The Fair Housing Act (FHA) and Equal Credit Opportunity Act (ECOA) protect consumers by prohibiting unfair and discriminatory practices. Read OCC's Answers about Consumer Loans and Answers about Consumer Mortgages for more information.
The FHA prohibits discrimination in residential real estate–related transactions based on...
The ECOA prohibits discrimination in credit transactions based on
*Age is a prohibited factor provided the applicant has the capacity to enter into a contract.
A lender's policies, even when applied equally to all its credit applicants, may have a negative effect on certain applicants. For example, a lender may have a policy of not making single family home loans for less than $60,000. This policy might exclude a high number of applicants who have lower income levels or lower home values than the rest of the applicant pool. That uneven effect of the policy is called disparate impact.
Illegal disparate treatment occurs when a lender bases its lending decision on one or more of the prohibited discriminatory factors covered by the fair lending laws. For example, if lender offers a credit card with a limit of $750 for applicants age 21 through 30 and $1,500 for applicants over age 30. This policy violates the ECOA's prohibition on discrimination based on age.
Fair lending laws also contain provisions to address predatory lending practices. Some examples follow:
Unfair and Deceptive Practices
The OCC took the lead among the federal bank regulatory agencies in developing an approach to address unfair and deceptive marketing practices. These practices are often an element in predatory lending. The OCC has taken a number of enforcement actions against banks that were found to have engaged in abusive practices and, in one landmark case, required a bank to pay over $300 million in restitution to its customers. The following are a number of OCC actions and issuances related to unfair and deceptive practices.