Each month we will serve up cans of Alphabet Soup applicable to the
mortgage industry. Each flavor of Alphabet Soup will include the soup’s
acronym and its actual name, and a hyperlink to the regulation, law, or
rule from the agency that administers it. It’s all right here; relax and enjoy
reading your favorite bowl of Mortgage Compliance Alphabet Soup.
COMPLIANCE ALPHABET SOUPS
Compliance Alphabet Soups
FAIR LENDING LAWS
Fair lending is comprised of a closely-coordinated combination of requirements
and prohibitions contained in several consumer protection and civil rights laws and
regulations. The Fair Lending Laws are generally considered to be: Regulation B – Equal
Credit Opportunity Act (ECOA); Fair Housing Act; Regulation V – Fair Credit Reporting
Act (FCRA); and Regulation C – Home Mortgage Disclosure Act (HMDA).
Regulation B and the ECOA protect applicants to and borrowers of loans from
discrimination on the basis of race, color, religion, national origin, sex, marital status, age,
whether the applicant derives income from a public assistance program, or whether the
applicant has exercised in good faith any right under the Consumer Credit Protection
Act. The law applies in consumer-purpose and business-purpose transactions, is not
collateral dependent, and includes the end-to-end credit process. It also requires
non-HMDA reporting financial institutions and other mortgage lenders to collect information about a loan
applicant(s)’s race, ethnicity, and sex for applications and loans to purchase or refinance a consumer’s principal
dwelling (commonly referred to as ‘government monitoring information’).
The Fair Housing Act protects any person from discrimination because of race, color, religion, sex,
handicap, familial status, or national origin in the sale, rental, or advertising of dwellings, in the provision of
brokerage services, or in the availability of residential real estate-related transactions.
Regulation V and FCRA provides rules to credit reporting and consumer reporting agencies about
collecting and disseminating information about consumers to be used in credit evaluations and for other
purposes, including insurance applications and employment. It also provides rules for credit reporters and
report users, like banks and other creditors, to protect consumers from inaccurate and negative reporting.
Regulation C and HMDA require certain financial institutions and other mortgage lenders to report
information about applications and loans to purchase or refinance a dwelling or dwelling(s) and for certain
transactions secured by a dwelling or dwelling(s). While the aggregated HMDA data, which shows lending
activity by race/ethnicity/sex, geographic location, income levels, type of collateral, and economic status
of census tracts or blocks, does not prove discrimination, it may reveal lending patterns that warrant further
investigation by federal financial regulators.
HMDA ATR ECOA QM