Equal Credit Opportunity Act (Regulation B): nine prohibited bases, your right to reasons

ECOA makes it illegal to price or deny a mortgage on nine personal characteristics, and forces a written, reasoned answer on every application within 30 days.

The Equal Credit Opportunity Act was passed in 1974, originally to stop lenders from refusing credit to women in their own names, and was broadened in 1976 to its present list of protected characteristics. Regulation B, now 12 CFR Part 1002 under the CFPB, implements it. ECOA is a fair lending law, and it is also a procedural law: it tells lenders what they may not ask, what they may not consider, and what they owe every applicant in writing. Unlike most mortgage rules, it applies to all credit — consumer, business, secured, unsecured — so a hard money lender making a business-purpose loan is still bound by it.

The nine prohibited bases

A creditor may not discriminate in any aspect of a credit transaction on the basis of:

race;
color;
religion;
national origin;
sex (which the CFPB interprets to include sexual orientation and gender identity);
marital status;
age, provided the applicant has the capacity to contract;
receipt of income from any public assistance program;
the good-faith exercise of any right under the Consumer Credit Protection Act (for example, having disputed a credit card charge or asserted a TILA claim).

“Any aspect” is read broadly: marketing, pre-qualification, underwriting, pricing, the terms offered, servicing and collection. Discouraging someone from applying is itself a violation, and the rule recognizes both intentional discrimination and facially neutral practices that have a disproportionate effect without a business justification.

What a lender may not ask or do

Regulation B restricts the application itself. A lender generally may not ask about your plans to have children, whether you are using birth control, or your spouse’s details unless the spouse will be liable, lives in a community-property state, or you are relying on the spouse’s income. It may ask about marital status only in the terms “married,” “unmarried” or “separated,” and only where state property law makes it relevant. Income from alimony, child support or separate maintenance may be disclosed at your option, and if disclosed must be counted if it is likely to continue. A creditor may not discount or refuse to consider income because it comes from part-time work, a pension, an annuity or public assistance, though it may evaluate whether the income is stable. It may not require a spouse’s signature on the note when you qualify alone (the spousal signature rule), although it may require a signature on the mortgage or deed of trust to perfect its lien in some states. Age may be used only to favor older applicants or in a properly validated scoring system that does not assign a negative value to elderly applicants.

The notices you are owed

ECOA’s most used provision is procedural. Within 30 days of receiving a completed application, the creditor must notify you of its decision: approval, counteroffer, or adverse action. An adverse action notice must be in writing, must state the specific principal reasons for the decision (or tell you that you may request them within 60 days), and must identify the federal agency that enforces ECOA against that creditor. “Does not meet our standards” is not a reason; “insufficient income relative to debt” or “delinquent credit obligations” is. If the creditor used a credit report, the FCRA adds the bureau’s name, your score and the key factors. If the application is incomplete, the lender must within 30 days either decide or send a notice listing what is missing and a reasonable deadline. A counteroffer you do not accept within 90 days is treated as a denial, with a notice.

Since 2014, Regulation B also gives you a right to the appraisal: on a first-lien loan secured by a dwelling, the lender must tell you within three business days of application that you may receive a copy of any valuation, and must deliver copies promptly after completion and no later than three business days before consummation (or, if the loan does not close, within 30 days of that outcome). You may waive the timing but not the right to the copy, and you cannot be charged for the copy itself, only for the appraisal fee.

Limits of the law

ECOA does not require a lender to approve anyone, or to ignore credit history, income, debt ratio or collateral. It does not prohibit pricing differences that reflect legitimate risk factors consistently applied. It is silent on property-based discrimination such as redlining of a neighborhood, which is the domain of the Fair Housing Act, although the two statutes overlap heavily in mortgage cases. And it does not reach the seller or the real estate agent, only creditors and those who arrange credit.

Who enforces it and what you can recover

The CFPB, the banking agencies, the FTC (for non-bank lenders), and the Department of Justice, which can sue for a pattern or practice of discrimination, all enforce ECOA. Private suits are allowed: actual damages, punitive damages up to $10,000 in an individual action (up to the lesser of $500,000 or 1% of net worth in a class action), equitable relief and attorney’s fees. The statute of limitations is five years from the violation. Lenders must keep application records for 25 months, which is what makes later investigation possible.

Putting ECOA to work

If you are denied, read the stated reasons against your file and ask, in writing, for the specific reasons if the notice only offers them on request; vague reasons are a violation in themselves. Request the appraisal and compare the value and comparables with what you know about the property — appraisal bias complaints are handled under both ECOA and the Fair Housing Act. If a loan officer asks about pregnancy, childcare plans or your ethnicity beyond the government monitoring questions, or tells you that your disability income, child support or part-time job “doesn’t count,” write down the date and the words used. Complaints can be filed with the CFPB at no cost. Our credit score guide and DTI guide explain what legitimate reasons look like, so you can tell a lawful denial from an unlawful one.

Key points

Enacted 1974, expanded 1976; Regulation B (12 CFR 1002) under the CFPB; applies to all credit, including business-purpose loans.
Nine prohibited bases: race, color, religion, national origin, sex, marital status, age, public assistance income, and exercising consumer credit rights.
Decision notice within 30 days of a completed application; adverse action must state specific reasons or offer them within 60 days.
Alimony, child support, part-time, retirement and public assistance income may not be discounted by category.
No spouse signature on the note when you qualify alone; questions about childbearing plans are prohibited.
Free copy of the appraisal, delivered promptly and no later than 3 business days before closing on first-lien dwelling loans.
Private suits: actual damages, punitive damages up to $10,000 individually, attorney’s fees; five-year statute of limitations.
Enforced by the CFPB, banking agencies, FTC and DOJ; lenders keep application files 25 months.

How ECOA applies to you

Frequently asked questions

Does ECOA apply to a business-purpose or investor loan?

Yes. Unlike TILA and RESPA, ECOA covers every extension of credit, including loans to investors and businesses. A hard money lender may not deny or price a loan on any prohibited basis and must give written notice of adverse action, though the notice rules for business credit are somewhat lighter: for a business with revenues over $1 million, reasons may be oral and given on request.

Can a lender count my child support or disability income?

It must consider it if you choose to disclose it and it is likely to continue. Regulation B forbids refusing to consider, or discounting, income because it is alimony, child support, separate maintenance, public assistance or part-time earnings. A lender may still ask for documentation of the amount and history, and may evaluate whether payments are reliably received.

How long does a lender have to tell me its decision?

Thirty days from receipt of a completed application, for approval, denial or counteroffer. If the application is incomplete, the lender must within the same 30 days either decide on what it has or send a written notice of incompleteness listing the missing items and a reasonable deadline. Silence beyond 30 days is itself a Regulation B violation you can cite in a complaint.

Am I entitled to see the appraisal even if the loan is denied?

Yes. On a first-lien loan secured by a dwelling, the lender must provide a copy of every appraisal or written valuation it developed, promptly upon completion or within 30 days after it decides not to close the loan, whichever is earlier. You paid for the appraisal, and you may use it to challenge the value or take it to another lender, though a new lender will usually order its own.