When it comes to Fair Lending, there are certain things that, by law, you cannot consider in your decision-making process. Those are specified in both Regulation B (Equal Credit Opportunity Act) and the Fair Housing Act and include race, sex, age, etc., to name a few. While technically not protected by regulation, we like to throw in one more.
Jerod explains more in the video.
Transcript:
The task is simply this. When it comes to Reg B, you are not to consider that laundry list of items you'll see on page three. Now, there's not a ton. There are eight. Eight listed areas that you can't go. So what I would do is highlight, and underline those words, Do Not Consider. If you're a lender, if you're an organization, these are things that you can't take into account when you're doing anything with respect to the credit decision-making process, race, color, religion, national origin, and sex. Note that that includes both sexual orientation and gender. That was updated in June 2020 by way of a Supreme Court decision. They have now included sexual orientation within that. Marital status, age, obviously, they have to be of legal age to enter into a contract, receipt of income from any public assistance program, and then any right under the Consumer Credit Protection Act.
Now, I'm going to have you pick up your pens and write in a ninth that is not a protected class by way of the regulation, but regulatory agencies often observe it as an area where you don't want to be discriminating. And it is simply service members and their dependents. They're not protected under the Equal Credit Opportunity Act. Yes, there's the Soldiers and Sailors Civil Relief Act and the Military Lending Act that affords protections. But you wouldn't want to discriminate against them, just like these other groups. So we throw them into the bucket as well as a ninth that's not part of the regulation but one we want to watch out for. Now, those areas are with respect to any aspect of the credit transaction process.
If we go to page number four, the same thing occurs here. Do not consider, with respect to any part of the home buying process, race, color, religion, or national origin. This is stuff that the Fair Housing Act covers. Now, just because we're here on the top of page four doesn't mean those things on the previous page are outside or out of bounds. Okay? We're talking about financial institutions here. So if you're talking about loans, the previous page, page number three, is in play, but so too would be page number four at the very top. And again, there's some crossover there as well. But the idea is simply this. You're not to consider these things when you make a credit decision or any part of the credit decision-making process. Okay, hold that thought.
Published
2022/12/15
