On Could 9, the CFPB released an advisory opinion affirming that ECOA and its implementing rule, Regulation B, defend not solely these individuals actively looking for credit score, but additionally those that have sought and obtained credit score. The CFPB said within the opinion that “[d]espite this well-established interpretation, the Bureau is aware that some creditors fail to acknowledge that ECOA and Regulation B plainly apply to circumstances that take place after an extension of credit has been granted, including a revocation of credit or an unfavorable change in the terms of a credit arrangement.” As well as, the Bureau states that it’s “aware that some creditors fail to provide applicants with required notifications that include a statement of the specific reasons for the adverse action taken or disclose an applicant’s right to such a statement.”
The opinion additionally factors out that ECOA protects candidates from discrimination “with respect to any aspect of a credit transaction,” not merely the applying course of, and that “applicant” is outlined in ECOA to incorporate individuals who’ve utilized for and obtained credit score, not merely individuals who’re making use of for credit score. The opinion additionally states that this problem has been thought-about in solely a single United States Court docket of Appeals case, which agreed that the legislation protects current debtors. Whereas sure United States District Court docket opinions have interpreted ECOA extra narrowly, the CFPB stated it isn’t persuaded by these opinions. “No court of appeals has endorsed these district courts’ narrow reading,” the opinion stated. “These district court decisions read ‘applicant’ in isolation instead of reading this statutory term in context, as required by the [U.S.] Supreme Court.”
CFPB Director Rohit Chopra stated in a associated assertion that “today’s advisory opinion and accompanying analysis makes clear that anti-discrimination protections do not vanish once a customer obtains a loan.”
Placing It Into Apply: Mortgage servicers particularly should be conscious that the anti-discrimination provisions in ECOA/Regulation B apply to actions they’re taking or failing to take, which incorporates offering opposed motion notices beneath acceptable circumstances. Servicers ought to evaluation their insurance policies and procedures to find out that they’re compliant with the advisory opinion.