The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
March 14, 1986 To All Depository Institutions in the Second Federal Reserve Districts and Others Maintaining Sets of Board Regulations? As indicated in our Circular No. 9961s dated December 2, 1985s enclosed are copies of the revised pamphlets on Regulation B s "Equal Credit Opportunitys" and Its Official Staff Commentary, both effective December 16, 1985o Questions regarding the regulation or the commentary may be directed to our Compliance Examinations Department (Tel0 No. 212=791=5919)0 Circulars Division Federal Reserve Bank of New York 0707C B oard o f G overnors o f the Federal Reserve System Regulation B Equal Credit Opportunity 12 C FR 202; as revised effective December 16, 1985 Any inquiry relating to this regulation should be addressed to the Federal Reserve Bank of the District in which the inquiry arises. January 1986 Contents Page Page Section 202; 1— Authority, purpose, and scop e............................................................... (a) Authority and sco p e ......................... (b) Purpose ............................................... Section 202.2— Definitions........................... Section 202.3— Limited exceptions for certain classes of transactions.................. (a) Public-utilities credit......................... (b) Securities cred it.................................. (c ) Incidental credit ............................... (d) Business cred it.................................... (e) Government c r e d it........................... Section 202.4— General rule prohibiting discrimination ............................................. Section 202.5— Rules concerning taking of applications ................................................. (a) Discouraging applications .............. (b) General rules concerning requests for information .................................. (c ) Information about a spouse or former spouse...................................... (d) Other limitations on information requests ............................................... (e) Written applications......... ............... Section 202.6— Rules concerning evaluation of applications......................... (a) General rule concerning use of inform ation........................................ (b) Specific rules concerning use of inform ation........................................ (c ) State property la w s ........................... Section 202.7— Rules concerning extensions of credit .................................... (a) Individual accounts........................... (b) Designation of n am e......................... (c) Action concerning existing openend accounts ...................................... (d) Signature of spouse or other person (e) Insurance............................................. Section 202.8— Special-purpose credit programs........................................................ (a) Standards for programs.................... (b) Rules in other sections .................... (c ) Special rule concerning requests and use of information .................... (d ) Special rule in the case of financial need ...................................................... Section 202.9— Notifications......................... (a) Notification of action taken, ECOA notice, and statement of specific reasons................................................. 1 1 1 1 4 4 4 4 5 5 5 5 5 5 5 6 6 6 6 6 7 7 7 7 8 8 8 9 9 9 9 9 9 9 (b) Form of ECOA notice and statement of specific reasons........... 10 (c ) Incomplete applications.....................10 (d) Oral notifications by small-volume creditors................................... 10 (e) Withdrawal of approved application............................................. 11 (f) Multiple applicants..............................11 (g) Applications submitted through a third p a r ty ............................. 11 Section 202.10— Furnishing of credit information...................................................... 11 (a ) Designation of acco u n ts................11 (b) Routine reports to consumer reporting a g e n cy ............................. 11 (c ) Reporting in response to inquiry. . 1 1 Section 202.11— Relation to state law . . . . 11 (a ) Inconsistent state laws ....................... 11 (b) Preempted provisions of state law . 11 (c ) Laws on finance charges, loan ceilings............................................... 12 (d) State and federal laws not affected . 12 (e) Exemption for state-regulated transactions...................................... 12 Section 202.12— Record retention........... 12 (a ) Retention of prohibited inform ation...................................... 12 (b) Reservation of records ....................... 12 Section 202.13— Information for monitoring purposes.....................................13 (a ) Information to be requested.........13 (b) Obtaining of inform ation............. 13 (c ) Disclosure to applicant ( s ) ........... 13 (d) Substitute monitoring program . . . 13 Section 202.14— Enforcement, penalties, and liabilities .................................................. 13 (a) Administrative enforcement......... 13 (b) Penalties and liabilities..................14 (c ) Failure of com pliance.................... 14 Appendix A— Federal enforcement agencies............................................................. 14 Appendix B— Model application forms . . . 15 Appendix C— Sample notification forms . . 26 Appendix D— Issuance of staff interpretations............................................... 30 Equal Credit Opportunity A c t ................. 31 i Regulation B Equal Credit Opportunity 12 C F R 202; effective M arch 23, 1977; as revised effective D ecem ber 16, 1985* SE C T IO N 202.1— Authority, Scope, and Purpose (a) Authority and scope. This regulation is is sued by the Board of Governors of the Feder al Reserve System pursuant to title VII (Equal Credit Opportunity A ct) of the Con sumer Credit Protection Act, as amended (15 USC 1601 et seq.). Except as otherwise pro vided herein, the regulation applies to all per sons who are creditors, as defined in section 202.2(1). Information-collection require ments contained in this regulation have been approved by the Office of Management and Budget under the provisions of 44 USC 3501 et seq. and have been assigned OMB No. 7100-0201. (b) Purpose. The purpose of this regulation is to promote the availability of credit to all creditworthy applicants without regard to race, color, religion, national origin, sex, mari tal status, or age (provided the applicant has the capacity to contract); to the fact that all or part of the applicant’s income derives from a public assistance program; or to the fact that the applicant has in good faith exercised any right under the Consumer Credit Protection Act. The regulation prohibits creditor prac tices that discriminate on the basis of any of these factors. The regulation also requires creditors to notify applicants of action taken on their applications; to report credit history in the names of both spouses on an account; to retain records of credit applications; and to collect information about the applicant’s race and other personal characteristics in applica tions for certain dwelling-related loans. SE C T IO N 202.2— Definitions For the purposes of this regulation, unless the context indicates otherwise, the following defi nitions apply. * Creditors have the option of continuing to comply with the previous version of the regulation until October 1, 1986, when compliance with this revised version becomes mandatory. (a) Account means an extension of credit. When employed in relation to an account, the word use refers only to open-end credit. (b) Act means the Equal Credit Opportunity Act (title VII of the Consumer Credit Protec tion A ct). (c ) Adverse action. (1 ) The term means— (i) a refusal to grant credit in substan tially the amount or on substantially the terms requested in an application unless the creditor makes a counteroffer (to grant credit in a different amount or on other terms) and the applicant uses or expressly accepts the credit offered; (ii) a termination of an account or an unfavorable change in the terms of an ac count that does not affect all or a sub stantial portion of a class of the creditor’s accounts; or (iii) a refusal to increase the amount of credit available to an applicant who has made an application for an increase. (2 ) The term does not include— (i) a change in the terms of an account expressly agreed to by an applicant; (ii) any action or forbearance relating to an account taken in connection with in activity, default, or delinquency as to that account; (iii) a refusal or failure to authorize an account transaction at a point of sale or loan, except when the refusal is a termi nation or an unfavorable change in the terms of an account that does not affect all or a substantial portion of a class of the creditor’s accounts, or when the re fusal is a denial of an application for an increase in the amount of credit available under the account; (iv) a refusal to extend credit because applicable law prohibits the creditor from extending the credit requested; or (v) a refusal to extend credit because the creditor does not offer the type of credit or credit plan requested. (3 ) An action that falls within the defini tion of both paragraphs ( c ) ( 1 ) and ( c ) ( 2 ) of this section is governed by paragraph (c )(2 ). 1 § 202.2 (d) Age refers only to the age of natural per sons and means the number of fully elapsed years from the date of an applicant’s birth. (e) Applicant means any person who requests or who has received an extension of credit from a creditor, and includes any person who is or may become contractually liable regard ing an extension of credit. For purposes of section 202.7(d ), the term includes guaran tors, sureties, endorsers and similar parties. (f) Application means an oral or written re quest for an extension of credit that is made in accordance with procedures established by a creditor for the type of credit requested. The term does not include the use of an account or line of credit to obtain an amount of credit that is within a previously established credit limit. A completed application means an appli cation in connection with which a creditor has received all the information that the creditor regularly obtains and considers in evaluating applications for the amount and type of credit requested (including, but not limited to, cred it reports, any additional information request ed from the applicant, and any approvals or reports by governmental agencies or other persons that are necessary to guarantee, in sure, or provide security for the credit or col lateral) . The creditor shall exercise reasonable diligence in obtaining such information. (g) Board means the Board of Governors of the Federal Reserve System. (h ) Consumer credit means credit extended to a natural person primarily for personal, family, or household purposes. (i) Contractually liable means expressly obli gated to repay all debts arising on an account by reason of an agreement to that elfect. (j) Credit means the right granted by a credi tor to an applicant to defer payment of a debt, incur debt and defer its payment, or purchase property or services and defer payment therefor. (k) Credit card means any card, plate, cou pon book, or other single credit device that may be used from time to time to obtain mon ey, property, or services on credit. (/) Creditor means a person who, in the ordi2 R egulation B nary course of business, regularly participates in the decision of whether or not to extend credit. The term includes a creditor’s assignee, transferee, or subrogee who so participates. For purposes of sections 202.4 and 2 02.5(a), the term also includes a person who, in the ordinary course of business, regularly refers applicants or prospective applicants to credi tors, or selects or offers to select creditors to whom requests for credit may be made. A per son is not a creditor regarding any violation of the act or this regulation committed by anoth er creditor unless the person knew or had rea sonable notice of the act, policy, or practice that constituted the violation before becoming involved in the credit transaction. The term does not include a person whose only partici pation in a credit transaction involves honor ing a credit card. (m ) Credit transaction means every aspect of an applicant’s dealings with a creditor regard ing an application for credit or an existing ex tension of credit (including, but not limited to, information requirements; investigation procedures; standards of creditworthiness; te r m s o f c r e d it; f u r n is h in g o f c r e d i t in f o r m a tion; revocation, alteration, or termination of credit; and collection procedures). (n) Discriminate against an applicant means to treat an applicant less favorably than other applicants. (o ) Elderly means age 62 or older. (p) Empirically derived and other credit scor ing systems. (1 ) A credit scoring system is a system that evaluates an applicant’s creditworthiness mechanically, based on key attributes of the applicant and aspects of the transaction, and that determines, alone or in conjunc tion with an evaluation of additional infor mation about the applicant, whether an ap plicant is deemed creditworthy. To qualify as an empirically derived, demonstrably and statistically sound, credit scoring system, the system must be— (i) based on data that are derived from an empirical comparison of sample groups or the population of creditworthy R egulation B and noncreditworthy applicants who ap plied for credit within a reasonable pre ceding period of time; (ii) developed for the purpose of evalu ating the creditworthiness of applicants with respect to the legitimate business in terests of the creditor utilizing the system (including, but not limited to, minimiz ing bad debt losses and operating expens es in accordance with the creditor’s busi ness judgment); (iii) developed and validated using ac cepted statistical principles and method ology; and (iv) periodically revalidated by the use of appropriate statistical principles and methodology and adjusted as necessary to maintain predictive ability. (2 ) A creditor may use an empirically de rived, demonstrably and statistically sound, credit scoring system obtained from anoth er person or may obtain credit experience from which to develop such a system. Any such system must satisfy the criteria set forth in paragraph (p) (1 ) (i) through (iv) of this section; if the creditor is unable dur ing the development process to validate the system based on its own credit experience in accordance with paragraph ( p ) ( l ) of this section, the system must be validated when sufficient credit experience becomes available. A system that fails this validity test is no longer an empirically derived, demonstra bly and statistically sound, credit scoring system for that creditor. (q) Extend credit and extension o f credit mean the granting of credit in any form (in cluding, but not limited to, credit granted in addition to any existing credit or credit limit; credit granted pursuant to an open-end credit plan; the refinancing or other renewal of cred it, including the issuance of a new credit card in place of an expiring credit card or in substi tution for an existing credit card; the consoli dation of two or more obligations; or the con tinuance of existing credit without any special effort to collect at or after maturity). (r) Good faith means honesty in fact in the conduct or transaction. § 202.2 (s) Inadvertent error means a mechanical, electronic, or clerical error that a creditor demonstrates was not intentional and oc curred notwithstanding the maintenance of procedures reasonably adapted to avoid such errors. (t) Judgmental system o f evaluating appli cants means any system for evaluating the creditworthiness of an applicant other than an empirically derived, demonstrably and statis tically sound, credit scoring system. (u) Marital status means the state of being unmarried, married, or separated, as defined by applicable state law. The term “unmar ried” includes persons who are single, di vorced, or widowed. (v) Negative factor or value, in relation to the age of elderly applicants, means utilizing a factor, value, or weight that is less favorable regarding elderly applicants than the credi tor’s experience warrants or is less favorable than the factor, value, or weight assigned to the class of applicants that are not classified as elderly and are most favored by a creditor on the basis of age. (w) Open-end credit means credit extended under a plan under which a creditor may per mit an applicant to make purchases or obtain loans from time to time directly from the creditor or indirectly by use of a credit card, check, or other device. (x ) Person means a natural person, corpora tion, government or governmental subdivision or agency, trust, estate, partnership, coopera tive, or association. (y) Pertinent element o f creditworthiness, in relation to a judgmental system of evaluating applicants, means any information about ap plicants that a creditor obtains and considers and that has a demonstrable relationship to a determination of creditworthiness. (z) Prohibited basis means race, color, reli gion, national origin, sex, marital status, or age (provided that the applicant has the ca pacity to enter into a binding contract); the fact that all or part of the applicant’s income derives from any public assistance program; or the fact that the applicant has in good faith 3 § 202.2 exercised any right under the Consumer Cred it Protection A ct or any state law upon which an exemption has been granted by the Board. (aa) State means any state, the District of Columbia, the Commonwealth of Puerto Rico, or any territory or possession of the United States. SE C T IO N 202.3— Limited Exceptions for Certain Classes of Transactions (a) Public-utilities credit. (1 ) Definition. Public-utilities credit refers to extensions of credit that involve public-utility services provided through pipe, wire, or other con nected facilities, or radio or similar trans mission (including extensions of such facili ties), if the charges for service, delayed payment, and any discount for prompt pay ment are filed with or regulated by a gov ernment unit. (2 ) Exceptions. The following provisions of this regulation do not apply to publicutilities credit: (i) section 2 0 2 .5 (d )(1 ) concerning in formation about marital status; (ii) section 202.10 relating to furnishing of credit information; and (iii) section 202.12(b) relating to record retention. (b) Securities credit. (1) Definition. Securi ties credit refers to extensions of credit sub ject to regulation under section 7 of the Se curities Exchange Act of 1934 or extensions of credit by a broker or dealer subject to regulation as a broker or dealer under the Securities Exchange Act of 1934. (2 ) Exceptions. The following provisions of this regulation do not apply to securities credit: (i) section 202.5(c) concerning infor mation about a spouse or former spouse; (ii) section 2 0 2 .5 (d )(1 ) concerning in formation about marital status; (iii) section 2 0 2 .5 (d )(3 ) concerning in formation about the sex of an applicant; (iv) section 202.7(b) relating to desig nation of name, but only to the extent necessary to prevent violation of rules re garding an account in which a broker or 4 R egulation B dealer has an interest, or rules necessitat ing the aggregation of accounts of spous es for the purpose of determining controlling interests, beneficial interests, beneficial ownership, or purchase limita tions and restrictions; (v) section 2 0 2.7(c) relating to action concerning open-end accounts, but only to the extent the action taken is on the basis of a change of name or marital status; (vi) section 202.7(d ) relating to the sig nature of a spouse or other person; (vii) section 202.10 relating to furnish ing of credit information; and (viii) section 202.12(b) relating to rec ord