9(f))

24. When an application is made to multip le creditors by a

third party, and no credit is offered or extended by any of

the creditors, does the bank ensure that the app licant is

properly informed of the action taken? (§1002.9(g))

Furnishing Credit Information

25. If the bank furnishes information:

a. Does the bank designate any new account to

reflec t

the

particip ation of both spouses if the app licant’s

spouse is p ermitted to use or is contractually liable on

the account (other than as a guarantor, surety,

endorser, or similar p arty) and any existing account

within 90 days of the Requirement? (If answer is No,

there app ears to be a violation.)

b. Does the bank furnish joint account information to

consumer reporting agencies in a manner that

provides access to such information in the name of

each spouse? (§1002.10(b))

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V–7.16 FDIC Consumer Compliance Examination Manual — March 2022

26. When an application involves multiple applicants, does the

bank provide notification of action to the primary

applicant, when one is readily app arent? (§1002.9(f))

Record Retention

27. Does the bank retain application files for 25 months (12

months for business credit ap plications from businesses

with gross revenues of $1 million or less in the previous

fiscal year, except an ext ension of trade credit, credit

incident to a factoring agreement, or other similar typ es of

business credit) after date of notice of action taken or

notice of incomp leteness the following (as app licable)

containing:

a) The ap plication and all sup p orting material?

(§1002.12(b)(1)(i));

b) All information obtained for monitoring

purposes? (§1002.12(b)(1)(i));

c) The notification of action taken, if written, or any

notation or memorandum by the bank, if made

orally? (§1002.12(b)(1)(ii)(A));

d) A statement of specific reasons for adverse action,

if written, or any notation or memorandum by the

bank, if made orally? (§1002.12(b)(1)(ii)(B))

e) Any written statement submitted by the ap plicant

alleging a violation of ECOA or Regulation B?

(§1002.12(b)(1)(iii))

28. Does the bank retain application files in connection with

existing accounts for 25 months (12 months for business

credit app lications from businesses with gross revenues of

$1 million or less in the previous fiscal year, except an

extension of trade credit, credit incident to a factoring

agreement, or other similar types of business credit) after

date of notice of action taken containing:

a) Any written or recorded information concerning

the adverse action? (§1002.12(b)(2)(i));

b) Any written statement submitted by the applicant

alleging a violation of ECOA or Regulation B?

(§1002.12(b)(2)(ii))

29. Does the bank retain application files for other

applications, for which §1002.9’s notification requirement

do not apply, retain for 25 months (12 months for

business

credit app lications from businesses with gross revenues of

$1 million or less in the previous fiscal year, except an

extension of trade credit, credit incident to a factoring

agreement, or other similar types of business credit) after

the date the bank receives the app lication, containing all

written or recorded information in its possession

concerning the ap plicant, including any notation of action

taken? (§1002.12(b)(3))

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FDIC Consumer Compliance Examination Manual — March 2022 V–7.17

30. For business credit applications from businesses with gross

revenues of more than $1 million in the previous fiscal

year, or an extension of trade credit, credit incident to a

factoring agreement, or other similar typ es of business

credit, does the bank retain records for at least 60 days

after notifying the applicant of the action taken, or for 12

months after notifying the applicant of the action taken if

the applicant requests in the 60-day time period the reasons

for denial or that the records be retained? (§1002.12(b)(5))

31. For prescreened solicitations, does the bank retain for 25

months (12 months for business credit except for

businesses with gross revenues of more than $1 million in

the previous fiscal year, or an ext ension of trade credit,

credit incident to a factoring agreement, or other similar

types of business credit) after the offer of credit was made:

a) The text of any prescreened solicitation;

b) The list of criteria the bank used to select

potential recipients of the solicitation; and

c) Any correspondence related to complaints

(formal or informal) about the solicitation?

(§1002.12(b)(7))

32. Was information relative to an investigative enforcement

or civil action retained until final disposition of the matter?

(§1002.12(b)(4))

33. If the bank conducts a self-test pursuant to §1002.15, does

it after completion of the test, retain all written and

recorded information:

a) For 25 months?

b) Until final disp osition if it has actual notice

that it is under investigation or subject to

enforcement proceedings or a civil action?

(§1002.12(b)(6))

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V–7.18 FDIC Consumer Compliance Examination Manual — March 2022

34. With respect to applications for credit to be secured by a

first lien on a dwelling, in the absence of a waiver, does the

creditor:

a) Provide copies of all appraisals and other written

valuations developed in connection with the

application for credit promptly upon completion, or

three business days prior to consummation of the

transaction (for closed-end-credit) or at, or before,

account opening (for open-end credit), whichever is

earlier, whether credit is granted or denied or the

application is withdrawn; or

b) If the creditor obtains a waiver of the timing

requirements that is not otherwise prohibited by law,

does the creditor:

i. Obtain the waiver at least three business days pri

consummation or account opening (except in the

case of waivers p ertaining solely to the ap plicant’s

receipt of a copy of an appraisal or other written

valuation that contains only clerical changes from

a previous version of the appraisal or other written

valuation provided to the applicant three or more

business days prior to consummation or account

opening);

ii. Provide the applicant a copy of the appraisal or

other valuation at or before consummation or

account opening, where the loan is consummated

or the account is opened; and

iii.

Where the loan is not consummated or the

account

is not op ened, provide the ap plicant

with cop ies no later than 30 days after

dete

rmining the consummation will not

occur or the account will not be opened? (12

CFR 1002.14(a)).

35. With respect to applications for credit to be secured by a

first lien on a dwelling, does the creditor refrain from

charging an ap plicant for providing required cop ies of

appraisals and other written valuations? (A creditor may

charge a reasonable fee to reimburse for the cost of the

appraisal or other written valuation unless otherwise

provided by the law but a creditor may not charge an

applicant for providing a copy of ap praisals and other

written valuations.) (12 CFR 1002.14(a)(3))

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FDIC Consumer Compliance Examination Manual — March 2022 V–7.19

36. With resp ect to ap plications for credit to be secured by a

first lien on a dwelling, does the creditor mail or deliver a

written notice of the app licant’s right to receive a cop y of

all written appraisals developed in connection with the

application no later than the third business day after the

creditor receives the ap plication for credit; or if the creditor

determines that credit was not to be secured by a first lien

on a dwelling at the time of application but later

determined the credit will be secured by a first lien on a

dwelling, does the creditor mail or deliver the same written

notice no later than the third business day after such de-

termination? (12 CFR

1002.14(a)(2))

37. Are the creditor’s written disclosures that are required by

Regulation B clear, consp icuous, and excep t for those

required by 12 CFR 1002.5 (self-tests) and 1002.13

(monitoring), in a form the app licant can retain? (12 CFR

1002.4(d))

General Rule

38. Do the bank’s marketing or advertising materials (including

lobby s igns or other disp lays) contain any information that

would discourage, on a prohibited basis, a reasonable

person from making or pursuing an

application? (§1002.4(b))