lending laws

Posted : March 1, 2018
Last Updated : March 1, 2018

lending laws

Financial institutions must follow certain federal laws and regulations that protect your rights as a consumer. There may also be state laws that give you additional protections. Contact your state’s Department of Consumer Protection or attorney general for more information about your state’s laws.

Equal Credit Opportunity Act

The Equal Credit Opportunity Act (ECOA) protects consumer rights throughout all stages of the loan process and promotes the availability of credit to all creditworthy applicants; without regard to race, color, religion, national origin, sex, marital status, age, receipt of public assistance income, and exercise of rights under the Consumer Credit Protection Act. For example: you can’t be denied a loan because you’ve filed a complaint against the bank. The ECOA also restricts the lender from requesting certain information during the loan application process.

Note: In most cases, lenders can’t request certain information. However, for certain home loans, lenders must collect some of the information (race, sex, marital status, and age).

The lender must notify you in writing, within 30 days of the date of the loan application, if you’ve been approved or denied the loan. If you’re denied, the notice will contain the name and address of the lender, the name and address of the federal agency you can contact if you feel you’ve been discriminated against, and either a statement of the specific reasons for denial or a notice that you may request the specific reasons for your denial.

Truth in Lending Act

The Truth in Lending Act (TILA) requires lenders to disclose the total cost of your loan, including the finance charge and the APR. In addition, it gives consumers the right to cancel certain types of home loans within three days. A Truth in Lending disclosure will include the APR, finance charge, amount financed, and total payment.

Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA) requires that the lender notify you if you’re denied a loan or credit because of information in your credit report. This notice is usually combined with the notice denying the loan or credit. The FCRA notice should contain:
  • The name, address, and telephone number of the credit reporting agency that provided the credit report to the lender.
  • A statement that the credit reporting agency didn’t make the decision to deny your application.
  • A notice of your right to obtain a free copy of your credit report within 60 days of receiving the notice.
  • A notice of your right to dispute the information in your credit report.

Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act (FDCPA) helps eliminate abusive debt collection practices. Under this law, debt collectors other than your creditor can’t:
  • Contact you at any unusual time or place.
  • Contact you at work if you’ve informed them not to call you there.
  • Use threats of violence or other criminal means to harm you or your property.
  • Call you with the intent to annoy, abuse, or harass you.
  • Call you without identifying themselves.
  • Use deceptive or misleading methods to collect debt.

Report any problems you have with a debt collector to your state Attorney General’s office (naag.org) and the FTC (ftc.gov).

Fair Credit Billing Act

The Fair Credit Billing Act (FCBA) requires creditors to promptly credit payments and correct billing mistakes for open-ended accounts (e.g., credit cards). It also allows you to withhold payments on defective goods. Note: The Electronic Fund Transfer Act and the TILA also have methods for correcting billing errors.

If you think there is an error on your bill you should, within 60 days of receipt of your incorrect bill, notify your creditor in writing and keep a copy of the communication. You should always include your name, account number, and what you believe is the error. The lender is required to acknowledge your communication within 30 days. Within two billing cycles (no longer than 90 days), the lender must either correct the problem or explain why it believes the bill is correct.

Source: PlanningYourDreams.org

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lending laws

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