retention. (c ) Incidental credit. (1 ) Definition. Inciden tal credit refers to extensions of consumer credit other than credit of the types de scribed in paragraphs (a ) and (b) of this section— (i) that are not made pursuant to the terms of a credit card account; (ii) that are not subject to a finance charge (as defined in Regulation Z, 12 C FR 226.4); and (iii) that are not payable by agreement in more than four installments. (2 ) Exceptions. The following provisions of this regulation do not apply to incidental credit: (i) section 2 0 2.5(c) concerning infor mation about a spouse or former spouse; (ii) section 2 0 2 .5 (d )(1 ) concerning in formation about marital status; (iii) section 2 0 2 .5 (d )(2 ) concerning in formation about income derived from ali mony, child support, or separate mainte nance payments; (iv) section 2 0 2 .5 (d )(3 ) concerning in formation about the sex of an applicant, but only to the extent necessary for medi cal records or similar purposes; (v) section 202.7(d ) relating to the sig nature of a spouse or other person; (vi) section 202.9 relating to notifications; (vii) section 202.10 relating to furnish ing of credit information; and R egulation B (viii) section 202.12(b) relating to rec ord retention. (d) Business credit. (1 ) Definition. Business credit refers to extensions of credit primari ly for business or commercial (including agricultural) purposes, but excluding exten sions of credit of the types described in par agraphs (a) and (b) of this section. (2 ) Exceptions. The following provisions of this regulation do not apply to business credit: (i) section 2 0 2 .5 (d )(1 ) concerning in formation about marital status; and (ii) section 202.10 relating to furnishing of credit information. (3 ) Modified requirements. The following provisions of this regulation apply to busi ness credit as specified below: (i) section 202.9(a), (b ), and (c ) relat ing to notifications: the creditor shall no tify the applicant, orally or in writing, of action taken or of incompleteness. When credit is denied or when other adverse ac tion is taken, the creditor is required to provide a written statement of the rea sons and the ECOA notice specified in section 202.9(b) if the applicant makes a written request for the reasons within 30 days of that notification; and (ii) section 202.12(b) relating to record retention. The creditor shall retain rec ords as provided in section 202.12(b) if the applicant, within 90 days after being notified of action taken or of incomplete ness, requests in writing that records be retained. (e) Government credit. (1 ) Definition. Gov ernment credit refers to extensions of credit made to governments or governmental sub divisions, agencies, or instrumentalities. (2 ) Applicability o f regulation. Except for section 202.4, the general rule prohibiting discrimination on a prohibited basis, the re quirements of this regulation do not apply to government credit. § 202.5 SE C T IO N 202.4— General Rule Prohibiting Discrimination A creditor shall not discriminate against an applicant on a prohibited basis regarding any aspect of a credit transaction. SE C T IO N 202.5— Rules Concerning Taking o f Applications (a ) Discouraging applications. A creditor shall not make any oral or written statement, in advertising or otherwise, to applicants or prospective applicants that would discourage on a prohibited basis a reasonable person from making or pursuing an application. (b) General rules concerning requests fo r information. (1 ) Except as provided in para graphs (c ) and (d ) of this section, a credi tor may request any information in connec tion with an application.1 (2 ) Required collection o f information. Notwithstanding paragraphs (c ) and (d) of this section, a creditor shall request in formation for monitoring purposes as re quired by section 202.13 for credit secured by the applicant’s dwelling. In addition, a creditor may obtain information required by a regulation, order, or agreement issued b y , o r e n te r e d i n to w ith , a c o u r t o r a n e n forcement agency (including the attorney general of the United States or a similar state official) to monitor or enforce compli ance with the act, this regulation, or other federal or state statute or regulation. (3 ) Special-purpose credit. A creditor may obtain information that is otherwise re stricted to determine eligibility for a spe cial-purpose credit program, as provided in section 2 02.8(c) and (d ). (c ) Information about a spouse or form er spouse. (1 ) Except as permitted in this para graph, a creditor may not request any infor mation concerning the spouse or former spouse of an applicant. (2 ) Permissible inquiries. A creditor may request any information concerning an ap 1 This paragraph does not limit or abrogate any federal or state law regarding privacy, privileged information, credit reporting limitations, or similar restrictions on ob tainable information. 5 § 202.5 plicant’s spouse (or former spouse under paragraph (c) (2 ) (v )) that may be request ed about the applicant if— (i) the spouse will be permitted to use the account; (ii) the spouse will be contractually lia ble on the account; (iii) the applicant is relying on the spouse’s income as a basis for repayment of the credit requested; (iv) the applicant resides in a communi ty property state or property on which the applicant is relying as a basis for re payment of the credit requested is located in such a state; or (v) the applicant is relying on alimony, child support, or separate maintenance payments from a spouse or former spouse as a basis for repayment of the credit requested. (3 ) Other accounts o f the applicant. A creditor may request an applicant to list any account upon which the applicant is li able and to provide the name and address in which the account is carried. A creditor may also ask the names in which an appli cant has previously received credit. (d ) Other limitations on information requests. (1 ) M arital status. If an applicant applies for individual unsecured credit, a creditor shall not inquire about the applicant’s marital status unless the applicant resides in a com munity property state or is relying on prop erty located in such a state as a basis for repayment of the credit requested. If an ap plication is for other than individual unse cured credit, a creditor may inquire about the applicant’s marital status, but shall use only the terms “married,” “unmarried,” and “separated.” A creditor may explain that the category “unmarried” includes sin gle, divorced, and widowed persons. (2 ) Disclosure about income from alimony, child support, or separate maintenance. A creditor shall not inquire whether income Stated in an application is derived from ali mony, child support, or separate mainte nance payments unless the creditor disclos es to the applicant that such income need not be revealed if the applicant does not 6 R egulation B want the creditor to consider it in determin ing the applicant’s creditworthiness. (3 ) Sex. A creditor shall not inquire about the sex of an applicant. An applicant may be requested to designate a title on an appli cation form (such as Ms., Miss, Mr., or Mrs.) if the form discloses that the designa tion of a title is optional. An application form shall otherwise use only terms that are neutral as to sex. (4 ) Childbearing, childrearing. A creditor shall not inquire about birth control prac tices, intentions concerning the bearing or rearing of children, or capability to bear children. A creditor may inquire about the number and ages of an applicant’s depen dents or about dependent-related financial obligations or expenditures, provided such information is requested without regard to sex, marital status, or any other prohibited basis. (5 ) Race, color, religion, national origin. A creditor shall not inquire about the race, color, religion, or national origin of an ap plicant or any other person in connection with a credit transaction. A creditor may i n q u ir e a b o u t a n a p p li c a n t ’s p e r m a n e n t r e s idence and immigration status. (e) Written applications. A creditor shall take written applications for the types of credit covered by section 202.13(a) but need not take written applications for other types of credit. SE C T IO N 202.6— Rules Concerning Evaluation of Applications (a ) General rule concerning use o f informa tion. Except as otherwise provided in the act and this regulation, a creditor may consider any information obtained, so long as the infor mation is not used to discriminate against an applicant on a prohibited basis.2 (b) Specific rules concerning use o f informa tion. (1 ) Except as provided in the act and 2 The legislative history of the act indicates that the Con gress intended an “effects test” concept, as outlined in the employment field by the Supreme Court in the cases of Griggs v. Duke Power Co., 401 U.S. 424 (1971), and Albe marle Paper Co. v. Moody, 422 U.S. 405 (1975), to be applicable to a creditor’s determination of creditworthiness. R egulation B this regulation, a creditor shall not take a prohibited basis into account in any system of evaluating the creditworthiness of applicants. (2 ) Age, receipt o f public assistance, (i) E x cept as permitted in this paragraph, a creditor shall not take into account an applicant’s age (provided that the appli cant has the capacity to enter into a bind ing contract) or whether an applicant’s income derives from any public assist ance program. (ii) In an empirically derived, demon strably and statistically sound, credit scoring system, a creditor may use an ap plicant’s age as a predictive variable, pro vided that the age of an elderly applicant is not assigned a negative factor or value. (iii) In a judgmental system of evaluat ing creditworthiness, a creditor may con sider an applicant’s age or whether an ap plicant’s income derives from any public assistance program only for the purpose of determining a pertinent element of creditworthiness. (iv) In any system of evaluating creditworthiness, a creditor may consider the age of an elderly applicant when such age is used to favor the elderly applicant in extending credit. (3 ) Childbearing, childrearing. In evaluat ing creditworthiness, a creditor shall not use assumptions or aggregate statistics re lating to the likelihood that any group of persons will bear or rear children or will, for that reason, receive diminished or inter rupted income in the future. (4 ) Telephone listing. A creditor shall not take into account whether there is a tele phone listing in the name of an applicant for consumer credit but may take into ac count whether there is a telephone in the applicant’s residence. (5 ) Income. A creditor shall not discount or exclude from consideration the income of an applicant or the spouse of an appli cant because of a prohibited basis or be cause the income is derived from part-time employment or is an annuity, pension, or other retirement benefit; a creditor may consider the amount and probable continu ance of any income in evaluating an appli § 202.7 cant’s creditworthiness. When an applicant relies on alimony, child support, or separate maintenance payments in applying for cred it, the creditor shall consider such pay ments as income to the extent that they are likely to be consistently made. (6 ) Credit history. To the extent that a creditor considers credit history in evaluat ing the creditworthiness of similarly quali fied applicants for a similar type and amount of credit, in evaluating an appli cant’s creditworthiness a creditor shall con sider— (i) the credit history, when available, of accounts designated as accounts that the applicant and the applicant’s spouse are permitted to use or for which both are contractually liable; (ii) on the applicant’s request, any infor mation the applicant may present that tends to indicate that the credit history being considered by the creditor does not accurately reflect the applicant’s creditworthiness; and (iii) on the applicant’s request, the cred it history, when available, of any account reported in the name of the applicant’s spouse or former spouse that the appli cant can demonstrate accurately reflects the applicant’s creditworthiness. (7 ) Immigration status. A creditor may consider whether an applicant is a perma nent resident of the United States, the ap plicant’s immigration status, and any addi tional information that may be necessary to ascertain the creditor’s rights and remedies regarding repayment. (c ) State property laws. A creditor’s consider ation or application of state property laws di rectly or indirectly affecting creditworthiness does not constitute unlawful discrimination for the purposes of the act or this regulation. SE C T IO N 202.7— Rules Concerning Extensions of Credit (a ) Individual accounts. A creditor shall not refuse to grant an individual account to a creditworthy applicant on the basis of sex, marital status, or any other prohibited basis. (b) Designation o f name. A creditor shall not 7 § 202.7 refuse to allow an applicant to open or main tain an account in a birth-given first name and a surname that is the applicant’s birth-given surname, the spouse’s surname, or a combined surname. (c ) Action concerning existing open-end ac counts. (1 ) Limitations. In the absence of evi dence of the applicant’s inability or unwill ingness to repay, a creditor shall not take any of the following actions regarding an applicant who is contractually liable on an 'existing open-end account on the basis of the applicant’s reaching a certain age or re tiring or on the basis of a change in the applicant’s name or marital status: (i) require a reapplication, except as provided in paragraph ( c ) ( 2 ) of this section; (ii) change the terms of the account; or (iii) terminate the account. (2 ) Requiring reapplication. A creditor may require a reapplication for an open-end account on the basis of a change in the mar ital status of an applicant who is contractu ally liable if the credit granted was based in whole or in part on income of the appli cant’s spouse and if information available to the creditor indicates that the applicant’s income may not support the amount of credit currently available. (d) - Signature o f spouse or other person. (1 ) R ule fo r qualified applicant. Except as pro vided in this paragraph, a creditor shall not require the signature of an applicant’s spouse or other person, other than a joint applicant, on any credit instrument if the applicant qualifies under the creditor’s stan dards of creditworthiness for the amount and terms of the credit requested. (2 ) Unsecured credit. If an applicant re quests unsecured credit and relies in part upon property that the applicant owns jointly with another person to satisfy the creditor’s standards of creditworthiness, the creditor may require the signature of the other person only on the instrument(s) necessary, or reasonably believed by the creditor to be necessary, under the law of the state in which the property is located, to ^enable the creditor to reach the property R egulation B being relied upon in the event of the death or default of the applicant. (3 ) Unsecured credit— community property states. If a married applicant requests unse cured credit and resides in a community property state, or if the property upon which the applicant is relying is located in such a state, a creditor may require the sig nature of the spouse on any instrument nec essary, or reasonably believed by the credi tor to be necessary, under applicable state law to make the community property avail able to satisfy the debt in the event of de fault if— (i) applicable state law denies the appli cant power to manage or control suffi cient community property to qualify for the amount of credit requested under the creditor’s standards of creditworthiness; and (ii) the applicant does not have suffi cient separate property to qualify for the amount of credit requested without re gard to community property. (4 ) Secured credit. If an applicant re quests secured credit, a creditor may re quire the signature of the applicant’s spouse or other person on any instrument neces sary, or reasonably believed by the creditor to be necessary, under applicable state law to make the property being offered as secu rity available to satisfy the debt in the event of default, for example, an instrument to create a valid lien, pass clear title, waive inchoate rights, or assign earnings. (5 ) Additional parties. If, under a credi tor’s standards of creditworthiness, the per sonal liability of an additional party is nec essary to support the extension of the credit requested, a creditor may request a cosign er, guarantor, or the like. The applicant’s spouse may serve as an additional party, but the creditor shall not require that the spouse be the additional party. (6 ) Rights o f additional parties. A creditor shall not impose requirements upon an ad ditional party that the creditor is prohibited from imposing upon an applicant under this section. (e) Insurance. A creditor shall not refuse to extend credit and shall not terminate an ac- § 202.9 R egulation B count because credit life, health, accident, dis ability, or other credit-related insurance is not available on the basis of the applicant’s age. SE C T IO N 202.8— Special-Purpose Credit Programs (a) Standards fo r programs. Subject to the provisions of paragraph (b) of this section, the act and this regulation permit a creditor to extend special-purpose credit to applicants who meet eligibility requirements under the following types of credit programs: (1 ) any credit assistance program express ly authorized by federal or state law for the benefit of an economically disadvantaged class of persons; (2 ) any credit assistance program offered by a not-for-profit organization, as defined under section 501(c) of the Internal Reve nue Code of 1954, as amended, for the ben efit of its members or for the benefit of an economically disadvantaged class of per sons; or (3) any special-purpose credit program of fered by a for-profit organization or in which such an organization participates to meet special social needs, if— (i) the program is established and ad ministered pursuant to a written plan that identifies the class of persons that the program is designed to benefit and sets forth the procedures and standards for extending credit pursuant to the pro gram; and (ii) the program is established and ad ministered to extend credit to a class of persons who, under the organization’s customary standards of creditworthiness, probably would not receive such credit or would receive it on less favorable terms than are ordinarily available to other ap plicants applying to the organization for a similar type and amount of credit. (b) Rules in other section. (1 ) General appli cability. All of the provisions of this regula tion apply to each of the special-purpose credit programs described in paragraph (a) of this section unless modified by this section. (2 ) Common characteristics. A program described in paragraph (a ) ( 2 ) or (a ) ( 3 ) of this section qualifies as a special-purpose credit program only if it was established and is administered so as not to discrimi nate against an applicant on any prohibited basis; however, all program participants may be required to share one or more com mon characteristics (for example, race, na tional origin, or sex) so long as the program was not established and is not administered with the purpose of evading the require ments of the act or this regulation. (c ) Special rule concerning requests and use o f information. If participants in a special-pur pose credit program described in paragraph (a) of this section are required to possess one or more common characteristics (for exam ple, race, national origin, or sex) and if the program otherwise satisfies the requirements of paragraph (a ), a creditor may request and consider information regarding the common characteristic(s) in determining the appli cant’s eligibility for the program. (d ) Special rule in the case o f financial need. If financial need is one of the criteria under a special-purpose program described in para graph (a ) of this section, the creditor may re quest and consider, in determining an appli cant’s eligibiltiy for the program, information regarding the applicant’s marital status; ali mony, child support, and separate mainte nance income; and the spouse’s financial re sources. In addition, a creditor may obtain the signature of an applicant’s spouse or other person on an application or credit instrument relating to a special-purpose program if the signature is required by federal or state law. SE C T IO N 202.9— Notifications (a) Notification o f action taken, ECOA notice, and statement o f specific reasons. (1 ) When notification is required. A creditor shall no tify an applicant of action taken within— (i) 30 days after receiving a completed application concerning the creditor’s ap proval of, counteroffer to, or adverse ac tion on the application; 9 § 202.9 (ii) 30 days after taking adverse action on an incomplete application, unless no tice is provided in accordance with para graph (c ) of this section; (iii) 30 days after taking adverse action of an existing account; or (iv) 90 days after notifying the applicant of a counteroffer if the applicant does not expressly accept or use the credit offered. (2 ) Content o f notification when adverse action is taken. A notification given to an applicant when adverse action is taken shall be in writing and shall contain: a statement of the action taken; the name and address of the creditor; a statement of the provisions of section 701(a) of the act; the name and address of the federal agency that adminis ters compliance with respect to the creditor; and either— (i) a statement of specific reasons for the action taken; or (ii) a disclosure of the applicant’s right to a statement of specific reasons within 30 days, if the statement is requested within 60 days of the creditor’s notifica tion. The disclosure shall include the name, address, and telephone number of the person or office from which the state ment of reasons can be obtained. If the creditor chooses to provide the reasons orally, the creditor shall also disclose the applicant’s right to have them confirmed in writing within 30 days of receiving a written request for confirmation from the applicant. (b) Form o f ECOA notice and statement o f specific reasons. (1 ) ECOA notice. To satisfy the disclosure requirements of paragraph ( a ) (2 ) of this section regarding section 701(a) of the act, the creditor shall provide a notice that is substantially similar to the following: T he federal E qual C redit O p p ortunity A ct p ro hibits creditors from discrim inating against cred it applicants on th e basis o f race, color, religion, national origin, sex, m arital status, age (provided th e applicant has the capacity to enter into a binding co n tra ct); because all o r p a rt o f the ap plican t’s incom e derives from any public assist ance program ; o r because the applicant has in good faith exercised any right u n der the C on sum er C redit P ro tection A ct. T he federal agency 10 R egulation B th a t adm inisters com pliance w ith this law con cerning this creditor is (nam e and address as specified by the appropriate agency listed in ap pendix A o f this regulation). (2 ) Statement o f specific reasons. The state ment of reasons for adverse action required by paragraph ( a ) ( 2 ) ( i ) of this section must be specific and indicate the principal reason (s) for the adverse action. State ments that the adverse action was based on the creditor’s internal standards or policies or that the applicant failed to achieve the qualifying score on the creditor’s credit scoring system are insufficient. (c ) Incomplete applications. (1 ) Notice alter natives. Within 30 days after receiving an application that is incomplete regarding matters that an applicant can complete, the creditor shall notify the applicant either— (i) of action taken, in accordance with paragraph (a) of this section; or (ii) of the incompleteness, in accordance with paragraph (c ) (2 ) of this section. (2 ) Notice o f incompleteness. If additional information is needed from an applicant, the creditor shall send a written notice to the applicant specifying the information needed, designating a reasonable period of time for the applicant to provide the infor mation, and informing the applicant that failure to provide the information requested will result in no further consideration being given to the application. The creditor shall have no further obligation under this sec tion if the applicant fails to respond within the designated time period. If the applicant supplies the requested information within the designated time period, the creditor shall take action on the application and no tify the applicant in accordance with para graph (a ) of this section. (3 ) Oral request fo r information. At its op tion, a creditor may inform the applicant orally of the need for additional informa tion; but if the application remains incom plete the creditor shall send a notice in ac cordance with paragraph ( c ) ( 1 ) of this section. (d) Oral notifications by small-volume credi tors. The requirements of this section (includ § 2 0 2 .1 1 R egulation B ing statements of specific reasons) are satisfied by oral notifications in the case of any creditor that did not receive more than 150 applica tions during the preceding calendar year. (e) Withdrawal o f approved application. When an applicant submits an application and the parties contemplate that the applicant will inquire about its status, if the creditor ap proves the application and the applicant has not inquired within 30 days after applying, the creditor may treat the application as with drawn and need not comply with paragraph ( a ) (1 ) of this section. (f) Multiple applicants. When an application involves more than one applicant, notification need only be given to one of them but must be given to the primary applicant where one is readily apparent. (g) Applications submitted through a third party. When an application is made on behalf of an applicant to more than one creditor and the applicant expressly accepts or uses credit offered by one of the creditors, notification of action taken by any of the other creditors is not required. If no credit is offered or if the applicant does not expressly accept or use any credit offered, each creditor taking adverse ac tion must comply with this section, directly or through a third party. A notice given by a third party shall disclose the identity of each creditor on whose behalf the notice is given. SE C T IO N 202.10— Furnishing o f Credit Information (a) Designation o f accounts. A creditor that furnishes credit information shall designate— (1 ) any new account to reflect the partici pation of both spouses if the applicant’s spouse is permitted to use or is contractual ly liable on the account (other than as a guarantor, surety, endorser, or similar par ty); and (2 ) any existing account to reflect such participation, within 90 days after receiving a written request to do so from one of the spouses. (b) Routine reports to consumer reporting agency. If a creditor furnishes credit informa tion to a consumer reporting agency concern ing an account designated to reflect the partic ipation of both spouses, the creditor shall furnish the information in a manner that will enable the agency to provide access to the in formation in the name of each spouse. (c ) Reporting in response to inquiry. If a cred itor furnishes credit information in response to an inquiry concerning an account designat ed to reflect the participation of both spouses, the creditor shall furnish the information in the name of the spouse about whom the infor mation is requested. SE C T IO N 202.11— Relation to State Law (a) Inconsistent state laws. Except as other wise provided in this section, this regulation alters, affects, or preempts only those state laws that are inconsistent with the act and this regulation and then only to the extent of the inconsistency. A state law is not inconsistent if it is more protective of an applicant. (b) Preempted provisions o f state law. (1 ) A state law is deemed to be inconsistent with the requirements of the act and this regula tion and less protective of an applicant within the meaning of section 705 (f) of the act to the extent that the law— (i) requires or permits a practice or act prohibited by the act or this regulation; (ii) prohibits the individual extension of consumer credit to both parties to a mar riage if each spouse individually and vol untarily applies for such credit; (iii) prohibits inquiries or collection of data required to comply with the act or this regulation; (iv) prohibits asking or considering age in an empirically derived, demonstrably and statistically sound, credit scoring sys tem to determine a pertinent element of creditworthiness, or to favor an elderly applicant; or (v) prohibits inquiries necessary to es tablish or administer a special-purpose credit program as defined by section 202 . 8. 11 §2 0 2 .1 1 (2 ) A creditor, state, or other interested party may request the Board to determine whether a state law is inconsistent with the requirements of the act and this regulation. (c) Laws on finance charges, loan ceilings. If married applicants voluntarily apply for and obtain individual accounts with the same creditor, the accounts shall not be aggregated or otherwise combined for purposes of deter mining permissible finance charges or loan ceilings under any federal or state law. Per missible loan ceiling laws shall be construed to permit each spouse to become individually lia ble up to the amount of the loan ceilings, less the amount for which the applicant is jointly liable. (d ) State and federal laws not affected. This section does not alter or annul any provision of state property laws, laws relating to the dis position of decedents’ estates, or federal or state banking regulations directed only toward insuring the solvency of financial institutions. (e) Exemption fo r state-regulated transac tions. (1 ) Applications. A state may apply to the Board for an exemption from the re quirements of the act and this regulation for any class of credit transactions within the state. The Board will grant such an exemp tion if the Board determines that— (i) the class of credit transactions is sub ject to state law requirements substantial ly similar to the act and this regulation or that applicants are afforded greater pro tection under state law; and (ii) there is adequate provision for state enforcement. (2 ) Liability and enforcement, (i) No ex emption will extend to the civil-liability provisions of section 706 or the adminis trative-enforcement provisions of section 704 of the act. (ii) After an exemption has been grant ed, the requirements of the applicable state law (except for additional require ments not imposed by federal law) will constitute the requirements of the act and this regulation. 12 R egulation B SE C T IO N 202.12— Record Retention (a) Retention o f prohibited information. A creditor may retain in its files information that is prohibited by the act or this regulation in evaluating applications, without violating the act or this regulation, if the information was obtained— (1 ) from any source prior to March 23, 1977; (2 ) from consumer reporting agencies, an applicant, or others without the specific re quest of the creditor; or (3 ) As required to monitor compliance with the act and this regulation or other federal or state statutes or regulations. (b) Preservation o f records. (1 ) Applications. For 25 months after the date that a creditor notifies an applicant of action taken on an application or of incompleteness, the credi tor shall retain in original form or a copy thereof— (i) any application that it receives, any information required to be obtained con cerning characteristics of the applicant to monitor compliance with the act and this regulation or other similar law, and any other written or recorded information used in evaluating the application and not returned to the applicant at the appli cant’s request; (ii) a copy of the following documents if furnished to the applicant in written form (or, if furnished orally, any notation or memorandum made by the creditor): (A ) the notification of action taken; and (B ) the statement of specific reasons for adverse action; and (iii) any written statement submitted by the applicant alleging a violation of the act or this regulation. (2 ) Existing accounts. For 25 months after the date that a creditor notifies an applicant of adverse action regarding an existing ac count, the creditor shall retain as to that account, in original form or a copy thereof— (i) any written or recorded information concerning the adverse action; and (ii) any written statement submitted by § 2 0 2 .1 4 R egulation B the applicant alleging a violation of the act or this regulation. (3 ) Other applications. For 25 months after the date that a creditor receives an applica tion for which the creditor is not required to comply with the notification require ments of section 202.9, the creditor shall re tain all written or recorded information in its possession concerning the applicant, in cluding any notation of action taken. (4 ) Enforcement proceedings and investiga tions. A creditor shall retain the informa tion specified in this section beyond 25 months if it has actual notice that it is un der investigation or is subject to an enforce ment proceeding for an alleged violation of the act or this regulation by the attorney general of the United States or by an en forcement agency charged with monitoring that creditor’s compliance with the act and this regulation, or if it has been served with notice of an action filed pursuant to section 706 of the act and section 202.14 of this regulation. The creditor shall retain the in formation until final disposition of the mat ter, unless an earlier time is allowed by or der of the agency or court. SE C T IO N 202.13— Information for Monitoring Purposes (a) Information to be requested. A creditor that receives an application for credit primari ly for the purchase or refinancing of a dwelling occupied or to be occupied by the applicant as a principal residence, where the extension of credit will be secured by the dwelling, shall request as part of the applica tion the following information regarding the applicant (s): (1) race or national origin, using the cate gories American Indian or Alaskan Native; Asian or Pacific Islander; Black; White; Hispanic; Other (Specify); (2 ) sex; (3) marital status, using the categories Married, Unmarried, and Separated; and (4 ) age. “Dwelling” means a residential structure that contains one to four units, whether or not that structure is attached to real property. The term includes, but is not limited to, an indi vidual condominium or cooperative unit, and a mobile or other manufactured home. (b) Obtaining o f information. Questions re garding race or national origin, sex, marital status, and age may be listed, at the creditor’s option, on the application form or on a sepa rate form that refers to the application. The applicant(s) shall be asked but not required to supply the requested information. If the ap plicant (s) chooses not to provide the informa tion or any part of it, that fact shall be noted on the form. The creditor shall then also note on the form, to the extent possible, the race or national origin and sex of the applicant(s) on the basis of visual observation or surname. (c ) Disclosure to applicant(s). The creditor shall inform the applicant(s) that the infor mation regarding race or national origin, sex, marital status, and age is being requested by the federal government for the purpose of monitoring compliance with federal statutes that prohibit creditors from discriminating against applicants on those bases. The creditor shall also inform the applicant(s) that if the applicant(s) chooses not to provide the infor mation, the creditor is required to note the race or national origin and sex on the basis of visual observation or surname. (d) Substitute monitoring program. A moni toring program required by an agency charged with administrative enforcement un der section 704 of the act may be substituted for the requirements contained in paragraphs (a ), (b ), and (c ). SE C T IO N 202.14— Enforcement, Penalties, and Liabilities (a) Administrative enforcement. (1 ) As set forth more fully in section 704 of the act, administrative enforcement of the act and this regulation regarding certain creditors is assigned to the Comptroller of the Curren cy, Board of Governors of the Federal Re serve System, board of directors of the Fed eral Deposit Insurance Corporation, Feder al Home Loan Bank Board (acting directly or through the Federal Savings and Loan Insurance Corporation), National Credit 13 § 2 0 2 .1 4 Union Administration, Interstate Com merce Commission, Secretary of Agricul ture, Farm Credit Administration, Securi ties and Exchange Commission, Small Busi ness Administration, and Secretary of Transportation. (2 ) Except to the extent that administra tive enforcement is specifically assigned to other authorities, compliance with the re quirements imposed under the act and this regulation is enforced by the Federal Trade Commission. (b) Penalties and liabilities. (1 ) Sections 706(a) and (b) and 702(g) of the act pro vide that any creditor that fails to comply with a requirement imposed by the act or this regulation is subject to civil liability for actual and punitive damages in individual or class actions. Pursuant to sections 704(b ), (c ), and ( d ) and 702(g) of the act, violations of the act or regulation also con stitute violations of other federal laws. Lia bility for punitive damages is restricted to nongovernmental entities and is limited to $10,000 in individual actions and the lesser of $500,000 o r 1 p e r c e n t of t h e c r e d i t o r ’s net worth in class actions. Section 7 0 6 (c) provides for equitable and declaratory relief and section 706(d ) authorizes the awarding of costs and reasonable attorney’s fees to an aggrieved applicant in a successful action. (2 ) As provided in section 706(f), a civil action under the act or this regulation may be brought in the appropriate United States district court without regard to the amount in controversy or in any other court of com petent jurisdiction within two years after the date of the occurrence of the violation, or within one year after the commencement of an administrative enforcement proceed ing or of a civil action brought by the attor ney general of the United States within two years after the alleged violation. (3 ) Sections 706(g) and (h) provide that, if an agency responsible for administrative enforcement is unable to obtain compliance with the act or this regulation, it may refer the matter to the attorney general of the United States. On referral, or whenever the Attorney General has reason to believe that one or more creditors are engaged in a pat 14 R egulation B tern or practice in violation of the act or this regulation, the attorney general may bring a civil action. (c ) Failure o f compliance. A creditor’s failure to comply with sections 2 0 2 .6 (b )(6 ), 202.9, 202.10, 202.12 or 202.13 is not a violation if it results from an inadvertent error. On discov ering an error under sections 202.9 and 202.10, the creditor shall correct it as soon as possible. If a creditor inadvertently obtains the monitoring information regarding the race or national origin and sex of the applicant in a dwelling-related transaction not covered by section 202.13, the creditor may act on and retain the application without violating the regulation. A P P E N D IX A — Federal Enforcement Agencies The following list indicates the federal agen cies that enforce Regulation B for particular classes of creditors. Any questions concerning a particular creditor should be directed to