If a creditor did not inform the borrower within 30 days of a credit decision that was adverse, which law is violated?

If a creditor did not inform the borrower within 30 days of a credit decision that was adverse, which law is violated?

• A. RESPA
• B. ECOA
• C. FCRA
• D. TILA

Answer: (B)

The main rule being tested is the requirement under the Equal Credit Opportunity Act (ECOA) that lenders notify applicants of adverse credit decisions within 30 days after receiving a completed application. This notice, known as an adverse-action notice, ensures applicants know why credit was denied or offered on less favorable terms so they can address any issues or seek alternatives. If a creditor fails to provide that notice within the 30-day window, it violates ECOA (Regulation B). Other laws cover different areas. RESPA deals with disclosures related to settlement costs and the closing process, not the timing of adverse-action notices. FCRA governs how credit information is collected and reported and the rights tied to consumer reports, including when a lender must inform you about a report they used. TILA focuses on disclosures of loan terms and costs and related protections, such as right-to-rescind rights in certain loans. None of these impose the exact 30-day adverse-action notice requirement that ECOA does. So, failing to inform the borrower within 30 days of an adverse credit decision is a violation of ECOA.

The main rule being tested is the requirement under the Equal Credit Opportunity Act (ECOA) that lenders notify applicants of adverse credit decisions within 30 days after receiving a completed application. This notice, known as an adverse-action notice, ensures applicants know why credit was denied or offered on less favorable terms so they can address any issues or seek alternatives. If a creditor fails to provide that notice within the 30-day window, it violates ECOA (Regulation B).

Other laws cover different areas. RESPA deals with disclosures related to settlement costs and the closing process, not the timing of adverse-action notices. FCRA governs how credit information is collected and reported and the rights tied to consumer reports, including when a lender must inform you about a report they used. TILA focuses on disclosures of loan terms and costs and related protections, such as right-to-rescind rights in certain loans. None of these impose the exact 30-day adverse-action notice requirement that ECOA does.

So, failing to inform the borrower within 30 days of an adverse credit decision is a violation of ECOA.