§1691 — Title 15 Commerce and Trade | U.S. Code

Summary

Creditors must not refuse or treat someone unfairly in any part of a credit deal because of race, color, religion, national origin, sex, marital status, or age (if the person can make a legal contract). They also may not discriminate because the person’s income comes from public assistance or because the person used their rights under this law. A creditor may ask about marital status, age, or public-assistance income when it is needed to check income, likely income continuation, or other credit factors. Credit scoring systems that use age are allowed if they are statistically sound, but they cannot give older people a worse score just for being elderly. Creditors may also offer or deny credit under certain targeted programs for disadvantaged groups, nonprofit member programs, or special-purpose programs that follow rules set by the Bureau. After getting a completed application, a creditor must tell the applicant what it decided within 30 days (or a longer reasonable time if the Bureau’s rules allow). If the creditor takes adverse action (like denying credit, revoking credit, changing terms, or refusing the amount or terms asked), the applicant can get a written statement with the specific reasons. The creditor can give reasons up front, or tell the applicant they can request the reasons within 60 days and the creditor will provide them within 30 days of that request. Small creditors (those who acted on 150 or fewer applications in the prior calendar year) may give verbal reasons. For loans secured by a first lien on a home, the creditor must give the applicant a copy of any written appraisal or valuation promptly when it is finished and no later than 3 days before closing; the applicant can waive the 3-day rule. The applicant may have to pay a reasonable fee for the appraisal itself, but the creditor must give the appraisal copy at no additional cost and must tell the applicant at application time that they have the right to get these copies. Valuations include automated models, broker price opinions, and estimates from government-sponsored enterprise policies.

Title 15, §1691

Commerce and Trade — Source: USLM XML via OLRC

(a)It shall be unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction—

(1)on the basis of race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to contract);

(2)because all or part of the applicant’s income derives from any public assistance program; or

(3)because the applicant has in good faith exercised any right under this chapter.

(b)It shall not constitute discrimination for purposes of this subchapter for a creditor—

(1)to make an inquiry of marital status if such inquiry is for the purpose of ascertaining the creditor’s rights and remedies applicable to the particular extension of credit and not to discriminate in a determination of credit-worthiness;

(2)to make an inquiry of the applicant’s age or of whether the applicant’s income derives from any public assistance program if such inquiry is for the purpose of determining the amount and probable continuance of income levels, credit history, or other pertinent element of credit-worthiness as provided in regulations of the Bureau;

(3)to use any empirically derived credit system which considers age if such system is demonstrably and statistically sound in accordance with regulations of the Bureau, except that in the operation of such system the age of an elderly applicant may not be assigned a negative factor or value;

(4)to make an inquiry or to consider the age of an elderly applicant when the age of such applicant is to be used by the creditor in the extension of credit in favor of such applicant; or

(5)to make an inquiry under section 1691c–2 of this title, in accordance with the requirements of that section.

(c)It is not a violation of this section for a creditor to refuse to extend credit offered pursuant to—

(1)any credit assistance program expressly authorized by law for an economically disadvantaged class of persons;

(2)any credit assistance program administered by a nonprofit organization for its members or an economically disadvantaged class of persons; or

(3)any special purpose credit program offered by a profit-making organization to meet special social needs which meets standards prescribed in regulations by the Bureau;

(d)(1)Within thirty days (or such longer reasonable time as specified in regulations of the Bureau for any class of credit transaction) after receipt of a completed application for credit, a creditor shall notify the applicant of its action on the application.

(2)Each applicant against whom adverse action is taken shall be entitled to a statement of reasons for such action from the creditor. A creditor satisfies this obligation by—

(A)providing statements of reasons in writing as a matter of course to applicants against whom adverse action is taken; or

(B)giving written notification of adverse action which discloses (i) the applicant’s right to a statement of reasons within thirty days after receipt by the creditor of a request made within sixty days after such notification, and (ii) the identity of the person or office from which such statement may be obtained. Such statement may be given orally if the written notification advises the applicant of his right to have the statement of reasons confirmed in writing on written request.

(3)A statement of reasons meets the requirements of this section only if it contains the specific reasons for the adverse action taken.

(4)Where a creditor has been requested by a third party to make a specific extension of credit directly or indirectly to an applicant, the notification and statement of reasons required by this subsection may be made directly by such creditor, or indirectly through the third party, provided in either case that the identity of the creditor is disclosed.

(5)The requirements of paragraph (2), (3), or (4) may be satisfied by verbal statements or notifications in the case of any creditor who did not act on more than one hundred and fifty applications during the calendar year preceding the calendar year in which the adverse action is taken, as determined under regulations of the Bureau.

(6)For purposes of this subsection, the term “adverse action” means a denial or revocation of credit, a change in the terms of an existing credit arrangement, or a refusal to grant credit in substantially the amount or on substantially the terms requested. Such term does not include a refusal to extend additional credit under an existing credit arrangement where the applicant is delinquent or otherwise in default, or where such additional credit would exceed a previously established credit limit.

