12 CFR Part 1002 - Equal Credit Opportunity Act (Regulation B)
Specifically, the CFPB removed the “effects test” from the regulation and affirmatively stated that ECOA does not recognize disparate-impact liability. It also modified the prohibition on “discouragement” to focus on statements of intent to discriminate rather than statements that merely create negative impressions. Lastly, the rule prohibited creditors from using race, color, national origin, or sex as common characteristics under Special Purpose Credit Programs (SPCPs) and imposed additional requirements for for-profit creditors wishing to use SPCPs. The amendments facilitate compliance with ECOA by ensuring that the obligations are consistent with the statute. An updated version of Regulation B will be published soon.
For example, the rule excluded merchant cash advances, small dollar transactions, and agricultural loans from coverage under Regulation B, subpart B. It also minimized data collection and reporting requirements to adhere more closely to statutory requirements for those creditors that remain covered under the rule. The rule eliminated pricing and denial-reason data and removed reference to LGBTQIA+-owned business status, as well as the use of disaggregated categories in collecting race and ethnicity data points. These changes thereby eliminate unnecessary compliance burdens that would raise the cost and may lower the availability of credit for small businesses and communities. An updated version of Regulation B will be published soon.
Regulation B protects applicants from discrimination in any aspect of a credit transaction.
Credit transactions and aspects of credit transactions include:
- Consumer credit
- Business credit
- Mortgage loans
- Refinancing
- Open-end credit
- Credit applications
- Standards of creditworthiness
- Denial of credit
- Servicing and collection
- Revocation, alteration, or termination of credit
The regulation covers topics such as:
- Discrimination
- Discouragement
- Notification of action taken (including adverse action)
- Appraisal and other written valuations
- Special purpose credit programs
- Limitation on collection of certain protected information
- Self-testing and self-correction
- Evaluation of applications
- Signature requirements
- Mandatory information collection for monitoring purposes
Additional resources
Consumer FAQs
Other resources
Mortgage Appraisal and Other Written Valuations Under ECOA Compliance Resources