its enforcement agency. National Banks Comptroller of the Currency Consumer Examinations Division Washington, D.C. 20219 State M ember Banks Federal Reserve Bank serving the District in which the state member bank is located. Nonmember Insured Banks Federal Deposit Insurance Corporation Re gional Director for the region in which the nonmember insured bank is located. Savings Institutions Insured by the F SLIC and Members o f the FH LB System (except fo r savings banks insured by FDIC) The Federal Home Loan Bank Board Supervi sory Agent in the District in which the insti tution is located. A ppendix B R egulation B Federal Credit Unions Regional office of the National Credit Union Administration serving the area in which the federal credit union is located. Air Carriers Assistant General Counsel for Aviation En forcement and Proceedings Department of Transportation 400 Seventh Street, S.W. Washington, D.C. 20590 Creditors Subject to Interstate Commerce Commission Office of Proceedings Interstate Commerce Commission Washington, D.C. 20523 Creditors Subject to Packers and Stockyards Act Nearest Packers and Stockyards Administra tion area supervisor. Sm all Business Investment Companies U.S. Small Business Administration 1441 L Street, N.W. Washington, D.C. 20416 Brokers and Dealers Securities and Exchange Commission Washington, D.C. 20549 Federal Land Banks, Federal Land B ank Associations, Federal Intermediate Credit Banks, and Production Credit Associations Farm Credit Administration 1501 Farm Credit Drive McLean, Virginia 22102-5090 Retailers, Finance Companies, and A ll Other Creditors Not Listed Above FTC regional office for region in which the creditor operates or Federal Trade Commission Equal Credit Opportunity Washington, D.C. 20580 A P P E N D IX B — Model Application Forms This appendix contains five model credit ap plication forms, each designed for use in a particular type of consumer credit transaction as indicated by the bracketed caption on each form. The first sample form is intended for use in open-end, unsecured transactions; the sec ond for closed-end, secured transactions; the third for closed-end transactions, whether unsecured or secured; the fourth in transac tions involving community property or occur ring in community property states; and the fifth in residential mortgage transactions. The appendix also contains a model disclosure for use in complying with section 202.13 for cer tain dwelling-related loans. All forms con tained in this appendix are models; their use by creditors is optional. The use or modification of these forms is governed by the following instructions. A creditor may change the forms by asking for additional information not prohibited by sec tion 202.5; by deleting any information re quest; or by rearranging the format without modifying the substance of the inquiries. In any of these three instances, however, the ap propriate notices regarding the optional na ture of courtesy titles; the option to disclose alimony, child support, or separate mainte nance; and the limitation concerning marital status inquiries must be included in the appro priate places if the items to which they relate appear on the creditor’s form. If a creditor uses an appropriate appendix B model form, or modifies a form in accordance with the above instructions, that creditor shall be deemed to be acting in compliance with the provisions of paragraphs (c ) and (d) of sec tion 202.5 of this regulation. 15 A ppendix B R egulation B [Open-end, unsecured credit] C R E D IT A P P LIC A TIO N IMPORTANT: Read these Directions before completing this Application. Check Appropriate Box □ If you are applying for individual credit in your own name and are relying on your own income or assets and not the income or assets of another person as the basis for repayment of the credit requested, complete Sections A, C, D, and E, omitting B and the second part of C. If this is an application for joint credit with another person, complete all Sections, providing information in B about the joint applicant. If you are applying for individual credit, but are relying on income from alimony, child support, or sepa rate maintenance or on the income or assets of another person as the basis for repayment of the credit requested, complete all Sections to the extent possible, providing information in B about the person on whose alimony, support, or maintenance payments or income or assets you are relying. □ □ Amount Requested Payment Date Desired Proceeds of Credit ....................................................................................... To be Used For.................................................................................................................................. SECTION A— INFORMATION REGARD IN G APPLICANT Full Name (Last, First, Middle): ................................................................................................ ........................................................ Birthdate: / Present Street Address: ............................................................................................................................................................................. Years there: .......... / City: ............................................................................... State: ....................................... Zip: ........................Telephone: ........................................................ Social Security N o.: ......................................................................................... Driver’s License N o.: ................................................................................. City: ..................................................................... ........ State: ..................................... Zip: ..................... Present net salary or commission: $ per . No. Dependents: Ages: Alimony, child support, or separate maintenance income need not be revealed if you do not wish to have it considered as a basis for repaying this obligation. Alimony, child support, separate maintenance received under: court order □ written agreement □ oral understanding □ Other income: $................................ per .................................. Source(s) of other income: Is any income listed in this Section likely to be reduced before the credit requested is paid off? □ Yes (Explain in detail on a separate sheet.) No □ Have you ever received credit from us? ............................ When? ..... ........................................ Office: ..... Checking Account No.................................. ...................................................... Institution and Branch: Savings Account No....................... ..................................................................... Institution and Branch: Name of nearest relative not living with you: ............................................. Relationship: .........;.i........................ Address: ......................................................................................................................................................................... SECTION B—INFORMATION REGARDIN G JO IN T APPLICANT OR OTHER PARTY (Use separate sheets if necessary.) Full Name (Last, First, Middle): ......................................................................................................................................................... Birthdate: / Relationship to Applicant (if any): ............................................................................................................................ Present Street Address: City: ............................................................................. Years there: State: ........................ Z i p ...................Telephone: .................................................... Social Security No.: ......................................................................................... Driver’s License N o.: ............................................................................ Present Employer: ............................................................................ ............... Years there: Telephone: .......................................... Position or title: ................................................................................................. Name of supervisor: ............................................................................ Employer’s Address: ..................................................................................................................................................... .............................................................. Previous Employer: ..................................................................................................................................................................................... Years there: ... Previous Employer’s Address: .............................................................................................. .................................................................................................. Present net salary or commission: $........................ per ........................ . No. Dependents: .................... Ages: ...................................... .......... Alimony, child support, separate maintenance received under: court order [“] written agreement □ oral understanding □ Other income: $................................ per .................................. Source(s) of other income: .................................................................. ............. Is any income listed in this Section likely to be reduced before the credit requested is paid off? □ Yes (Explain in detail on a separate sheet.) No □ Checking Account N o.: ................................................................................... Institution and Branch: ........................................................... Savings Account N o.: ....................................................................................... Institution and Branch: ........................................................... Name of nearest relative not living with Joint Applicant or Other Party: .............................................................................................................................................................................................. Relationship: ........................................................................................................ Address: ........................................................................................ SECTION C—MARITAL STATUS Applicant: □ Married □ Separated Other Party: □ Married □ Separated 16 □ Unmarried (including single, divorced, and widowed) □ Unmarried (including single, divorced, and widowed) A ppendix B R egulation B SECTION D— A SSET AND DEBT INFORMATION (If Section B has been completed, this Section should be completed giving information about both the Applicant and Joint Applicant or Other Person. Please mark Anplicant-related informa tion with an “A.” If Section B was not completed, only give information about the Applicant in this Section.) A S S E T S O W N E D (Use separate sheet if necessary.) Value Description of Assets Cash Subject to Debt? Yes/No Name(s) of Owner(s) $ Automobiles (Make, Model, Year) Cash Value of Life Insurance (Issuer, Face Value) Real Estate (Location, Date Acquired) Marketable Securities (Issuer, Type, No. of Shares) Other (List) Total Assets $ O U T S T A N D IN G D E B TS (Include charge accounts, instalment contracts, credit cards, rent, mortgages, etc. Use separate sheet if necessary.) Type of Debt or Acct. No. Creditor 1. (Landlord or Mongage Holder) Name in Which Acct. Carried Original Debt Monthly Payments Present Balance Past Due? Yes/No $ (Omit rent) $ (Omit rent) f □ Rent Payment □ Mortgage 2. 3. $ $ $ Total Debts Date Paid (Credit References) T. $ 2. Are you a co-maker, endorser, or guarantor on any loan or contract? Are there any unsatisfied judgments against you? Have you been declared bankrupt in the last 14 years? Yes □ No 0 Yes □ No □ Amount $ Yes □ No □ If “yes” where? If “yes” for whom? To whom? If “yes” to whom owed? Year Other obligations— (E.g., liability t<d pay alimony, child support, separate maintenance. Use separate sheet if necessary.) SECTION E—SECURED CREDIT Briefly describe the property to be given as security: and list names and addresses of all co-owners of the property: Address Name If the security is real estate, give the full name of your spouse (if any): Everything that I have stated in this application is correct to the best of my knowledge. I understand that you will retain this application whether or not it is approved. You are authorized to check my credit and employment history and to answer ques tions about youi credit experience with me. Applicant’s Signature Date Other Signature (W here Applicable) Date A ppendix B R egulation B [Closed-end, secured credit] C R E D IT A P P LIC A TIO N IMPORTANT: Read these Directions before completing this Application. Check Appropriate Box □ If you are applying for an individual account in your own name and are relying on your own income or assets and not the income or assets of another person as the basis for repayment of the credit requested, complete only Sections A and D. □ If you are applying for a joint account or an account that you and another person will use, complete all Sections, providing information in B about the joint applicant or user. □ If you are applying for an individual account, but are relying on income from alimony, child support, or separate maintenance or on the income or assets of another person as the basis for repayment of the credit requested, complete all Sections to the extent possible, providing information in B about the person on whose alimony, support, or maintenance payments or income or assets you are relying. SECTION A—INFORMATION REGARDING APPLICANT Full Name (Last, First, Middle): ......................................................................................................................................................... Birthdate: / Present Street Address: .............................................................................................................................................................................. Years there: .... City: ............................................................................... State: ....................................... Zip: ........................ Telephone: ................................................ Social Security N o.: ........................................................................................... Driver’s License N o.: ........................................................................... Previous . Street Address: ......................................................................................................................................................................... Years there: .... City: ............................................................................... State: ..................................... Zip: ................................. Present Employer: ............................................................................................ Years there: ......................... Telephone: ........................................... Position or title: ................................................................................................Name of supervisor: ............................................................................... Employer’s Address: ....................................................................................................................................................................................................................... Previous Employer: ...................................................................................................................................................................................... Years there: .... Previous Employer’s Address: ........................................................................ ........................................................................................................................... Present net salary or commission: $........................ per .......................... No. Dependents: .................... Ages: .................................................. Alimony, child support, or separate maintenance income need not be revealed If you do not wish to have it considered as j for repaying this obligation. Alimony, child support, separate maintenance received under: court order □ written agreement □ oral understanding □ Other income: $. per Source(s) of other income: Is any income listed in this Section likely to be reduced in the next two years? □ Yes (Explain in detail on a separate sheet.) No □ Have you ever received credit from us? ............................... When? ......................................... Office: Checking Account N o.: ..................................................................................... Institution and Branch: ....... Savings Account N o.: ....................................................................................... Institution and Branch: ........ Relationship: .................................... Address: ............................................. ...................................................................................................................................... SECTION B—INFORMATION REGARDING JO IN T APPLICANT, USER, OR OTHER PARTY (Use separate sheets if necessary.) Full Name (Last, First, Middle): ........................................................................................................................................................ Birthdate: / / Relationship to Applicant (if any): ................................................................................................................................................................................................... Present Street Address: ................................................................................................................................................................................ Years there: .............. City: ............................................................................... State: ..................................... Zip: ........................ Telephone: .......................................................... Social Security N o.: ......................................................................................... Driver’s License N o.: ........................................... .......................................... Present Employer: ...............................................................................................Years there: ......................... Telephone: ...................................................... Position or title: ............................................................................................... Name of supervisor: .......................................................................................... Employer’s Address: ................................................................................................................................................................................................................................ Previous Employer: ...................................................................................................................................................................................... Years there: .............. Previous Employer’s Address: ............................ ................................................................................................................................................................................ Present net salary or commission: $........................ per ........................ . No. Dependents: Ages: Alimony, child support, or separate maintenance income need not be revealed if you do not wish to have it considered as a basis for repaying this obligation. Alimony, child support, separate maintenance received under: court order □ written agreement □ oral understanding □ Other income: $... per ................................ . Source(s) of other income: Is any income listed in this Section likely to be reduced in the next two years? □ Yes (Explain in detail on a separate sheet.) □ No Checking Account N o.: ..................................................................................... Institution and Branch: ....................................................... Savings Account N o.: ..................................................................................... Institution and Branch: ....................................................... Name of nearest relative not living with Joint Applicant, User, or Other Party: ............................................................................................................. Telephone: ............... Relationship: ................................................................................... Address: ....................................................................................................... SECTION C—MARITAL STATUS (Do not complete if this is an application for an individual account.) Applicant: □ Married □ Separated □ Unmarried (including single, divorced, and widowed) Other Party: □ Married □ Separated □ Unmarried (including single, divorced, and widowed) 18 A p pend ix B R egulation B SECTION B —A SSET AND D EBT INFORMATION (If Section B has been completed, this Section should be completed giving information about both the Applicant and Joint Applicant, User, or Other Person. Please mark Applicant-related information with an “A .” If Section B was not completed, only give information about the Applicant in this Section.) A S S E T S O W N E D (Use separate sheet if necessary.) Value Description of Assets Cash Subject to Debt? Yes/No Name(s) of Owner(s) $ Automobiles (Make, Model, Year) Cash Value of Life Insurance (Issuer, Face Value) Real Estate (Location, Date Acquired) Marketable Securities (Issuer, Type, No. of Shares) Other (List) Total Assets $ O U T S T A N D IN G D E B T S (Include charge accounts, instalment contracts, credit cards, rent, mortgages, etc. Use separate sheet if necessary.) Creditor 1. (Landlord or Mortgage Holder) Type of Debt or Acct. No. Name in Which Acct. Carried □ Rent Payment □ Mortgage Original Present Debt Balance $ (Omit rent) $ (Omit rent) $ Monthly Payments $ s Past Due ? Yes/No 2. 5. 4. 5. 6. $ Total Debts Date Paid (Credit References) $ Are you a co-maker, endorser, or guarantor on any loan or contract? Yes □ No □ If “yes” for whom? To whom? Yes □ Are there any unsatisfied If “yes” judgments against you? No □ Amount $ to whom owed? Have you teen declared Yes □ If “yes” bankrupt in the last 14 years? No □ where? Year Other Obligations— (E.g., liability to pay alimony, child support, separate maintenance. Use separate sheet if necessary.) Everything that I have stated in this application is correct to the best of my knowledge. I understand that you will retain this application whether or not it is approved. You are authorized to check my credit and employment history and to answer ques tions about your credit experience with me. Applicant’s Signature Date O ther Signature (W here Applicable) Date A ppendix B R egulation B [Closed-end, unsecured/secured credit] CREDIT APPLICATION IMPORTANT: Read these Directions before completing this Application. Check Appropriate Box Amount Requested $................................... □ If you are applying for individual credit in your own name, are not married, and are not relying on alimony, child support, or separate maintenance payments or on the income or assets of another person as the basis for repayment of the credit requested, complete only Sections A and D. If the requested credit is to be secured, also complete Section E. □ In all other situations, complete all Sections except E, providing information in B about your spouse, a joint applicant or user, or the person on whose alimony, support, or maintenance payments or income or assets you are relying. If the requested credit is to be secured, also complete Section E. Payment Date Desired ................................................ Proceeds of Credit To be Used For ... SECTION A— INFORMATION REGARDIN G APPLICANT Full Name (Last, First, Middle): ........................................................................................................................................... Birthdate: Present Street Address .................................................................................................................................................................. Years there: / / .......... City: ................ .......................................................... State: ......................................... Zip: ........................ Telephone: Social Security No.: ............................................................................................ Driver’s License N o.: .......................... Previous Street Address: ............................................................................................................................................................ Years there: City: ........................................................................... State: ......................................... Zip: ................................. Present Employer: ..............................................................................................Years there: ......................... Telephone: ...................................................... Position or title: ................................................................................................ Name of supervisor: .......................................................................................... Employer’s Address: ................................................................................................................................................................................................................................. Previous Employer: ................................................................ ................................................................................................................... Years there: .............. Previous Employer’s Address: .............................................................................................................................................................................................................. Present net salary or commission: $ ..................... per ....................... .. No. Dependents: ................... Ages: ............................................................... Alimony, child support, or separate maintenance income need not be revealed if you do not wish to have it considered as a basis for repaying this obligation. Alimony, child support, separate maintenance received under: court order □ written agreement □ oral understanding □ Other income: $ per .. Source(s) of other income: Is any income listed in this Section likely to be reduced in the next two years or before the credit requested is paid off? □ Yes (Explain in detail on a separate sheet.) No □ Have you ever received credit from us? ........................... When? .................................................. Office: .............................................................. Checking Account N o.: ................................................................................... Institution and Branch: ......................................................................... Savings Account N o.: ........................................................................................ Institution and Branch: ......................................................................... Name of nearest relative not living with you .............................................................................................................Telephone: ................................. Relationship: ................................................................................................ ................................. Address: ........................................................................... Full Name (Last, First, Middle): ......................................................................................................................................................... Birthdate: / Relationship to Applicant (if any): ......................................................................................................................................................... Years there: ............ / Present Street Address: ..................................................................................... .................................................................................................................................... City: ............................................................................... State: .............................................. Zip: ............................. Telephone: ............................................ Social Security N o.: ............................................................................................Driver’s License N o.: ...................................................................................... Present Employer: ......................... .....................................................................Years there: ......................... Telephone: .................................................... Position or title: .................................................................................................. Name of supervisor: ........................................................................................ Employer’s Address: ............................................................................................................................................................................................................................... Previous Employer: ...................................................................................................................... ................................................................ Years there: ............ Previous Employer’s Address: ......................................................................................................................... ................................................................................. Present net salary or commission: $ per ....................... .. No. Dependents: Alimony, child support, separate maintenance received under: court order □ Ages: .......................................................... written agreement □ oral understanding □ Other income: S................................. Der .................................. Source(s) of other income: Is any income listed in this Section likely to be reduced in the next two years or before the credit requested is paid off? □ Yes (Explain in detail on a separate sheet.) □ No Checking Account N o.: .................................................................................... Institution and Branch: ...................................................................... Savings Account N o.: ........................................................................................ Institution and Branch: ........................................................................ Name of nearest relative not living with Spouse, Joint Applicant, User, or other Party: ....................................................................................................... Telephone: ................................ Relationship: 20 ......................................................................................................... Address: .................................................................................................. A ppendix B R egulation B SECTION C—M ARITAL STATUS (Do not complete if this is an application for individual unsecured credit.) Applicant: Q Married □ Separated □ Unmarried (including single, divorced, and widowed) Other Party: □ Married □ Separated □ Unmarried (including single, divorced, and widowed) SECTION D—A SSET AND DEBT INFORMATION (If Section B has been completed, this Section should be completed giving information about both the Applicant and Joint Applicant or Other Person. Please mark Applicant-related information with an “A .” If Section B was not completed, only give information about the Applicant in this Section.) A S S E T S O W N E D (Use separate sheet if necessary.) Value Description of Assets Cash Subject to Debt? Yes/No Name(s) of Owner(s) $ Automobiles (Make, Model, Year) Cash Value of Life Insurance (Issuer, Face Value) Real Estate (Location, Date Acquired) Marketable Securities (Issuer, Type, No. of Shares) Other (List) Total Assets $ O U T S T A N D IN G D E B T S (Include charge accounts, instalment contracts, credit cards, rent, mortgages, etc. Use separate sheet if necessary.) Creditor 1. (Landlord or Mortgage Holder) Type of Debt or Acct. No. Name in Which Acct. Carried □ Rent Payment □ Mortgage Original Debt Monthly Payments Present Balance $ (Omit rent) $ (Omit rent) $ $ j $ Past Due? Yes/No 2. 3. Total Debts Date Paid (Credit References) 1. $ 2. Are you a guarantor Are there judgments co-maker, endorser, or on any loan or contract? Yes □ any unsatisfied Yes □ against you? No □ If “Yes,” for whom?_________________________ To whom? If “ Yes,” Amount $ to whom owed? No □ Have you been declared Yes □ If “Yes,” bankrupt in the last 14 years?_______No □ ________where?__________________________________________ Year Other obligations— (E.g., liability to pay alimony, child support, separate maintenance. Use separate sheet if necessary.) SECTION E—SECURED C RED IT (Complete only if credit is to be secured.) Briefly describe the property to be given as security: and list names and addresses of all co-owners of the property: Name Address If the security is real estate, give the full name of your spouse (if any): Everything that I have stated in this application is correct to the best .of my knowledge. I understand that you will retain this application whether or not it is approved. You are authorized to check my credit and employment history and to answer ques tions about your credit experience with me. Applicant’s Signature Date Other Signature (Where Applicable) Date 21 A ppendix B R egulation B [Community property] C R E D IT A PPLIC A TIO N IMPORTANT: Reed these Directions before completing this Application. Check Appropriate Box □ If you are applying for individual credit in your own name, are not married, and are not relying on alimony, child support, or separate maintenance payments or on the income or assets of another person as the basis for repayment of the credit requested, complete only Sections A and D. If the requested credit is to be secured, also complete Section E. □ In all other situations, complete all Sections except E, providing information in B about your spouse, a joint applicant or user, or the person on whose alimony, support, or maintenance payments or income or assets you are relying. If the requested credit is to be secured, also complete Section E. Amount Requested Payment Date Desired $............................................................................................. Proceeds of Credit To be Used For SECTION A— INFORMATION REGARDING APPLICANT Full Name (Last, First, Middle): ............................................................................................................... ....................................... Birthdate: / Present Street Address .................. .................................................................................................................... ....................................... Years there: .......... City: .......................................................................... . State: .......................................... Zip: .................... Telephone: ....................................................... / Social Security N o.: ............................................................................................ Driver’s License No.: Previous Street Address: ................................................................................................................................ Years there: City: ........................................................................... State: .......................:................. Zip: ................................. Present Employer: ................................................................. ...........................Years there: .......................... Telephone: ...................................................... Position or title: ................................................................................................ Name of supervisor: .......................................................................................... Employer’s Address: ............................................................................................................................................................ .................................................................... Previous Employer: ............................................................................................................................ ...................................................... Years there: Previous Employer’s Address: .............. ...................................................... ............................................................................................................................................... Present net salary or commission: S per . No. Dependents: Ages: ............................................................... Alimony, child support, or separate maintenance income need cot be revealed if yoa do cot wish to have it considered as a basis for repaying this obligation. Alimony, child support, separate maintenance received under: court order □ Other income: $ per written agreement □ oral understanding □ ________ . Source(s) of other income: Is any income listed in this Section likely to be reduced in the next two years or before the credit requested is paid off? □ Yes (Explain in detail on a separate sheet.) No □ Have you ever received credit from us? ........................... When? .................................................. Office: Checking Account No.: .................................................. .......... ..................... Institution and Branch: ......................................................................... Savings Account N o.: ........................................................................................ Institution and Branch: ......................................................................... Name of nearest relative Relationship: , living with you ...................... Full Name (Last, First, Middle): ......................................................................................................................................................... Birthdate: / Relationship to Applicant (if any): ......................................................................................................................................................... Years there: .............. / Present Street Address: ........................................................................................................................................................................................................................... City: ............................................................................... State: .............................................. Zip: Telephone: .................................. ........... Social Security N o.: ...................................