A California lender provides a loan at 6% interest to a White borrower and offers the same loan at 7.5% interest to a Hispanic borrower with identical credit qualifications and financial profile. Which federal law is being violated?
Correct Answer
D) The Equal Credit Opportunity Act (ECOA)
ECOA prohibits discrimination in any aspect of a credit transaction based on race, color, national origin, and other protected classes. Offering different interest rates to equally qualified borrowers based on ethnicity is a clear ECOA violation.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A trustee sale is a type of foreclosure where a trustee, appointed under a deed of trust, sells the property at auction to satisfy the debt.
Usury is the practice of charging an interest rate that exceeds the maximum rate permitted by state law. Usury laws protect borrowers from excessive interest charges on loans.
A VA loan is a mortgage guaranteed by the Department of Veterans Affairs available to eligible veterans, active-duty service members, and surviving spouses. It offers no down payment and no private mortgage insurance requirements.
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