Question 1

Which of the following is a protected class under ECOA?

Accepted Answer

ECOA prohibits discrimination based on marital status, among other protected characteristics. Regulation B also covers race, color, religion, national origin, sex, age if the applicant can contract, receipt of public assistance, and good-faith exercise of rights under the Consumer Credit Protection Act.

Question 2

Under ECOA, which factor may a creditor generally consider without automatically violating the law?

Accepted Answer

Credit history is a legitimate underwriting factor if it is used consistently and without unlawful discrimination. ECOA prohibits discrimination on protected bases, but it does not stop creditors from evaluating bona fide credit risk factors.

Question 3

ECOA prohibits discrimination against an applicant because all or part of the applicant's income comes from:

Accepted Answer

Regulation B specifically prohibits discrimination because an applicant receives income from a public assistance program. Creditors may evaluate whether income is stable and likely to continue, but may not discount it simply because of the source.

Question 4

Which action would most likely violate ECOA?

Accepted Answer

Refusing to consider an applicant because of marital status violates ECOA. Creditors may evaluate income, assets, and debts, but they may not discriminate on a prohibited basis under Regulation B.

Question 5

A creditor denies a completed mortgage application. Which statement about the adverse action notice is correct?

Accepted Answer

ECOA requires a timely adverse action notice and specific reasons for the action, or notice of the applicant's right to obtain them. Regulation B does not allow vague non-specific explanations as a substitute for meaningful notice.

Question 6

An underwriter receives an incomplete application and asks for missing tax returns. The applicant never sends them. Under ECOA, the creditor may generally:

Accepted Answer

For incomplete applications, Regulation B allows the creditor to send a notice of incompleteness identifying what is needed and a reasonable deadline, or to take adverse action within the required timing. The rule is designed to keep applicants informed rather than leaving files unresolved indefinitely.

Question 7

Which statement best describes an ECOA adverse action notice?

Accepted Answer

Regulation B requires an adverse action notice to identify the creditor and include the action taken and the specific reasons, or a notice of the right to obtain those reasons. FCRA may impose additional duties when a consumer report was used.

Question 8

A lender uses an AI model to deny an application but says the model is too complex to explain. Under ECOA, this is:

Accepted Answer

ECOA requires specific and accurate adverse action reasons even when complex algorithms are used. The CFPB has emphasized that a creditor cannot avoid compliance by relying on a model it cannot explain.

Question 9

A married borrower qualifies on her own income and credit for an unsecured loan. The creditor nevertheless requires her husband to co-sign because 'that's company policy.' This is:

Accepted Answer

If the applicant individually qualifies, requiring a spouse to co-sign because of marital status or policy can violate Regulation B. ECOA is designed to prevent automatic spousal-signature requirements unrelated to creditworthiness or collateral law.

Question 10

A creditor tells an older applicant, 'You probably shouldn't apply for a 30-year mortgage at your age.' What is the main ECOA concern?

Accepted Answer

ECOA prohibits discouraging or discriminating against applicants on prohibited bases, including age if the applicant has legal capacity to contract. Even before a formal denial, discouragement can create fair lending concerns.

ECOA Practice Questions

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