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REGULATION BREGULATION B
Discrimination Discrimination
And And
LendingLending
REGULATION BREGULATION B
Enacted in 1974Enacted in 1974 Requires creditors to base Requires creditors to base
lending decisions on neutral lending decisions on neutral credit factorscredit factors Borrower’s ability to repay a debtBorrower’s ability to repay a debt Borrower’s willingness to repay a Borrower’s willingness to repay a
debtdebt
REGULATION BREGULATION B
Cannot Discriminate based Cannot Discriminate based on:on: SexSex Marital StatusMarital Status Childbearing intentionsChildbearing intentions Part-time incomePart-time income Receipt of alimony, child support, Receipt of alimony, child support,
or separate maintenance paymentsor separate maintenance payments
REGULATION BREGULATION B
In 1976, new guidelines were added to In 1976, new guidelines were added to the Reg.the Reg.
Discrimination is prohibited based on:Discrimination is prohibited based on: RaceRace Skin ColorSkin Color ReligionReligion National originNational origin AgeAge Receipt of protected incomeReceipt of protected income
REGULATION BREGULATION B
Pre-applicationPre-application Cannot discourage member from Cannot discourage member from
applyingapplying Cannot accept applications from Cannot accept applications from
non-members (employee should non-members (employee should determine eligibility for membership determine eligibility for membership first)first)
Cannot discourage certain Cannot discourage certain categories of members from categories of members from applying for creditapplying for credit
REGULATION BREGULATION B
Can ask marital status when:Can ask marital status when:Application is for joint creditApplication is for joint creditLoan is to be securedLoan is to be securedApplicant lives in a community Applicant lives in a community
property state or relies on property state or relies on property located in one to property located in one to secure the loansecure the loan
REGULATION BREGULATION B
Can only ask about a spouse if:Can only ask about a spouse if: Spouse will use the account or be Spouse will use the account or be
contractually liable for itcontractually liable for it Applicant is relying on spouse’s income to Applicant is relying on spouse’s income to
repay the loanrepay the loan Applicant is relying on alimony, child Applicant is relying on alimony, child
support, or separate maintenance income support, or separate maintenance income to repay the loanto repay the loan
Applicant lives in a community property Applicant lives in a community property state or is relying on assets located in onestate or is relying on assets located in one
REGULATION BREGULATION B
AgeAgeCan refuse credit to members Can refuse credit to members
who are not age 18 or olderwho are not age 18 or older If you ask one member If you ask one member
whether they expect decreases whether they expect decreases or interruptions in their or interruptions in their income, you must ask them allincome, you must ask them all
REGULATION BREGULATION B
Older ApplicantsOlder ApplicantsAge 62 and olderAge 62 and older
Cannot discriminate!Cannot discriminate!Determine whether the security Determine whether the security is adequate to cover the loanis adequate to cover the loan
Do they have additional Do they have additional collateral to support repayment?collateral to support repayment?
REGULATION BREGULATION B
IncomeIncome Cannot refuse to consider any Cannot refuse to consider any
legitimate income such as:legitimate income such as: Unemployment compensationUnemployment compensation Social SecuritySocial Security Any type of government assistanceAny type of government assistance AlimonyAlimony Child supportChild support Separate maintenance paymentsSeparate maintenance payments Part-time workPart-time work
REGULATION BREGULATION B
Income note:Income note: Members have the option of choosing Members have the option of choosing
whether or note to use Alimony, child whether or note to use Alimony, child support, and separate maintenance support, and separate maintenance payments in establishing their payments in establishing their creditworthinesscreditworthiness
You must inform them that they are not You must inform them that they are not required to tell you about this type of required to tell you about this type of income if they do not plan to rely on it to income if they do not plan to rely on it to repay the loanrepay the loan
REGULATION BREGULATION B
IncomeIncome Types of income that must be consideredTypes of income that must be considered
Alimony, child support, separate maintenance Alimony, child support, separate maintenance paymentspayments
Annuity, pension, or other retirement benefitsAnnuity, pension, or other retirement benefits Social Security or supplemental security incomeSocial Security or supplemental security income Unemployment compensationUnemployment compensation Aid to families with dependent childrenAid to families with dependent children Rent and mortgage supplementRent and mortgage supplement Welfare benefitsWelfare benefits
REGULATION BREGULATION B
Federal government monitoringFederal government monitoring If loan is used to purchase or refinance a If loan is used to purchase or refinance a