(e)(1)Each creditor shall furnish to an applicant a copy of any and all written appraisals and valuations developed in connection with the applicant’s application for a loan that is secured or would have been secured by a first lien on a dwelling promptly upon completion, but in no case later than 3 days prior to the closing of the loan, whether the creditor grants or denies the applicant’s request for credit or the application is incomplete or withdrawn.

(2)The applicant may waive the 3 day requirement provided for in paragraph (1), except where otherwise required in law.

(3)The applicant may be required to pay a reasonable fee to reimburse the creditor for the cost of the appraisal, except where otherwise required in law.

(4)Notwithstanding paragraph (3), the creditor shall provide a copy of each written appraisal or valuation at no additional cost to the applicant.

(5)At the time of application, the creditor shall notify an applicant in writing of the right to receive a copy of each written appraisal and valuation under this subsection.

(6)For purposes of this subsection, the term “valuation” shall include any estimate of the value of a dwelling developed in connection with a creditor’s decision to provide credit, including those values developed pursuant to a policy of a government sponsored enterprise or by an automated valuation model, a broker price opinion, or other methodology or mechanism.

Notes & Related Subsidiaries

Editorial Notes

Amendments

2010—Pub. L. 111–203, § 1085(1), substituted “Bureau” for “Board” wherever appearing. Subsec. (b)(5). Pub. L. 111–203, § 1071(b), added par. (5). Subsec. (e). Pub. L. 111–203, § 1474, amended subsec. (e) generally. Prior to amendment, subsec. (e) read as follows: “Each creditor shall promptly furnish an applicant, upon written request by the applicant made within a reasonable period of time of the application, a copy of the appraisal report used in connection with the applicant’s application for a loan that is or would have been secured by a lien on residential real property. The creditor may require the applicant to reimburse the creditor for the cost of the appraisal.” 1991—Subsec. (e). Pub. L. 102–242 added subsec. (e). 1976—Subsec. (a). Pub. L. 94–239 designated existing provisions as cl. (1), expanded prohibition against discrimination to include race, color, religion, national origin and age, and added cls. (2) and (3). Subsec. (b). Pub. L. 94–239 designated existing provisions as cl. (1) and added cls. (2) to (4). Subsecs. (c), (d). Pub. L. 94–239 added subsecs. (c) and (d).

Statutory Notes and Related Subsidiaries

Effective Date

of 2010 Amendment Pub. L. 111–203, title X, § 1071(d), July 21, 2010, 124 Stat. 2059, provided that: “This section [enacting section 1691c–2 of this title and amending this section] shall become effective on the designated transfer date.” [The term “designated transfer date” is defined in section 5481(9) of Title 12, Banks and Banking, as the date established under section 5582 of Title 12.] Amendment by section 1085(1) of Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 111–203, set out as a note under section 552a of Title 5, Government Organization and Employees. Amendment by section 1474 of Pub. L. 111–203 effective on the date on which final

Regulations

implementing that amendment take effect, or on the date that is 18 months after the designated transfer date if such

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have not been issued by that date, see section 1400(c) of Pub. L. 111–203, set out as a note under section 1601 of this title.

Effective Date

section 708, formerly § 707, of title VII of Pub. L. 90–321, as added by Pub. L. 93–495, title V, § 503, Oct. 28, 1974, 88 Stat. 1525, renumbered and amended by Pub. L. 94–239, §§ 7, 8, Mar. 23, 1976, 90 Stat. 255, provided that: “This title [enacting this subchapter and provisions set out as notes under section 1691 of this title] takes effect upon the expiration of one year after the date of its enactment [Oct. 28, 1974]. The

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made by the Equal Credit Opportunity Act

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of 1976 [enacting section 1691f of this title, amending this section and section 1691b, 1691c, 1691d, and 1691e of this title, repealing section 1609 of this title, enacting provisions set out as notes under this section, and repealing provisions set out as a note under this section] shall take effect on the date of enactment thereof [Mar. 23, 1976] and shall apply to any violation occurring on or after such date, except that the

Amendments

made to section 701 of the Equal Credit Opportunity Act [this section] shall take effect 12 months after the date of enactment [Mar. 23, 1976].”

Short Title

This subchapter known as the “Equal Credit Opportunity Act”, see

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note set out under section 1601 of this title. Congressional Findings and Statement of Purpose Pub. L. 93–495, title V, § 502, Oct. 28, 1974, 88 Stat. 1521, provided that: “The Congress finds that there is a need to insure that the various financial institutions and other firms engaged in the extensions of credit exercise their responsibility to make credit available with fairness, impartiality, and without discrimination on the basis of sex or marital status. Economic stabilization would be enhanced and competition among the various financial institutions and other firms engaged in the extension of credit would be strengthened by an absence of discrimination on the basis of sex or marital status, as well as by the informed use of credit which Congress has heretofore sought to promote. It is the purpose of this Act [see

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note set out under section 1601 of this title] to require that financial institutions and other firms engaged in the extension of credit make that credit equally available to all credit-worthy customers without regard to sex or marital status.”

§1691 Scope of prohibition

Summary

Title 15, §1691

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