In February, the NCUA issued Letter to Credit Unions 22-CU-04, Equal Credit Opportunity Act Nondiscrimination Requirements. With the CFPB’s increased focus on unfair discrimination, a deeper dive into the Letter is appropriate. The Letter summarizes general nondiscrimination requirements under the Equal Credit Opportunity Act (ECOA) relating to marital status, ages, income consideration, redlining, and indirect lending.

The ECOA prohibits discrimination in lending based on any prohibited basis. Prohibited basis’s include race, color, religion, national origin, sex, marital status, age, or if the applicant’s income comes from any public assistance program.

Discriminatory practices include:

  • Discouraging or selectively encouraging applicants with respect to inquiries about or applications for credit
  • Refusing to extend credit or using different standards in determining whether to extend credit
  • Treating a borrower differently in servicing a loan or invoking default remedies
  • Using different standards for pooling or packaging a loan in the secondary market
Marital Status

Except as otherwise permitted or required by law, a creditor must evaluate married and unmarried applicants using the same standards. In evaluating joint applicants, a creditor cannot treat applicants differently based on the existence, absence, or likelihood of a marital relationship between the parties.

“A common marital status discrimination violation involves risk-based pricing practices. When two applicants or signers are involved in a lending transaction, a lending policy cannot provide for different pricing guidelines based solely on applicants’ or signers’ marital status, in violation of ECOA. For example, when two applicants are involved, a credit union cannot price loans based on the higher of the two applicants’ credit scores when they are married but based on the primary applicant’s credit score when the applicants are unmarried.”


As a rule, a creditor cannot take into account an applicant’s age, provided the applicant has the capacity to enter into a binding contract. A creditor can consider the age of an elderly applicant (62 or older) when the age is used to favor the elderly applicant. A creditor may use an applicant’s age as a predictive variable if the age of an elderly applicant is not assigned a negative factor or value and the creditor is using an empirically derived, demonstrably and statistically sound, credit-scoring system.

Income Consideration

Creditors may not discount or exclude the income of an applicant or the spouse of an applicant because the income is derived from part-time employment, public assistance, or is an annuity, pension, or other retirement benefit.


Creditors must not avoid providing services to individuals living in communities of color because of the race or national origin of the people who live in those communities. Reviews to determine if a creditor is providing equal access to credit can include statistical analyses of the institution’s lending within its service area(s), analyses of service locations and placement of mortgage loan officers, and analyses of marketing and advertising.

Indirect Lending

Creditors should monitor their indirect lending relationships to ensure that any discretionary compensation, such as increasing interest rates above the creditors’ buy rates are not done on a discriminatory basis. Creditors that allow mark-ups must have a fair lending compliance management system which enables them to identify and address discriminatory pricing.


ECOA violations can be costly. In addition to reputational risks and potential fees and penalties from the institution’s regulator, regulatory agencies must refer certain ECOA violations to the Department of Justice for their consideration.

CSG can perform a fair lending review for your institution. Our review is designed to detect possible disparate treatment of protected classes of loan applicants and borrowers. If you are interested in a review, or just have questions, Contact Us!


Law-Related Services Disclosure.  Please be advised that CSG provides financial services compliance audit and consulting services to our clients.  The services that we provide include certain tasks that may be characterized as “law-related services” under Rule 5.7 of the Rules of Professional Conduct governing lawyers.  Since some of our employees are lawyers with an active bar license but are NOT engaged in the private practice of law, that Rule requires us to make disclosures clarifying that the services we perform may be law-related services, but they are not legal services.  Because they are not legal services, those services and our relationship will not be governed by the Rules of Professional Conduct that guide the client-lawyer relationship, such as rules applicable to privileged communications and prohibitions of conflicts of interest.  Notwithstanding this disclaimer, we will continue to govern our relationship with you using reasonable ethical and professional standards that are expected to meet your expectations.

Leave a Reply

Your email address will not be published.