principal residence, we are required to principal residence, we are required to request the following information:request the following information: Race/national origin, using specific, Race/national origin, using specific,
listed termslisted terms SexSex Marital status, using specific, listed Marital status, using specific, listed
termsterms AgeAge
REGULATION BREGULATION B
Government MonitoringGovernment Monitoring You may ask the applicant their You may ask the applicant their
immigration or residency status and deny immigration or residency status and deny credit to an illegal aliencredit to an illegal alien
If applicant refuses to answer the required If applicant refuses to answer the required questions:questions: Note the applicant’s refusal on the formNote the applicant’s refusal on the form Note the applicant’s national origin or Note the applicant’s national origin or
race and sex based on visual observationrace and sex based on visual observation
REGULATION BREGULATION B
InsuranceInsurance Can ask member’s age, sex, and Can ask member’s age, sex, and
marital status to determine insurance marital status to determine insurance eligibilityeligibility
Cannot deny credit because the Cannot deny credit because the member does not qualify for insurancemember does not qualify for insurance Credit lifeCredit life Credit disabilityCredit disability Health insuranceHealth insurance Accident insuranceAccident insurance
REGULATION BREGULATION B
Credit InformationCredit Information Must consider accounts where both Must consider accounts where both
spouses are contractually responsiblespouses are contractually responsible Must consider information a member Must consider information a member
presents disputing a negative credit historypresents disputing a negative credit history Must consider information reported in the Must consider information reported in the
name of a spouse or former spouse that name of a spouse or former spouse that accurately reflects the member’s accurately reflects the member’s creditworthiness ( member’s income was creditworthiness ( member’s income was needed to pay account listed in the name of needed to pay account listed in the name of their spouse)their spouse)
REGULATION BREGULATION B
DecisionsDecisions Must be communicated within 30 Must be communicated within 30
daysdays Approvals may be communicated Approvals may be communicated
by telephone or in personby telephone or in person Denials must be mailed an Adverse Denials must be mailed an Adverse
Action NoticeAction Notice
REGULATION BREGULATION B
Creditors must give a reason Creditors must give a reason for denying creditfor denying credit
Creditors may not terminate Creditors may not terminate credit on an existing account credit on an existing account because of a change in marital because of a change in marital status unless the applicant is status unless the applicant is unable or unwilling to payunable or unwilling to pay
REGULATION BREGULATION B
Adverse Action NoticesAdverse Action NoticesDenying creditDenying creditReducing member’s credit limitReducing member’s credit limitRefusing to increase amount of Refusing to increase amount of
credit available when a formal credit available when a formal request is made by the memberrequest is made by the member
REGULATION BREGULATION B
Adverse Action Notices must Adverse Action Notices must include:include: Telephone number of consumer reporting Telephone number of consumer reporting
agencyagency Statement-Consumer Reporting Agency did Statement-Consumer Reporting Agency did
not make decisionnot make decision Notice to receive a free copy of the credit Notice to receive a free copy of the credit
reportreport Notice of member’s right to dispute Notice of member’s right to dispute
information in the reportinformation in the report
REGULATION BREGULATION B
Notification of Adverse ActionNotification of Adverse Action Must be in writing and mailed to Must be in writing and mailed to
member within 30 daysmember within 30 days Must be in writing and mailed to Must be in writing and mailed to
member within 90 days of counteroffermember within 90 days of counteroffer ECOA NoticeECOA Notice Include list of reasons for denialInclude list of reasons for denial
Don’t include more than 4 reasons for Don’t include more than 4 reasons for denialdenial
REGULATION BREGULATION B
GuarantorGuarantor Does not share in the loan Does not share in the loan
proceeds but agrees to pay the proceeds but agrees to pay the debit if the borrower defaultsdebit if the borrower defaults
CosignerCosigner Signs, but does not receive the Signs, but does not receive the
proceedsproceedsEqually responsible for loan, Equally responsible for loan, whether in default or notwhether in default or not
REGULATION BREGULATION B
Secured CreditSecured Credit Must have signatures from all parties Must have signatures from all parties
named on the collateralnamed on the collateral Security agreement allows FTWCCU to Security agreement allows FTWCCU to
repossess collateralrepossess collateral Allows FTWCCU to sell collateral if Allows FTWCCU to sell collateral if
borrower defaultsborrower defaults Individual that signs security agreement Individual that signs security agreement
gives up their rights to property if loan gives up their rights to property if loan default occurs, but is not responsible for default occurs, but is not responsible for remaining debtremaining debt