*..................................................... Driver’s License No.: ........................................................................................ Present Employer: ......................................................................... ................. Years there: Telephone: ...................................................... Position or title: ..................................................................................................Name of supervisor: ........................................................................................... Employer’s Address: .......................................................................................................................................... ................................................................................ . Previous Employer: ...................................................................................................................................................................................... Years there: .............. Previous Employer’s Address: ............................................................................................................................................................................................................. Present net salary or commission: $_____________ per_____________ . No. Dependents:_____________Ages:___________________________ ___ Alimony, child support, ox separate maintenance income need not bo revealed If you do cot wish to have It considered os a basis fox repaying this obligation. Alimony, child support, separate maintenance received under: court order □ written agreement □ oral understanding □ Other income: $................................. per .................................. Source(s) of other income: .............................................................................................. Is any income listed in this Section likely to be reduced in the next two years or before the credit requested is paid off? □ Yes (Explain in detail on a separate sheet.) □ No Checking Account N o.: ................................................................................... Institution and Branch: ...................................................................... Savings Account N o.: ....................................................................................... Institution and Branch: ....................................................................... . Name of nearest relative not living with Spouse, Joint Applicant, User, or other Party: ....................................................................................................... Telephone: ................................ Relationship: 22 ...................................... .................................................................. Address: ................................................................................................... R egulation B A ppendix B SECTION C—M ARITAL STATUS Applicant: □ Married Other Party: □ Married □ Separated □ Separated □ Unmarried (including single, divorced, and widowed) □ Unmarried (including single, divorced, widowed) SECTION D— A SSET AND DEBT INFORMATION (If Section B has been completed, this Section should be completed giving information about both the Applicant and Spouse, Joint Applicant, User, or Other Person. Please mark Applicantrelated information with an “A.” If Section B was not completed, only give information about the Applicant in this Section.) A S S E T S O W N E D (Use separate sheet if necessary.) Description of Assets Value Cash Subject to Debt? Yes/No Name(s) of Owner(s) $ Automobiles (Make, Model, Year) Cash Value of Life Insurance (Issuer, Face Value) Real Estate (Location, Date Acquired) Marketable Securities (Issuer, Type, No. of Shares) Other (List) Total Assets $ O U T S T A N D IN G D E B T S (Include charge accounts, instalment contracts, credit cards, rent, mortgages, etc. Use separate sheet if necessary.) Name of Creditor 1. (Landlord or Mortgage Holder) Type of Debt or Acct. No. Name in Which Acct. Carried □ Rent Payment □ Mortgage Monthly Payments Original Debt Present Balance $ (Omit rent) $ (Omit rent) $ $ $ $ Past Due? Yes/No 2. 3. Total Debts (Credit References) _ _ Date Paid 2. Are you a co-maker, endorser, or guarantor on any loan or contract? Are there any unsatisfied judgments against you? Yes □ No □ Amount $ Have you been declared bankrupt in the last 14 years Yes □ No □ If “yes,” where? Yes □ No □ If “yes,” for whom? To whom? If “yes,” to whom owed? Year Other obligations— (E.g., Liability to pay alimony, child support, separate maintenance. Use separate sheet if necessary.) SECTION E —SECURED C RED IT (Complete only if credit is to be secured.) Briefly describe the property to be given as security: and list names and addresses of all co-owners of the property: Name Address Everything that I have stated in this application is correct to the best of my knowledge. I understand that you will retain this application whether or not it is approved. You are authorized to check my credit and employment history and to answer ques tions about your credit experience with me. Applicant’s Signature Date Other Signature (Where Applicable) Date 23 A ppendix B [Residential real estate mortgage loan] 24 R egulation B A p pend ix B R egulation B Description hS 5 Name, Address^Accounl Number Kpo",Tow“dP"ch“ A ,a = s r $ 5 Pmt./Mos $ / / / / Automobile Loans / ' Life Insurance Net Cash Value Face Amount It / X > SUBTOTAL LIQUID ASSETS $ Vested Interest in Retirement Fund |s s s i u a f i B ? " Automobiles (Make and Year) / S iz r - '" - " Furniture and Personal Property . Other Assets (Itemtze) TOTAL MONTHLY PAYMENTS TOTAL ASSETS A S $ TOTAL LIABILITIES NET WORTH (A minus B) S B S Net Type of Payments MarkcT'value * f f i r 0 TOT ^LS s s s s s s 12. LIST PREVIOUS CREDIT REFERENCES information, requested by the federal government for ce, if yoL^hoose no?to furnish°th^?nfm surname. If you do not wish to furn BORROWER: RACE OR □ American Indian. NATIONAL □ Black □ His| ORIGIN □ Other (specify) _ SEX □ Female □ Male CO-BORROWER: RACE OR □ American Indian NATIONAL □ Black □ His ORIGIN □ Other (specify) _ SEX □ Female □ Male ih to furnish this infor FOR LENDER’S USE ONLY 25 R egulation B A ppendix C APPENDIX C—Sample Notification Forms This appendix contains six sample notification forms. Forms C -l through C-4 are intended for use in notifying an applicant that adverse action has been taken on an application or ac count under section 2 0 2 .9 (a )(1 ) and ( 2 ) (i) of this regulation. Form C-5 is a notice of dis closure of the right to request specific reasons for adverse action under section 2 0 2 .9 (a )(1 ) and (2 )(ii). Form C-6 is designed for use in notifying an applicant, under section 2 0 2 .9 (c )(2 ), that an application is incomplete. Form C -l contains the Fair Credit Report ing Act disclosure as required by sections 615(a) and (b) of that act. Forms C-2 through C-5 contain only the section 615(a) disclosure (that a creditor obtained informa tion from a consumer reporting agency that played a part in the credit decision). A credi tor must provide the section 615(b) disclo sure (that a creditor obtained information from an outside source other than a consumer reporting agency that played a part in the credit decision) where appropriate. The sample forms are illustrative and may not be appropriate for all creditors. They were designed to include some of the factors that creditors most commonly consider. If a credi tor chooses to use the checklist of reasons pro vided in one of the sample forms in this ap pendix and if reasons commonly used by the creditor are not provided on the form, the creditor should modify the checklist by substi tuting or adding other reasons. For example, if “inadequate downpayment” or “no deposit relationship with us” are common reasons for taking adverse action on an application, the creditor ought to add or substitute such rea sons for those presently contained on the sam ple forms. If the reasons listed on the forms are not the factors actually used, a creditor will not satisfy the notice requirement by simply checking the closest identifiable factor listed. For example, some creditors consider only references from banks or other depository in stitutions and disregard finance company ref erences altogether; their statement of reasons should disclose “insufficient bank references,” 26 not “insufficient credit references.” Similarly, a creditor that considers bank references and other credit references as distinct factors should treat the two factors separately and disclose them as appropriate. The creditor should either add such other factors to the form or check “other” and include the appro priate explanation. The creditor need not, however, describe how or why a factor ad versely affected the application. For example, the notice may say “length of residence” rath er than “too short a period of residence.” A creditor may design its own notification forms or use all or a portion of the forms con tained in this appendix. Proper use of Forms C -l through C-4 will satisfy the requirement of section 202.9(a) (2 ) (i). Proper use of Forms C-5 and C-6 constitutes full compli ance with sections 202.9(a) (2 ) (ii) and 2 0 2 .9 (c )(2 ), respectively. Form C -l—Sample Notice of Action Taken and Statement .of Reasons Statement of Credit Denial, Termination, or Change Date Applicant’s Name: ________________________ Applicant’s Address: ______________________ Description of Account, Transaction, or Re quested Credit: Description of Action Taken: Part / — PRIN CIPAL REASO N(S) FO R CRED IT D ENIAL, TERM INATION, OR OTHER ACTION T A K EN CONCERN ING CREDIT. This section must be complet ed in all instances. ___Credit application incomplete ___Insufficient number of credit references provided ___Unacceptable type of credit references provided ___Unable to verify credit references ___Temporary or irregular employment ___Unable to verify employment A ppendix C R egulation B __ Length of employment __ Income insufficient for amount of credit requested __ Excessive obligations in relation to income __ Unable to verify income __ Length of residence ___Temporary residence __ Unable to verify residence __ No credit file __ Limited credit experience __ Poor credit performance with us ___Delinquent past or present credit obliga tions with others ___Garnishment, attachment, foreclosure, re possession, collection action, or judgment ___Bankruptcy ___Value or type of collateral not sufficient __ Other, specify: _________________________ I f you have any questions regarding this notice, you should contact: Creditor’s n am e:__________________________ Creditor’s address: ________________________ Creditor’s telephone number: _____________ NOTICE: The federal Equal Credit Opportu nity Act prohibits creditors from discriminat ing against credit applicants on the basis of race, color, religion, national origin, sex, mari tal status, age (provided the applicant has the capacity to enter into a binding contract); be cause all or part of the applicant’s income de rives from any public assistance program; or because the applicant has in good faith exer cised any right under the Consumer Credit Protection Act. The federal agency that ad ministers compliance with this law concerning this creditor is (name and address as specified by the appropriate agency listed in appendix A ). Part / / — DISCLOSURE OF USE OF IN FORMATION OBTAINED FROM AN OUTSIDE SOURCE. This section should be completed if the credit decision was based in whole or in part on information that has been obtained from an outside source. __ Our credit decision was based in whole or in part on information obtained in a re port from the consumer reporting agency listed below. You have a right under the Fair Credit Reporting Act to know the information contained in your credit file at the consumer reporting agency. The re porting agency played no part in our deci sion and is unable to supply specific rea sons why we have denied credit to you. Name: Address: _______________________________ _____________________________ Telephone number: ____________________ ___Our credit decision was based in whole or in part on information obtained from an outside source other than a consumer re porting agency. Under the Fair Credit Re porting Act, you have the right to make a written request, no later than 60 days af ter you receive this notice, for disclosure of the nature of this information. Form C-2— Sample Notice o f Action Taken and Statement o f Reasons Date Dear Applicant: Thank you for your recent application. Your request for [a loan/a credit card/an in crease in your credit limit] was carefully con sidered, and we regret that we are unable to approve your application at this time, for the following reason(s): Your Income: ___is below our minimum requirement. __ is insufficient to sustain payments on the amount of credit requested. ___could not be verified. Your Employment: ___is not of sufficient length to qualify. ___could not be verified. Your Credit History: ___of making payments on time was not satisfactory. ___could not be verified. Your Application: ___lacks a sufficient number of credit references. 27 R egulation B A ppendix C ___lacks acceptable types of credit references. ___reveals that current obligations are ex cessive in relation to income. Other: _________________________________ The consumer reporting agency contacted that provided information that influenced our decision in whole or in part was [name, ad dress and telephone number of the reporting agency]. The reporting agency is unable to supply specific reasons why we have denied credit to you. You do, however, have a right under the Fair Credit Reporting Act to know the information contained in your credit file. Any questions regarding such information should be directed to [consumer reporting agency]. If you have any questions regarding this let ter you should contact us at [creditor’s name, address and telephone number]. NOTICE: The federal Equal Credit Opportu nity Act prohibits creditors from discriminat ing against credit applicants on the basis of race, color, religion, national origin, sex, mari tal status, age (provided the applicant has the capacity to enter into a binding contract); be cause all or part of the applicant’s income de rives from any public assistance program; or because the applicant has in good faith exer cised any right under the Consumer Credit Protection Act. The federal agency that ad ministers compliance with this law concerning this creditor is (name and address as specified by the appropriate agency listed in appendix A ). Form C-3— Sample Notice of Action Taken and Statement of Reasons (Credit Scoring) Date Dear Applicant: Thank you for your recent application fo r______________________ We regret that we are unable to approve your request. Your application was processed by a credit scoring system that assigns a numerical value 28 to the various items of information we consid er in evaluating an application. These numeri cal values are based upon the results of analy ses of repayment histories of large numbers of customers. The information you provided in your ap plication did not score a sufficient number of points for approval of the application. The reasons you did not score well compared with other applicants were: o Insufficient bank references o Type of occupation o Insufficient credit experience In evaluating your application the consum er reporting agency listed below provided us with information that in whole or in part in fluenced our decision. The reporting agency played no part in our decision other than pro viding us with credit information about you. Under the Fair Credit Reporting Act, you have a right to know the information provided to us. It can be obtained by contacting: [name, address, and telephone number of the consumer reporting agency]. If you have any questions regarding this let ter, you should contact us at Creditor’s Name: ______________________ Address: _______________________________ Telephone: _________________________ Sincerely, NOTICE: The federal Equal Credit Opportu nity Act prohibits creditors from discriminat ing against credit applicants on the basis of race, color, religion, national origin, sex, mari tal status, age (with certain limited excep tions); because all or part of the applicant’s income derives from any public assistance program; or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act. The federal agency that administers compliance with this law concerning this creditor is (name and address as specified by the appropriate agency listed in appendix A ). R egulation B A p pend ix C Form C-4— Sample Notice of Action Taken, Statement of Reasons, and Counteroffer Date Dear Applicant: Thank you for your application for _____________________ We are unable to of fer you credit on the terms that you requested for the following reason (s): We can, however, offer you credit on the following terms: _________________________ If this offer is acceptable to you, please noti fy us within [amount of time] at the following address:_______________________________ Our credit decision on your application was based in whole or in part on information ob tained in a report from [name, address and telephone number of the consumer reporting agency]. You have a right under the Fair Credit Reporting Act to know the informa tion contained in your credit file at the con sumer reporting agency. You should know that the federal Equal Credit Opportunity Act prohibits creditors, such as ourselves, from discriminating against credit applicants on the basis of their race, color, religion, national origin, sex, marital status, age because they receive income from a public assistance program, or because they may have exercised their rights under the Consumer Credit Protection Act. If you be lieve there has been discrimination in han dling your application you should contact the [name and address of the appropriate federal enforcement agency listed in appendix A ]. Sincerely, Form C-5— Sample Disclosure of Right to Request Specific Reasons for Credit Denial Date Dear Applicant: Thank you for applying to us f o r _______ After carefully reviewing your application, we are sorry to advise you that we cannot [open an account for you/grant a loan to you/increase your credit limit] at this time. If you would like a statement of specific reasons why your application was denied, please contact [our credit service manager] shown below within 60 days of the date of this letter. We will provide you with the statement of reasons within 30 days after receiving your request. Creditor’s Name Address Telephone number If we obtained information from a consumer reporting agency as part of our consideration of your application, its name, address, and tel ephone number is shown below. You can find out about the information contained in your file (if one was used) by contacting: Consumer reporting agency’s name Address Telephone number Sincerely, NOTICE: The federal Equal Credit Opportu nity Act prohibits creditors from discriminat ing against credit applicants on the basis of race, color, religion, national origin, sex, mari tal status, age (p ro v id e d the applicant has the capacity to enter into a binding contract); be cause all or part of the applicant’s income de rives from any public assistance program; or because the applicant has in good faith exer cised any right under the Consumer Credit Protection Act. The federal agency that ad ministers compliance with this law concerning this creditor is (name and address as specified by the appropriate agency listed in appendix A). F O R M C-6— Sample Notice o f Incomplete Application and Request for Additional Information Creditor’s name Address Telephone number Date Dear Applicant: 29 A ppendix C R egulation B T h a n k y o u fo r y o u r a p p lic a tio n fo r c red it. T h e follow ing in fo rm a tio n is n e ed ed to m a k e a decisio n on y o u r a p p licatio n : _____________ W e n eed to receive th is in fo rm a tio n by (d a te ) . I f w e do n o t receive it by th a t d ate, w e w ill re g re tta b ly be u n a b le to give fu r th e r c o n sid e ra tio n to y o u r c re d it req u est. S incerely, A P P E N D IX D — Issuance of Staff Interpretations p re ta tio n s w ill n o t be issu ed se p a ra te ly b u t w ill be in c o rp o ra te d in a n official c o m m e n ta ry to th e re g u la tio n , w h ic h w ill be am en d e d perio d ically . Requests for Issuance o f Official Staff Interpretations A re q u e st fo r an official sta ff in te rp re ta tio n sh o u ld be in w ritin g a n d a d d re sse d to th e D i re c to r, D iv isio n o f C o n su m e r a n d C o m m u n ity A ffairs, B o a rd o f G o v e rn o rs o f th e F e d e ra l R eserv e System , W a sh in g to n , D .C . 