What protections does ECOA provide in mortgage lending?

• A. ECOA prohibits discrimination based on protected characteristics and requires fair access to credit.
• B. ECOA requires lenders to maintain minimum reserve requirements.
• C. ECOA sets maximum late fees for loans.
• D. ECOA regulates the types of properties that can be financed.

Answer: (A)

ECOA protects borrowers by ensuring equal access to credit and prohibiting discrimination in mortgage lending based on protected characteristics. Lenders must evaluate applicants on creditworthiness and financial qualifications, not on attributes like race, color, religion, national origin, sex, marital status, age, or receipt of public assistance. If credit is denied or not offered on certain terms, the decision must be based on legitimate, measurable criteria and, where required, the lender must provide a reason. This framework is implemented through Regulation B and is designed to prevent bias in mortgage decisions.

The other topics mentioned aren’t what ECOA covers. Reserve requirements relate to banks’ capital and liquidity set by monetary policy, not lending discrimination. Caps on late fees fall under Truth in Lending Act and related regulations. Regulations about what types of properties can be financed come from underwriting guidelines and other housing laws, not ECOA.