Mortgages Analyzed
 
ECOA Notice

What is an ECOA Notice?

ECOA Notice

ECOA Notice is a disclosure statement that a lender, under certain circumstances, is required to send to a person who requests for an extension of credit. The intent of the ECOA Notice is to ensure the borrowers are aware of the ECOA law which prohibits lenders from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age, income derived from any public assistance program, or an applicant’s exercise of any right under the Consumer Credit Protection Act.

ECOA stands for Equal Credit Opportunity Act and is one of the key fair lending and consumer protection legislation. The disclosure is required as per Regulation B that implements ECOA.

Source :www.MortgagesAnalyzed.com

When is an ECOA Notice Required?

A lender is required to send an ECOA Notice to the applicant under the following circumstances:

  1. Applications for Consumer Credit: A written ECOA Notice must be sent to the Applicant when a lender takes an adverse action. The notice is typically included in the notice informing the applicant of the adverse action.
  2. Applications for Business Credit: Issuance of ECOA Notice depends on the size of the gross revenue a business has in its previous financial year. If the gross revenues are:
    1. Equal or Less than $1 million: The lender has a choice to give ECOA Notice either at the time of application or when an adverse action is taken. In both cases the notice must be in writing.
    2. More than $1 million: The written ECOA Notice accompanies the statement of reasons for adverse action and is required to be sent to the applicant only if the applicant makes a written request for the reasons of adverse action. The applicant’s request for reasons must be made within 60 days of the lender’s notification of adverse action.

Sending the ECOA notice in the manner above will help the lender to comply with the provisions of Consumer Financial Protection Bureau’s (CFPB) Regulation B, Section 202.9.

Source :www.MortgagesAnalyzed.com

Contents of an ECOA Notice

As a lender, 12 CFR §1002.9(b)(1) provides the specific text that you must include in the ECOA Notice:

The federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants 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 applicant'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 compliance with this law concerning this creditor is [name and address of the appropriate regulatory agency].

In the last line of the ECOA Notice insert the name and address of the regulatory agency that supervises you. CFPB Regulation B, Appendix A provides the list of regulatory agencies that you would use in the ECOA Notice. From Jan 1, 2013, the CFPB requires banks, savings associations, and credit unions with total assets of over $10 billion to list CFPB’s contact information in place of the contact information for your primary regulatory agency.

Source :www.MortgagesAnalyzed.com
 

Document Summary

 
ECOA Notice
Purpose
ECOA Notice makes the loan applicant aware of the ECOA provisions which prohibit lenders from discriminating against credit applicants based on prohibited basis (race, color, religion, etc.).
Use in Mortgages
ECOA Notice is used by the lender to comply with the provisions of Federal Reserve Board’s Regulation B, Section 1002.9
Other Names
  • ECOA Disclosure
  • Equal Credit Disclosure
Type
Disclosure
Provided By
Loan originator
Provided To
Loan applicant
Notarization Required
No
Signed By
The disclosure itself is not signed by anyone. However, the lender may require the applicant to sign an acknowledgement of receiving the notice.
Life Cycle Stage
Origination
Recordkeeping
The lender should retain the ECOA Notice for at least 25 months after the date of notifying an applicant of action taken or of incompleteness. Additional record retention requirements may apply in cases of enforcement proceedings, commercial purpose applications, self-tests, and other cases.
Model Form
Regulation B does not provide a model form but provides the specific information to be included in the ECOA Notice.
Applicable Laws
CFPB Regulation B, 12 CFR §1002.9(b)(1)
Source :www.MortgagesAnalyzed.com

Regulatory Citations

12 CFR §1002.9(b)(1) ECOA notice:

To satisfy the disclosure requirements of paragraph (a)(2) of this section regarding section 701(a) of the Act, 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 applicants 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 applicant'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 compliance with this law concerning this creditor is [name and address as specified by the appropriate agency or agencies listed in appendix A of this part]. Until January 1, 2013, a creditor may comply with this paragraph (b)(1) and paragraph (a)(2) of this section by including in the notice the name and address as specified by the appropriate agency in appendix A to 12 CFR part 202, as in effect on October 1, 2011.

Sample Documents

  1. Sample ECOA Notice

Updated: Aug 08, 2013

Comments

comments powered by Disqus
The intent of the ECOA Notice is to ensure the borrowers are aware of the ECOA law.
Finance
Know all there is to know about the US Mortgage Industry. We help you to make a well informed decision.
Finance
Loan Products
Confused about the choosing right loan product for you? We help you decide the loan product that suits your needs best.
Loan Products
Documents
Here you will find all there is to know about the forms, papers & documents required for Home Loan Mortgage and much more.
Documents
Regulation
List of all the Regulations related to US Mortgage Industry.
Regulations