Blog Post

NCUA Reminds Credit Unions About ECOA Nondiscrimination Requirements

Michael Christians • August 2, 2023

On August 1^st, the National Credit Union Administration (NCUA) issued a reminder about its Letter to Credit Unions (22-CU-04) issued in February 2022. That letter was titled “Equal Credit Opportunity Act Nondiscrimination Requirements”. While the reminder focused on avoiding age discrimination, let’s recap each of the nondiscrimination requirements discussed in the letter.

Marital Status

Generally, credit unions must evaluate married and unmarried applicants using the same standards. A credit union may not require a signature from an applicant’s spouse if he/she qualifies for the extension of credit individually, unless necessary to perfect the credit union’s security interest. A credit union may request a cosigner or guarantor; however, cannot require an applicant’s spouse to serve in that capacity.

Age

Generally, credit unions cannot consider an applicant’s age during underwriting. However, a credit union can deny an applicant who lacks the legal capacity to contract and/or offer loan programs that favor the elderly (those 62 years of age and older). A credit union cannot disqualify an applicant for automatic loan approval based on his/her age. In other words, the credit union cannot have a policy of performing a manual underwrite on all applications received from those age 25 and younger, when all other applications are submitted through its automatic loan approval system.

Protected Income

A credit union may not discount or exclude protected income. Protected income is defined as income from part-time employment, income from public assistance, or alimony/child support/separate maintenance income.

Redlining

Redlining is the practice of refusing to extend credit in certain geographical areas. Even though credit unions have defined fields of membership, they must ensure that they provide equal access to credit within those fields of membership.

Indirect Lending

Credit unions that allow auto dealers to mark-up the buy rate on a discretionary basis may be at an increased risk for claims of disparate treatment. Disparate treatment is defined as when similarly situated applicants are treated differently based on a protected classification. If data analysis shows that members of a protected classification are paying a higher mark-up than those that do not belong to a protected classification, this could indicate pricing disparities that are in violation of the Equal Credit Opportunity Act.

< Older Post Newer Post >

Share this post

Recent Blog Posts

NCUA Outlines Changes to Exam Scheduling Policy

By Michael Christians • February 12, 2025

In Letter to Credit Unions 25-CU-03 , the National Credit Union Administration (NCUA) announced its new exam scheduling policy. Effective January 1, 2025, federally insured credit unions (FICUs) will be examined according to the following schedule: 8 to 12 months following its last examination date FICUs with ANY of the following characteristics - A CAMELS rating of 3, 4, or 5, Considered less than well capitalized, An outstanding enforcement action, or Assets greater than or equal to $10 billion. FICUs with assets between $1 billion and $10 billion, and A CAMELS rating of 3, 4, or 5, or A change in CEO since its last examination. 12 to 16 months following its last examination date FICUs with assets between $1 billion and $10 billion, and A CAMELS rating of 1 or 2, and No change in CEO since its last examination. 14 to 18 months following its last examination date Federal credit unions (FCUs) not included above Once every 5 years Federally insured state-chartered credit unions (FISCUs) not included above The NCUA believes this revised schedule will allow it to better respond to emerging risks and priorities using available resources. It is important to note that nothing in the new schedule limits the NCUA's authority to examine any FICU as frequently as the agency deems necessary.

Eleventh Circuit Vacates New TCPA Prior Express Written Consent Requirements

By Michael Christians • January 29, 2025

Back in December 2023, the Federal Communications Commission (FCC) adopted a new rule amending the prior express written consent requirements under the Telephone Consumer Protection Act (TCPA). That rulemaking would have done a couple of things. First, it would have clarified that a consumer’s prior express written consent can apply to not more than one seller. In other words, the rule would have prevented a company from obtaining a consumer’s consent to the receipt of advertising and telemarketing messages both for itself as well as its affiliates. Second, the rule would have required that a consumer’s consent be logically and topically associated with the interaction that prompted the consent. That second requirement was particularly concerning for financial institutions. The language of the rulemaking seemed to suggest that an institution that captured prior express written consent at the time of account opening could not later rely on that same consent for purposes of sending advertising or telemarketing messages related to loans, credit cards, or other non-deposit products. The Insurance Marketing Coalition asked for a judicial review of the rulemaking at the Eleventh Circuit Court of Appeals. On January 24, 2025, that court vacated the new requirements. In its order, the court found that the FCC exceeded its statutory authority because the amendments to the definition of prior express written consent impermissibly conflicted with the statutory definition of the same term under the TCPA.

CFPB Reminds Institutions Payday Lending Rule Takes Effect March 30th

By Michael Christians • January 25, 2025

Following years of litigation, the Consumer Financial Protection Bureau’s 2017 payday lending rule will take effect on March 30, 2025. Three types of consumer loans are covered by the payday lending rule: Short-term loans that require repayment within 45 days, Longer term loans with a balloon payment, and Longer term loans for which the APR exceeds 36% and automatic payment is required from the consumer's account. Under the rule, covered lenders will have to adhere to both payment restrictions and notice requirements. First, when two consecutive automatic payment attempts have failed in connection with a covered loan, the lender is prohibited from attempting another withdrawal until it has obtained a new and specific authorization from the consumer. Second, the rule imposes the following notice requirements in connection with a covered loan: Written notice before the lender attempts to withdraw the first automatic payment from the consumer's account, Written notice before a subsequent automatic payment attempt that will differ in amount or effective date, and Written notice when two consecutive payment attempts have failed. Lenders that do not originate more than 2,500 covered loans in a calendar year are exempt from the rule’s requirements. Additional implementation resources regarding the payday lending rule are available from the CFPB here .

Address

5438 South Prairie View Drive

West Des Moines, IA 50266

Phone

319-325-1171

Email

michael@mchristiansconsulting.com

Sitemap

Michael Christians Consulting, LLC

This website has been built to be accessible for all users. If you experience any difficulty in accessing this website, please contact us for assistance.

Client Login