Finance
The Equal Credit Opportunity Act (ECOA) prohibits lenders from discriminating based on:
AA. Credit score and loan amount
BB. Race, color, religion, national origin, sex, marital status, age, or receipt of public assistance✓ Correct
CC. Property location and type only
DD. Income level and employment history
Explanation
ECOA prohibits credit discrimination based on race, color, religion, national origin, sex, marital status, age, or because income comes from public assistance.
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Key Terms to Know
Pre-Approval
A lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
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