20551. T h e re q u e st sh o u ld c o n ta in a co m p le te sta te m e n t o f all re le v a n t facts c o n c e rn in g th e issue, in c lu d in g copies o f all p e rtin e n t d o c u m e n ts. Official Staff Interpretations O fficials in th e B o a rd ’s D ivision o f C o n su m e r a n d C o m m u n ity A ffairs are a u th o riz e d to is sue official staff in te rp re ta tio n s o f th is re g u la tio n . T h e se in te rp re ta tio n s p ro v id e th e p ro te c tio n afforded u n d e r section 7 0 6 (e ) o f th e act. E x c e p t in u n u su a l circu m stan ces, su ch in te r 30 Scope o f Interpretations N o sta ff in te rp re ta tio n s w ill be issu ed a p p ro v ing c re d ito rs ’ fo rm s o r sta te m e n ts. T h is re stric tio n does n o t a p p ly to fo rm s o r sta te m e n ts w hose use is re q u ire d o r sa n c tio n e d by a g o v e rn m e n t agency. Equal Credit Opportunity Act 15 USC 1691 et seq.; as added by Pub. L. 93-495, Title V, 88 Stat. 1521 (October 28, 1974) P U B L IC L A W 9 3 -4 9 5 , T IT L E V Section 502 F in d in g s a n d p u rp o se 503 A m e n d m e n t to th e C o n su m e r C re d it P ro te c tio n A c t 704 705 706 707 708 709 A d m in istra tiv e e n fo rc e m e n t R e la tio n to S tate law s C ivil liability A n n u a l re p o rts to C o n g ress E ffective d a te S h o rt title SE C T IO N 502— Findings and Purpose T h e C o ngress finds th a t th e re is a n eed to in su re th a t th e v ario u s financial in s titu tio n s a n d o th e r firm s engaged in th e ex ten sio n s o f c re d it exercise th e ir resp o n sib ility to m a k e c re d it available w ith fairness, im p a rtia lity , a n d w ith o u t d isc rim in a tio n o n th e basis o f sex o r m a ri ta l statu s. E co n o m ic sta b iliz a tio n w o u ld be e n h a n c e d a n d c o m p e titio n am o n g th e v ario u s financial in s titu tio n s a n d o th e r firm s engaged in th e ex ten sio n o f c re d it w o u ld be stre n g th ened by a n absence o f d isc rim in a tio n on th e b asis o f sex o r m a rita l sta tu s, as w ell as by th e in fo rm e d use o f c re d it w h ich C o n g ress h a s h e re to fo re so u g h t to p ro m o te . I t is th e p u r p ose o f th is A c t to re q u ire th a t financial in s ti tu tio n s a n d o th e r firm s engaged in th e e x te n sion o f c re d it m a k e th a t c re d it eq u ally a v a il able to all c re d itw o rth y c u sto m e rs w ith o u t re g a rd to sex o r m a rita l sta tu s. [15 USC note.] SE C T IO N 503— Amendment to the Consumer Credit Protection A ct T h e C o n su m e r C re d it P ro te c tio n A c t (P u b lic L aw 90-321) is am en d e d b y ad d in g a t th e en d th e re o f a new title V II: T IT L E V II— E Q U A L C R E D IT O P P O R T U N IT Y S ection 701 702 703 P ro h ib ite d d isc rim in a tio n ; reaso n s for adverse ac tio n D efinitions R e g u la tio n s SE C T IO N 701— Prohibited Discrimination; Reasons for Adverse Action ( a ) I t sh all be u n la w fu l fo r an y c re d ito r to d isc rim in a te a g a in st a n y a p p lic a n t, w ith re sp ect to a n y a sp e c t o f a c re d it tra n sa c tio n — (1 ) on th e basis o f race, co lo r, religion, n a tio n a l origin, sex o r m a rita l sta tu s, o r age (p ro v id e d th e a p p lic a n t h a s th e c a p a c ity to c o n tr a c t) ; (2 ) b ecause all o r p a rt o f th e a p p lic a n t’s in co m e derives fro m a n y p u b lic assistance p ro g ra m ; o r (3 ) becau se th e a p p lic a n t h a s in good faith ex ercised a n y rig h t u n d e r th e C o n su m e r C re d it P ro te c tio n A ct. (b ) I t sh all n o t c o n s titu te d isc rim in a tio n for p u rp o se s o f th is title fo r a c re d ito r— (1 ) to m a k e a n in q u iry o f m a rita l sta tu s if su c h in q u iry is fo r th e p u rp o s e o f a sc e rta in in g th e c re d ito r’s rig h ts a n d rem ed ies a p p li cab le to th e p a rtic u la r ex te n sio n o f c re d it a n d n o t to d isc rim in a te in a d e te rm in a tio n o f c red itw o rth in ess; (2 ) to m a k e a n in q u iry o f th e a p p lic a n t’s age o r o f w h e th e r th e a p p lic a n t’s in co m e derives fro m a n y p u b lic a ssistan ce p ro g ra m if su ch in q u iry is fo r th e p u rp o se o f d e te r m in in g th e a m o u n t a n d p ro b a b le c o n tin u an ce o f in co m e levels, c re d it h isto ry , o r o th e r p e rtin e n t elem en t o f c re d itw o rth in e ss as p ro v id e d in re g u la tio n s o f th e B oard; (3 ) to use a n y em p irically d eriv e d c re d it system w h ich co n sid ers age if su c h system is d e m o n stra b ly a n d sta tistic a lly so u n d in a c c o rd a n c e w ith re g u la tio n s o f th e B oard, except th a t in th e o p e ra tio n o f su c h system th e age o f an e ld erly a p p lic a n t m a y n o t be assigned a neg ativ e fa c to r o r value; o r 31 R egulation B Statutory Provisions (4 ) to m a k e a n age o f a n eld erly su c h a p p lic a n t is in th e e x ten sio n ap p lic a n t. in q u iry o r to c o n sid e r th e a p p lic a n t w h e n th e age o f to be u sed b y th e c re d ito r o f c re d it in fa v o r o f su ch ( c ) I t is n o t a v io latio n o f th is sectio n fo r a c re d ito r to refu se to e x ten d c re d it offered p u r su a n t to — ( 1 ) a n y c re d it assistance p ro g ra m ex p ress ly a u th o riz e d b y law fo r a n eco n o m ically d is a d v a n ta g e d class o f persons; ( 2 ) a n y c re d it assistan ce p ro g ra m a d m in is te re d b y a n o n p ro fit o rg a n iz a tio n fo r its m e m b e rs o r a n eco n o m ically d isa d v a n ta g e d class o f persons; o r (3 ) a n y sp ecial p u rp o se c re d it p ro g ra m of fe re d b y a p ro fitm ak in g o rg a n iz a tio n to m e e t special social needs w h ic h m eets s ta n d a rd s p re sc rib e d in reg u la tio n s b y th e B oard; if su c h re fu sa l is re q u ire d by o r m a d e p u rs u a n t to su c h p ro g ra m . ( d ) (1 ) W ith in th irty days (o r su c h lo n g er re a so n a b le tim e as specified in re g u la tio n s o f th e B o a rd fo r an y class o f c re d it tra n s a c tio n ) a fte r rec e ip t o f a c o m p le te d a p p lic a tio n fo r cre d it, a c re d ito r sh all n o tify th e a p p lic a n t o f its a c tio n on th e ap p lic a tio n . (2 ) E a c h a p p lic a n t a g ain st w h o m ad v erse a c tio n is ta k e n sh all be e n title d to a sta te m e n t o f reaso n s fo r su ch a c tio n fro m th e c re d ito r. A c re d ito r satisfies th is o b lig a tio n by— ( A ) p ro v id in g sta te m e n ts o f re a so n s in w ritin g as a m a tte r o f co u rse to a p p li c a n ts ag a in st w h o m adverse a c tio n is ta k en; o r (B ) giving w ritte n n o tificatio n o f a d v erse a c tio n w h ic h discloses (i) th e a p p li c a n t’s rig h t to a sta te m e n t o f reaso n s w ith in th irty d ay s a fter re c e ip t by th e c re d ito r o f a re q u e s t m a d e w ith in sixty d a y s a fte r su c h notification, a n d (ii) th e id e n tity o f th e p erso n o r office fro m w h ic h su ch sta te m e n t m a y be o b tain ed . S u ch sta te m e n t m a y be given o ra lly if th e w ritte n n o tificatio n advises th e a p p lic a n t o f h is rig h t to h a v e th e sta te m e n t o f re a sons co n firm e d in w ritin g o n w ritte n req u est. (3 ) A sta te m e n t o f reaso n s m eets th e re 32 q u ire m e n ts o f th is sectio n only if it c o n ta in s th e specific re a so n s fo r th e adv erse a c tio n tak en . (4 ) W h e re a c re d ito r h a s b een re q u e ste d b y a th ird p a rty to m a k e a specific e x ten sio n o f c re d it d ire c tly o r in d ire c tly to a n a p p li c a n t, th e n o tificatio n a n d sta te m e n t o f re a sons re q u ire d b y th is su b sectio n m a y be m a d e d ire c tly b y su c h c re d ito r, o r in d ire c t ly th ro u g h th e th ird p a rty , p ro v id e d in ei th e r case th a t th e id e n tity o f th e c re d ito r is disclosed. (5 ) T h e re q u ire m e n ts o f p a ra g ra p h ( 2 ) , ( 3 ) , o r (4 ) m a y b e satisfied by v e rb a l s ta te m e n ts o r n o tificatio n s in th e case o f an y c re d ito r w h o d id n o t a c t o n m o re th a n 150 a p p lic a tio n s d u rin g th e c a le n d a r y e a r p re c ed in g th e c a le n d a r y e a r in w h ic h th e a d v erse a c tio n is ta k e n , as d e te rm in e d u n d e r re g u la tio n s o f th e B o ard . (6 ) F o r p u rp o se s o f th is su b sectio n , th e te rm “ a d v erse a c tio n ” m e a n s a d e n ia l o r re v o c a tio n o f cre d it, a c h a n g e in th e te rm s o f a n existing c re d it a rra n g e m e n t, o r a re fu sal to g ra n t c re d it in su b sta n tia lly th e a m o u n t o r o n su b sta n tia lly th e te rm s re q u ested . S u ch te rm does n o t in c lu d e a re fu sal to ex te n d a d d itio n a l c re d it u n d e r a n existing c re d it a rra n g e m e n t w h e re th e a p p lic a n t is d e lin q u e n t o r o th erw ise in d efau lt, o r w h e re su c h a d d itio n a l c re d it w o u ld ex ceed a p rev io u sly esta b lish e d c re d it lim it. [15 USC 1691. As amended by act of March 23, 1976 (90 Stat. 251).] SECTION 702—Definitions ( a ) T h e definitions a n d ru le s o f c o n stru c tio n set fo rth in th is se ctio n a re ap p licab le fo r th e p u rp o se s o f th is title. ( b ) T h e te rm “ a p p lic a n t” m e a n s a n y p e rso n w h o applies to a c re d ito r d ire c tly fo r an extension, ren ew al, o r c o n tin u a tio n o f cre d it, o r applies to a c re d ito r in d ire c tly b y u se o f an existing c re d it p la n fo r a n a m o u n t exceeding a p rev io u sly estab lish ed c re d it lim it. ( c ) T h e te rm “ B o a rd ” refers to th e B o a rd o f G o v e rn o rs o f th e F e d e ra l R eserv e System . ( d ) T h e te rm “ c re d it” m e a n s th e rig h t g ra n t R egulation B ed by a c re d ito r to a d e b to r to d efer p a y m e n t o f d e b t o r to in c u r d eb t a n d d efer its p a y m e n t o r to p u rc h a s e p ro p e rty o r services a n d defer p a y m e n t th e re fo r. (e ) T h e te rm “ c re d ito r” m ean s a n y p erso n w h o re g u la rly extends, renew s, o r co n tin u e s cred it; an y p e rso n w ho re g u la rly a rra n g e s fo r th e extension, renew al, o r c o n tin u a tio n o f cred it; o r a n y assignee o f a n o rig in al c re d ito r w ho p a rtic ip a te s in th e decision to e x ten d , re new , o r c o n tin u e credit. (f) T h e te rm “ p e rso n ” m ean s a n a tu r a l p e r son, a c o rp o ra tio n , g o v e rn m e n t o r g o v e rn m e n ta l subdivision o r agency, tru s t, estate, p a rtn e rsh ip , cooperative, o r association. (g ) A n y reference to an y re q u ire m e n t im p o sed u n d e r th is title o r an y p ro v isio n th e re o f in clu d es referen ce to th e re g u la tio n s o f th e B o a rd u n d e r th is title o r th e p ro v isio n th e re o f in question. SE C T IO N 703— Regulations ( a ) T h e B o a rd sh all prescrib e re g u la tio n s to c a rry o u t th e p u rp o ses o f th is title. T h ese re g u la tio n s m a y c o n ta in b u t a re n o t lim ite d to su c h classifications, differentiation, o r o th e r p rovision, a n d m a y p ro v id e fo r su c h a d ju s t m e n ts a n d ex cep tio n s for an y class o f tra n s a c tio n s, as in th e ju d g m e n t o f th e B o a rd a re n e c essary o r p ro p e r to effectuate th e p u rp o se s o f th is title, to p re v e n t c irc u m v e n tio n o r evasion th ereo f, o r to facilitate o r su b s ta n tia te c o m p li a n ce th e re w ith . In p a rtic u la r, su c h re g u la tio n s m a y ex e m p t fro m one o r m o re o f th e p ro v i sions o f th is title an y class o f tra n sa c tio n s n o t p rim a rily fo r p erso n al, fam ily, o r h o u se h o ld p u rp o ses, if th e B o a rd m ak es an express fin d in g th a t th e a p p lic a tio n o f su ch p ro v isio n o r p ro v isio n s w o u ld n o t c o n trib u te su b sta n tia lly to c a rry in g o u t th e p u rp o ses o f th is title. S uch re g u la tio n s sh all be p rescrib ed as soon as p o s sible a fte r th e d a te o f e n a c tm e n t o f th is A ct, b u t in n o ev en t la te r th a n th e effective d a te o f th is A ct. (b ) T h e B o a rd sh all estab lish a C o n su m e r A d v iso ry C o u n c il to advise a n d c o n su lt w ith it in th e exercise o f its fu n c tio n s u n d e r th e C o n su m e r C re d it P ro te c tio n A c t a n d to a d Statutory Provisions vise a n d c o n su lt w ith it c o n c e rn in g o th e r c o n su m e r re la te d m a tte rs it m ay p lace before th e C ouncil. In a p p o in tin g th e m e m b e rs o f th e C ouncil, th e B o a rd sh a ll seek to achieve a fa ir re p re se n ta tio n o f th e in te re sts o f cre d ito rs a n d co n su m ers. T h e C o u n c il sh all m e e t fro m tim e to tim e a t th e call o f th e B o ard . M e m b e rs o f th e C o u n c il w h o a re n o t re g u la r fu ll-tim e e m ployees o f th e U n ite d S tates shall, w hile a t te n d in g m eetin g s o f su c h C o u n cil, be e n titled to receive c o m p e n sa tio n a t a ra te fixed by th e B o ard , b u t n o t exceeding $100 p e r day, in clu d in g tra v e l tim e. S u ch m e m b e rs m a y be a l low ed tra v e l expenses, in c lu d in g tr a n s p o rta tio n a n d subsistence, w h ile aw ay fro m th e ir h o m es o r re g u la r p lace o f b usiness. [15 USC 1691b. As amended by act of March 23, 1976 (90 Stat. 252).] SE C T IO N 704— Administrative Enforcement ( a ) C o m p lia n c e w ith th e re q u ire m e n ts im p o sed u n d e r th is title sh all be en fo rced u n d er: (1 ) S ection 8 o f th e F e d e ra l D e p o sit In s u r a n ce A c t, in th e case o f— ( A ) n a tio n a l b a n k s, by th e C o m p tro lle r o f th e C u rre n c y ; (B ) m e m b e r b a n k s o f th e F e d e ra l R e serve S ystem (o th e r th a n n a tio n a l b a n k s ), by th e B o ard ; (C ) b a n k s in s u re d by th e F e d e ra l D e p o sit In s u ra n c e C o rp o ra tio n (o th e r th a n m e m b e rs o f th e F e d e ra l R eserv e Sys te m ), b y th e B o a rd o f D ire c to rs o f th e F e d e ra l D e p o sit In s u ra n c e C o rp o ra tio n . (2 ) S ection 5 ( d ) o f th e H o m e O w n e rs’ L o a n A c t o f 1933, sectio n 407 o f th e N a tio n a l H o u sin g A c t, a n d sectio n s 6 ( i) a n d 17 o f th e F e d e ra l H o m e L o a n B a n k A c t, by th e F e d e ra l H o m e L o a n B a n k B o a rd (a c t ing d ire c tly o r th ro u g h th e F e d e ra l Savings a n d L o a n In s u ra n c e C o rp o ra tio n ), in th e case o f an y in s titu tio n su b ject to an y o f th o se provisions. (3 ) T h e F e d e ra l C re d it U n io n A c t, by th e A d m in is tra to r o f th e N a tio n a l C re d it U n ion A d m in is tra tio n w ith re sp e c t to any F e d e ra l C re d it U n io n . (4 ) T h e A c ts to re g u la te co m m erce, by th e In te rs ta te C o m m e rc e C o m m issio n w ith re 33 Statutory Provisions sp ect to an y co m m o n c a rrie r su b ject to th o se A cts. (5 ) T h e F e d e ra l A v ia tio n A c t o f 1958, by th e S ecretary o f T ra n s p o rta tio n w ith re sp ect to a n y a ir c a rrie r o r fo reig n a ir c a rrie r su b je c t to th a t A ct. (6 ) T h e P a c k e rs a n d S to ck y ard s A c t, 1921 (e x c e p t as p ro v id e d in section 406 o f th a t A c t) , by th e S e c re ta ry o f A g ric u ltu re w ith re s p e c t to an y activ ities su b ject to th a t A ct. (7 ) T h e F a rm C re d it A c t o f 1971, by th e F a rm C re d it A d m in istra tio n w ith re sp e c t to a n y F e d e ra l la n d b a n k , F e d e ra l la n d b a n k asso ciatio n , F e d e ra l in te rm e d ia te c re d it b a n k , a n d p ro d u c tio n c re d it association. (8 ) T h e S ecurities E x ch an g e A c t o f 1934, by th e S ecurities a n d E x ch an g e C o m m is sion w ith re sp e c t to b ro k e rs a n d dealers; and (9 ) T h e Sm all B usiness In v e s tm e n t A c t o f 1958, by th e S m all B usiness A d m in is tra tio n , w ith re sp e c t to sm all b u sin ess in v e st m e n t com panies. (b ) F o r th e p u rp o se o f th e exercise by an y agency re fe rre d to in su bsection ( a ) o f its p o w ers u n d e r a n y A c t referred to in th a t s u b sectio n , a v io latio n o f any re q u ire m e n t im p o sed u n d e r th is title shall be d eem e d to be a v io la tio n o f a re q u ire m e n t im p o sed u n d e r th a t A c t. In a d d itio n to its pow ers u n d e r an y p ro vision o f law specifically re fe rre d to in subsec tio n ( a ) , e ach o f th e agencies re fe rre d to in th a t su b sectio n m a y exercise fo r th e p u rp o se o f en fo rcin g c o m p lia n c e w ith a n y re q u ire m e n t im p o se d u n d e r th is title, an y o th e r a u th o rity c o n fe rre d o n it b y law . T h e exercise o f th e a u th o ritie s o f a n y o f th e agencies re fe rre d to in su b sectio n (a ) fo r th e p u rp o se o f en fo rcin g co m p lia n c e w ith a n y re q u ire m e n t im p o sed u n d e r th is title sh all in no w ay p re c lu d e th e exercise o f su c h a u th o ritie s fo r th e p u rp o se o f en fo rcin g co m p lia n c e w ith an y o th e r p ro v i sion o f law n o t re la tin g to th e p ro h ib itio n o f d isc rim in a tio n o n th e basis o f sex o r m a rita l s ta tu s w ith re sp e c t to any a sp ect o f a c re d it tra n sa c tio n . ( c ) E x c e p t to th e e x te n t th a t e n fo rc e m e n t o f th e re q u ire m e n ts im p o sed u n d e r th is title is specifically c o m m itte d to som e o th e r G o v e rn m e n t agency u n d e r su b sectio n ( a ) , th e F e d e r al T ra d e C o m m issio n shall en fo rce su ch re 34 R egulation B q u ire m e n ts. F o r th e p u rp o s e o f th e exercise by th e F e d e ra l T ra d e C o m m issio n o f its fu n c tio n s a n d p o w ers u n d e r th e F e d e ra l T ra d e C o m m issio n A c t, a v io la tio n o f a n y re q u ire m e n t im p o sed u n d e r th is title sh all be d eem ed a v io latio n o f a re q u ire m e n t im p o sed u n d e r th a t A ct. A ll o f th e fu n c tio n s a n d p o w ers o f th e F e d e ra l T ra d e C o m m issio n u n d e r th e F e d e ra l T ra d e C o m m issio n A c t a re availab le to th e C o m m issio n to en fo rce c o m p lia n c e by a n y p e rso n w ith th e re q u ire m e n ts im p o sed u n d e r th is title, irresp ectiv e o f w h e th e r th a t p e r son is eng ag ed in c o m m e rc e o r m eets a n y o th e r ju risd ic tio n a l te sts in th e F e d e ra l T ra d e C o m m issio n A c t, in c lu d in g th e p o w e r to e n force a n y F e d e ra l R eserv e B o a rd re g u la tio n p ro m u lg a te d u n d e r th is title in th e sam e m a n n e r as if th e v io la tio n h a d b een a v io latio n o f a F e d e ra l T ra d e C o m m issio n tra d e re g u la tio n rule. ( d ) T h e a u th o rity o f th e B o a rd to issue re g u la tio n s u n d e r th is title does n o t im p a ir th e a u th o rity o f a n y o th e r ag ency d