CFPB Issues Advisory Opinion on Applicability of ECOA to Existing Borrowers | PC Weiner Brodsky Kider

The CFPB recently issued an advisory opinion explaining the agency’s position that the protections against discrimination under the Equal Credit Opportunity Act (ECOA) and its Implementing Regulation B, continue after the application stage and apply to all aspects of a credit agreement, including for borrowers. who have received an extension of credit.

The ECOA prohibits any creditor from discriminating against any applicant, with respect to any aspect of a credit transaction, on any prohibited basis (race, color, religion, national origin, sex or marital status, age, or because the applicant’s income is from an assistance program).

The CFPB argues that interpreting “applicant” to include individuals and businesses during the progress of the application, as well as after credit is granted, is consistent with the purpose of the ECOA, its history legislation and its enactment taken together. The advisory opinion notes that “[t]this is the Bureau’s long-standing position and the view of federal agencies prior to the Bureau’s creation.

Interpreting the term “applicant” broadly, the notice explains that the ECOA would prohibit a lender, for example, from lowering the credit limit on certain borrowers‘ accounts or using more aggressive collection practices with certain borrowers based on an ECOA ban. Additionally, the notice notes that the ECOA would require a lender to provide a Notice of Adverse Action to an existing borrower if, for example, an existing account is terminated or the terms of an account are changed adversely. . The CFPB has already taken this position in the context of litigation, in particular in an amicus brief filed at 7e Circuit in December 2021.

In a statement regarding the advisory opinion, CFPB Director Rohit Chopra said, “Today’s advisory opinion and accompanying analysis make it clear that protections against discrimination do not disappear overnight. time a client obtains a loan.

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