FDIC Issues Rule Prohibiting Misuse of FDIC Name and Logo

On May 9, 2022, the Consumer Financial Protection Bureau ("CFPB") issued an advisory opinion to affirm its interpretation that Equal Credit Opportunity Act ("ECOA") bars lenders from discriminating against customers after customers have applied for and received credit, not just during the application process.

The CFPB stated in its opinion that “[d]espite this well-established interpretation, the Bureau is aware that some creditors fail to acknowledge that ECOA and Regulation B plainly apply to circumstances that take place after an extension of credit has been granted, including a revocation of credit or an unfavorable change in the terms of a credit arrangement.”  In addition, the Bureau states that it is “aware that some creditors fail to provide applicants with required notifications that include a statement of the specific reasons for the adverse action taken or disclose an applicant’s right to such a statement.”

It has well established that the term “applicant” as used by the ECOA and its implementing rule, Regulation B, includes both those seeking credit as well as persons who are current borrowers. As such the opinion further explains that the ECOA protects applicants from discrimination throughout the entire credit transaction not just the application process.

With this recent affirming opinion by the Bureau, loan servicers should be aware and review their policies and procedures to determine that they are compliant with the CFPB's opinion. Additionally, loan servicers should be aware that the ECOA/Regulation B provisions may apply to actions that servicers are taking or failing to take, which may include providing adverse action notices to borrowers with existing credit.