Connolly & Mott v. Lanham et al.
The Equal Credit Opportunity Act (ECOA) prohibits creditors from discriminating on a prohibited basis “against any applicant, with respect to any aspect of a credit transaction.” 15 U.S.C. § 1691. And Regulation B, which implements ECOA, further specifies that, when assessing applications for credit, “a creditor shall not take a prohibited basis into account in any system of evaluating the creditworthiness of applicants.” 12 C.F.R. § 1002.6(b)(1).
The CFPB and DOJ filed a joint Statement of Interest (SOI) explaining that relying on discriminatory home appraisals can violate ECOA. The law is clear that mortgage lenders cannot take race, sex, or any other prohibited bases into account when evaluating the creditworthiness of an applicant. That means lenders cannot rely on a discriminatory appraisal if they knew, or should have known, that the appraisal was discriminatory. The SOI also explains that, to survive a motion to dismiss under ECOA, plaintiffs need only plead facts that plausibly allege discriminatory intent, rather than establish a prima facie case, which is not a pleading requirement but rather an evidentiary standard. In the SOI, the Department of Justice also addresses how the Fair Housing Act applies to discriminatory appraisals.