We will begin by comparing the prohibited basis of both ECOA and FHA.

ECOA and FHA Combined

Under ECOA, it is unlawful for a lender to discriminate on a prohibited basis in any aspect of a credit transaction, and under both ECOA and FHA, it is unlawful for a lender to discriminate on a prohibited basis.

Under one or both of these laws, a lender may not, because of a prohibited factor:

  • Fail to provide information or services or provide different information or services regarding any aspect of the lending process, including credit availability, application procedures or lending standards
  • Discourage or selectively encourage applicants with respect to inquiries about or applications for credit
  • Refuse to extend credit or use different standards in determining whether to extend credit
  • Vary the terms of credit offered, including the amount, interest rate, duration or type of loan
  • Use different standards to evaluate collateral or credit

 

May Not Express Preference

A lender may not express a preference, either orally or in writing, that is based on prohibited factors. A lender may also not indicate that it will treat applicants differently on a prohibited basis.

A lender may not discriminate on a prohibited basis because of the characteristics of:

  • An applicant, prospective applicant, or borrower
  • A person associated with an applicant, prospective applicant, or borrower (for example, a co-applicant, spouse, business partner or live-in aide)
  • The present or prospective occupants of either the property to be financed or the characteristics of the neighborhood or other area where the property to be financed is located

The courts have recognized three methods of proof of lending discrimination under ECOA and FHA. These include overt evidence of disparate treatment, comparative evidence of disparate treatment and evidence of disparate impact. These details will be discussed later in this course.