esig n ated in th is se ctio n to m a k e ru les resp e c tin g its o w n p ro ce d u re s in en fo rcin g co m p lia n c e w ith re q u ire m e n ts im p o se d u n d e r th is title. [15 USC 1691c. As amended by acts of March 23, 1976 (90 Stat. 253) and Oct. 3, 1984 (98 Stat. 1708).] SE C T IO N 705— Relation to State Laws ( a ) A re q u e st fo r th e sig n a tu re o f b o th p a r ties to a m a rria g e fo r th e p u rp o se o f cre a tin g a v alid lien, p assin g c le a r title, w aiving in c h o a te rig h ts to p ro p e rty , o r assig n in g earn in g s, sh all n o t c o n stitu te d isc rim in a tio n u n d e r th is title. Provided, however, T h a t th is p ro v isio n sh all n o t be c o n stru e d to p e rm it a c re d ito r to ta k e sex o r m a rita l sta tu s in to a c c o u n t in c o n n e c tio n w ith th e e v a lu a tio n o f c re d itw o rth in e ss o f an y ap p lic a n t. (b ) C o n sid e ra tio n o r a p p lic a tio n o f S tate p ro p e rty law s d ire c tly o r in d ire c tly affecting c re d itw o rth in e ss sh all n o t c o n stitu te d isc rim i n a tio n fo r p u rp o se s o f th is title. (c ) A n y p ro v isio n o f S tate law w h ic h p ro h ib its th e se p a ra te ex ten sio n o f c o n su m e r c re d it to e ach p a rty to a m a rria g e sh all n o t ap p ly in a n y case w h ere e ach p a rty to a m a rria g e R egulation B v o lu n ta rily applies for se p a ra te c re d it fro m th e sam e c re d ito r: Provided, T h a t in an y case w h e re su c h a S tate law is so p re e m p te d , each p a rty to th e m a rria g e shall be solely re sp o n si ble fo r th e d e b t so c o n tra c te d . ( d ) W h e n e ach p a rty to a m a rria g e s e p a ra te ly a n d v o lu n ta rily applies fo r a n d o b ta in s sep a ra te c re d it ac c o u n ts w ith th e sam e c re d ito r, th o se ac c o u n ts sh all n o t be ag g re g a te d o r o th erw ise c o m b in ed fo r p u rp o ses o f d e te rm in in g perm issible finance ch arg es o r perm issible lo an ceilings u n d e r th e law s o f a n y S tate o r o f th e U n ite d States. (e ) W h e re th e sam e act o r om ission c o n sti tu te s a v io latio n o f th is title a n d o f a p p licab le S tate law , a p e rso n aggrieved by su c h c o n d u c t m ay b rin g a legal ac tio n to re c o v e r m o n e ta ry dam ag e s e ith e r u n d e r th is title o r u n d e r su ch S tate law , b u t n o t b o th . T h is elec tio n o f re m e dies sh all n o t ap p ly to c o u rt a c tio n s in w h ic h th e re lie f so u g h t d oes n o t in c lu d e m o n e ta ry d am ag e s o r to a d m in istra tiv e actions. (f) T h is title does n o t a n n u l, a lte r, o r affect, o r e x em p t an y p e rso n subject to th e p ro v isio n s o f th is title fro m com p ly in g w ith , th e law s o f an y S tate w ith resp ect to c re d it d is c rim in a tio n , except to th e e x te n t th a t th o se law s are in c o n siste n t w ith a n y p ro v isio n o f th is title, a n d th e n o nly to th e e x te n t o f th e in c o n sist ency. T h e B o a rd is a u th o riz e d to d e te rm in e w h e th e r su c h inco n sisten cies exist. T h e B o a rd m a y n o t d e te rm in e th a t an y S tate law is in c o n siste n t w ith a n y p ro v isio n o f th is title if th e B o a rd d e te rm in e s th a t su c h law gives g re a te r p ro te c tio n to th e ap p lic a n t. (g ) T h e B o a rd sh a ll by re g u la tio n e x em p t fro m th e re q u ire m e n ts o f sectio n s 701 a n d 702 o f th is title a n y class o f c re d it tra n sa c tio n s w ith in an y S tate if it d e te rm in e s th a t u n d e r th e law o f th a t S tate th a t class o f tra n sa c tio n s is su b ject to re q u ire m e n ts su b sta n tia lly sim ilar to th o se im p o sed u n d e r th is title o r th a t su ch law gives g re a te r p ro te c tio n to th e ap p lic a n t, a n d th a t th e re is a d e q u a te p ro v isio n fo r e n fo rcem en t. F a ilu re to c o m p ly w ith an y re q u ire m e n t o f su c h S tate law in an y tra n sa c tio n so ex em p ted sh a ll c o n stitu te a v io la tio n o f th is title fo r th e p u rp o ses o f sectio n 706. [15 USC 1691d. As amended by act of March 23, 1976 (90 Stat. 253).] Statutory Provisions SE C T IO N 706— Civil Liability ( a ) A n y c re d ito r w h o fails to c o m p ly w ith an y re q u ire m e n t im p o se d u n d e r th is title sh all be liable to th e aggrieved a p p lic a n t fo r any a c tu a l dam ag e s su sta in e d by su c h a p p lic a n t ac tin g e ith e r in a n in d iv id u a l c a p a c ity o r as a m e m b e r o f a class. (b ) A n y c re d ito r, o th e r th a n a g o v ern m en t o r g o v e rn m e n ta l su b d iv isio n o r agency, w ho fails to co m p ly w ith a n y re q u ire m e n t im posed u n d e r th is title sh all be liable to th e aggrieved a p p lic a n t fo r p u n itiv e d am ag e s in an a m o u n t n o t g re a te r th a n $10,000, in a d d itio n to any a c tu a l dam ag e s p ro v id e d in su b sectio n ( a ) , ex cep t th a t in th e case o f a class ac tio n th e to ta l reco v ery u n d e r th is su b sectio n sh all n o t exceed th e lesser o f $500,000 o r 1 p e r ce n tu m o f th e n e t w o rth o f th e c re d ito r. In d e te rm in ing th e a m o u n t o f su c h d am ag e s in a n y action, th e c o u rt sh all co n sid er, am o n g o th e r relev an t facto rs, th e a m o u n t o f a n y a c tu a l d am ages a w a rd e d , th e fre q u e n c y a n d p ersiste n c e o f fail u re s o f co m p lia n c e b y th e c re d ito r, th e re so u rces o f th e c re d ito r, th e n u m b e r o f persons ad v ersely affected, a n d th e e x te n t to w h ich th e c re d ito r’s fa ilu re of co m p lia n c e w as in te n tio n a l. ( c ) U p o n a p p lic a tio n b y a n ag grieved a p p li c a n t, th e a p p ro p ria te U n ite d S tates d is tric t c o u rt o r a n y o th e r c o u rt o f c o m p e te n t ju r is d ic tio n m a y g ra n t su c h eq u ita b le a n d d e c la ra to ry re lie f as is n ecessary to en fo rce th e re q u ire m e n ts im p o se d u n d e r th is title. ( d ) In th e case o f a n y successful a c tio n u n d e r su b sectio n ( a ) , ( b ) , o r ( c ) , th e co sts o f th e actio n , to g e th e r w ith a re a so n a b le a tto rn e y ’s fee as d e te rm in e d b y th e c o u rt, sh all be a d d e d to a n y d am ag e s a w a rd e d b y th e c o u rt u n d e r su c h subsection. (e ) N o p ro v isio n o f th is title im p o sin g an y liab ility sh all ap p ly to a n y a c t d o n e o r o m itte d in go o d fa ith in c o n fo rm ity w ith a n y official ru le, reg u la tio n , o r in te rp re ta tio n th e re o f by th e B o a rd o r in c o n fo rm ity w ith a n y in te rp re ta tio n o r a p p ro v a l by a n official o r em ployee o f th e F e d e ra l R eserv e S ystem d u ly a u th o riz e d by th e B o a rd to issue su c h in te rp re ta tio n s o r ap p ro v a ls u n d e r su c h p ro c e d u re s as th e B o a rd m a y p re sc rib e th e re fo r, n o tw ith sta n d in g th a t a fte r su c h a c t o r om ission h as o c c u rre d , su c h ru le, reg u la tio n , in te rp re ta tio n , 35 R egulation B Statutory Provisions o r a p p ro v a l is a m en d e d , rescinded, o r d e te r m in e d by ju d ic ia l o r o th e r a u th o rity to be in v alid fo r a n y reason. (f ) A n y a c tio n u n d e r th is se ctio n m a y be b ro u g h t in th e a p p ro p ria te U n ite d S tates d is tr ic t c o u rt w ith o u t re g a rd to th e a m o u n t in c o n tro v e rsy , o r in an y o th e r c o u rt o f co m p e te n t ju risd ic tio n . N o such a c tio n sh all be b ro u g h t la te r th a n tw o years fro m th e d a te o f th e o c c u rre n c e o f th e violation, ex cep t th a t— (1 ) w h en ev er a n y agency h a v in g re sp o n si b ility fo r a d m in istra tiv e e n fo rc e m e n t u n d e r se c tio n 704 com m ences a n e n fo rc e m e n t p ro c e e d in g w ith in tw o y ears fro m th e d a te o f th e o c c u rre n c e o f th e v iolation, (2 ) w h en ev er th e A tto rn e y G e n e ra l c o m m en ce s a civil a c tio n u n d e r th is sectio n w ith in tw o y ears fro m th e d a te o f o c c u r re n c e o f th e violation, th e n an y a p p lic a n t w h o has been a v ictim o f th e d is c rim in a tio n w h ich is th e su b ject o f su ch p ro c e e d in g o r civil a c tio n m a y b rin g an ac tio n u n d e r th is sectio n n o t la te r th a n o n e y e a r a fte r th e c o m m e n c e m e n t o f th a t p ro c e e d in g o r actio n . p ro h ib it th e disco v ery o f a c re d ito r’s c re d it g ra n tin g s ta n d a rd s u n d e r a p p ro p ria te d iscov ery p ro c e d u re s in th e c o u rt o r agency in w h ic h a n a c tio n o r p ro c e e d in g is b ro u g h t. [15 USC 1691e. As amended by act of March 23, 1976 (90 Stat. 253).] SE C T IO N 707— Annual Reports to Congress E a c h year, th e B o a rd a n d th e A tto rn e y G e n e ral shall, respectively, m a k e re p o rts to th e C o n g ress c o n c e rn in g th e a d m in is tra tio n o f th e ir fu n c tio n s u n d e r th is title, in c lu d in g su ch re c o m m e n d a tio n s as th e B o a rd a n d th e A tto r ney G e n e ra l, respectively, d eem n ecessary o r a p p ro p ria te . In a d d itio n , e ach re p o rt o f th e B o a rd sh all in c lu d e its assessm en t o f th e ex te n t to w h ic h co m p lia n c e w ith th e re q u ire m e n ts o f th is title is being achieved, a n d a su m m a ry o f th e e n fo rc e m e n t a c tio n s ta k e n by e ach o f th e agencies assigned a d m in is tra tiv e e n fo rc e m e n t resp o n sib ilities u n d e r sectio n 704. [15 U SC 1691f. A s ad d e d by act o f M arch 23, 1976 (9 0 (g ) T h e agencies h a v in g resp o n sib ility fo r a d m in is tra tiv e e n fo rc e m e n t u n d e r sectio n 704, if u n a b le to o b ta in c o m p lian ce w ith sectio n 701, are a u th o riz e d to re fe r th e m a tte r to th e A t to rn e y G e n e ra l w ith a re c o m m e n d a tio n th a t an a p p ro p ria te civil ac tio n be in stitu te d . ( h ) W h e n a m a tte r is re fe rre d to th e A tto r ney G e n e ra l p u rs u a n t to su b sectio n ( g ) , o r w h en ev er h e h a s re a so n to believe th a t o n e o r m o re c re d ito rs a re engaged in a p a tte rn o r p ra c tic e in v io latio n o f th is title, th e A tto rn e y G e n e ra l m a y b rin g a civil ac tio n in a n y a p p ro p ria te U n ite d S tates d is tric t c o u rt fo r su c h re lie f as m a y be a p p ro p ria te , in clu d in g in ju n c Stat. 255) and amended by act of March 31, 1980 (94 Stat. 174).] SE C T IO N 708— Effective D ate T h is title ta k e s effect u p o n th e e x p ira tio n o f one y e a r a fte r th e d a te o f its e n a c tm e n t. T h e a m e n d m e n ts m a d e by th e E q u a l C re d it O p p o rtu n ity A c t A m e n d m e n ts o f 1976 sh all ta k e effect o n th e d a te o f e n a c tm e n t th e re o f a n d sh a ll ap p ly to a n y v io la tio n o c c u rrin g on o r a fte r su c h d ate, ex cep t th a t th e a m e n d m e n ts m a d e to sectio n 701 o f th e E q u a l C re d it O p p o rtu n ity A c t sh all ta k e effect 12 m o n th s a fte r th e d a te o f e n a c tm e n t. tive relief. [15 USC 1691 note.] ( i) N o p e rso n aggrieved by a v io la tio n o f th is title a n d by a v io latio n o f sectio n 805 o f th e C ivil R ig h ts A c t o f 1968 sh all re c o v e r u n d e r th is title a n d sectio n 812 o f th e C ivil R ig h ts A c t o f 1968, if su c h v io latio n is b a se d on th e sam e tra n sa c tio n . T h is title m a y be c ite d as th e “ E q u a l C re d it O p p o rtu n ity A c t.” (j) N o th in g in th is title sh all be c o n stru e d to [15 USC 1691 note.] 36 SE C T IO N 709— Short Title Board of Governors of the Federal Reserve System ')u ■ Official Staff Commentary on Regulation B Equal Credit Opportunity Effective D e c e m b e r 16, 1985 [O.O/<f0k.) A n y in q u iry re la tin g to R e g u la tio n B sh o u ld be a d d re sse d to th e F e d e ra l R eserv e B a n k o f th e F e d e ra l R eserv e D is tric t in w h ic h th e in q u iry arises. J a n u a ry 1986 Contents Page In tro d u c tio n ..................................................... Page 1 S ection 202.1— A u th o rity , scope, a n d p u r p o s e ............................................................. Section 202.7— R u le s co n c e rn in g extensions o f c r e d i t .................................... 9 1 S ection 202.2— D e fin itio n s ........................... 1 S ection 202.8— S p ecial-p u rp o se cre d it p r o g r a m s ........................................................ 11 S ection 202.9— N o tif ic a t io n s ...................... 12 S ection 202.10— F u rn ish in g o f cre d it i n f o r m a t i o n ................................................... 15 S ection 202.12— R e c o rd r e t e n t i o n ............ 15 S ection 202.13— In fo rm a tio n for m o n ito rin g p u r p o s e s .................................. 16 S ection 202.3— L im ited ex cep tio n s for c e rta in classes o f tr a n s a c tio n s ................. 4 S ection 202.4— G e n e ra l ru le p ro h ib itin g d is c r im in a t io n .............................................. 5 S ection 202.5— R u le s c o n cern in g ta k in g o f a p p li c a ti o n s .............................................. 5 Section 202.6— R u le s c o n cern in g ev a lu a tio n o f a p p lic a tio n s ........................ S ection 202.14— E n fo rc e m e n t, penalties, a n d li a b il it ie s ................................................. 17 6 A p p e n d ix B— M o d e l a p p lic a tio n f o r m s . . 17 i Official Staff* Commentary on Regulation B Effective December 16, 1985 F o llo w in g is a n official staff in te rp re ta tio n o f R e g u la tio n B issued u n d e r a u th o rity d eleg a ted by th e F e d e ra l R eserv e B o a rd to officials in th e D iv isio n o f C o n su m e r a n d C o m m u n ity A ffairs. R eferences a re to sectio n s o f th e re g u la tio n o r th e E q u a l C re d it O p p o rtu n ity A c t (1 5 U S C 1601 et se q .). sio n ad d ressed . E a c h c o m m e n t in th e c o m m e n ta ry is identified b y a n u m b e r a n d th e re g u la to ry sectio n o r p a ra g ra p h th a t it in te rp re ts. F o r exam ple, c o m m e n ts to se ctio n 2 0 2 .2 (c ) a re fu rth e r div id ed by su b p a ra g ra p h , su ch as com m ent 2 ( c ) (1 ) ( i i) —1 a n d co m m e n t 2 (c )(2 ) ( ii)-l. IN T R O D U C T IO N SE C T IO N 202.1— Authority, Scope, and Purpose 1. Official status. S ection 7 0 6 (e ) o f th e E q u a l C re d it O p p o rtu n ity A c t p ro te c ts a c re d ito r fro m civil liab ility fo r any a c t d o n e o r o m itte d in good fa ith in co n fo rm ity w ith an in te rp re ta tio n issued by a d u ly a u th o riz e d official o f th e F e d e ra l R eserv e B o ard . T h is c o m m e n ta ry is th e m ean s by w h ic h th e D ivision o f C o n su m e r a n d C o m m u n ity A ffairs o f th e F e d e ra l R e serve B o a rd issues official staff in te rp re ta tio n s o f R e g u la tio n B. G o o d fa ith co m p lia n c e w ith th is c o m m e n ta ry affords a c re d ito r p ro te c tio n u n d e r sectio n 7 0 6 (e ) o f th e act. 2. Issuance o f interpretations. U n d e r a p p en d ix D to th e reg u la tio n , any p e rso n m a y re q u e st a n official staff in te rp re ta tio n . In te rp re ta tio n s w ill be issued a t th e d iscretio n o f d e sig n ated officials a n d in c o rp o ra te d in th is c o m m e n ta ry follow ing p u b lic a tio n fo r c o m m e n t in th e Fed eral Register. E x c e p t in u n u su a l c irc u m stances, official staff in te rp re ta tio n s w ill be issued only by m ean s o f th is c o m m e n ta ry . 3. Status o f previous interpretations. In te rp re ta tio n s o f R e g u la tio n B p rev io u sly issued by th e F e d e ra l R eserv e B o a rd a n d its staff have been in c o rp o ra te d in to th is c o m m e n ta ry as a p p ro p ria te . A ll o th e r p rev io u s B o a rd a n d staff in te rp re ta tio n s, official a n d unofficial, are su p ersed ed by th is co m m e n ta ry . 1 (a ) Authority and Scope 1. Scope. T h e E q u a l C re d it O p p o rtu n ity A c t a n d R e g u la tio n B a p p ly to all c re d it— c o m m e rc ia l as w ell as p e rso n a l— w ith o u t re g a rd to th e n a tu re o r ty p e o f th e c re d it o r th e c re d i to r. I f a tra n sa c tio n p ro v id es fo r th e d eferral o f th e p a y m e n t o f a d eb t, it is c re d it covered b y R e g u la tio n B even th o u g h it m ay n o t be a c re d it tra n sa c tio n co v ered by R e g u la tio n Z ( T r u th in L e n d in g ). F u rth e r, th e definition o f c re d ito r is n o t re s tric te d to th e p a rty o r p erso n to w h o m th e o b lig atio n is in itia lly payable, as is th e case u n d e r R e g u la tio n Z. M o reo v er, th e a c t a n d re g u la tio n ap p ly to all m e th o d s o f c re d it e v a lu a tio n , w h e th e r p e rfo rm e d ju d g m e n ta lly o r by u se o f a c re d it sco rin g system . 2. Foreign applicability. R e g u la tio n B g en e ra l ly does n o t a p p ly to len d in g activ ities th a t o c c u r o u tsid e th e U n ite d States. T h e re g u la tio n does ap p ly to len d in g a c tiv ities th a t ta k e p lace w ith in th e U n ite d S tates (a s w ell as th e C o m m o n w e a lth o f P u e rto R ic o a n d a n y te rrito ry o r possession o f th e U n ite d S ta te s), w h e th e r o r n o t th e a p p lic a n t is a citizen. SE C T IO N 202.2— Definitions 4. Footnotes. F o o tn o te s in th e re g u la tio n h av e th e sam e legal effect as th e te x t o f th e re g u la tio n , w h e th e r th e y a re e x p la n a to ry o r illu s tra tive in n a tu re . 5. Comment designations. T h e c o m m e n ts are d e sig n ated w ith as m u c h specificity as possible a c c o rd in g to th e p a rtic u la r re g u la to ry p ro v i 2 ( c ) Adverse Action Paragraph 2(c)(1)(H) 1. Move from service area. I f a c re d it c a rd is su e r te rm in a te s th e o p en -en d a c c o u n t o f a cu s to m e r b ecause th e c u sto m e r h a s m o v ed o u t o f 1 § 202.2 th e c a rd issu e r’s service area, th e te rm in a tio n is “ ad v erse a c tio n ” fo r p u rp o ses o f th e re g u la tio n u n less te rm in a tio n on th is g ro u n d w as ex p lic itly p ro v id e d for in th e c re d it ag re e m e n t b etw een th e p arties. In cases w h e re te rm in a tio n is ad v erse actio n , n o tificatio n is re q u ire d u n d e r sectio n 202.9. 2. Termination based on credit limit. I f a c re d ito r te rm in a te s cred it a c c o u n ts th a t h av e low c re d it lim its (fo r exam ple, u n d e r $400) b u t k eeps op en acco u n ts w ith h ig h e r c re d it lim its, th e te rm in a tio n is a d v erse a c tio n a n d n o tific a tio n is re q u ire d u n d e r sectio n 202.9. Paragraph 2(c)(2)(H) 1. Default—exercise o f due-on-sale clause. I f a m o rtg a g o r sells o r tra n sfe rs m o rtg a g e d p ro p e rty w ith o u t th e co n sen t o f th e m o rtg ag ee, a n d th e m o rtg ag ee exercises its c o n tra c tu a l rig h t to a c celerate th e m o rtg a g e lo an , th e m o rtg a g e e m a y tr e a t th e m o rtg a g o r as being in d efau lt. A n ad v erse-actio n n o tic e n eed n o t be given to th e m o rtg a g o r o r th e tran sferee. (S ee c o m m e n t 2 ( e ) - l fo r tr e a tm e n t o f a p u rc h a s e r w h o req u ests to assu m e th e lo a n .) Paragraph 2(c) (2) (iii) 1. Point-of-sale transactions. D e n ia l o f c re d it a t p o in t o f sale is n o t ad v erse a c tio n except u n d e r th o se c ircu m stan ces specified in th e reg u la tio n . F o r exam ple, d e n ial a t p o in t o f sale is n o t adv erse a ctio n in th e follow ing situ atio n s: ° « ° ° ° A c re d it c a rd h o ld e r p resen ts a n ex p ired c a rd o r a c a rd th a t h as been re p o rte d to th e c a rd issu er as lost o r stolen. T h e a m o u n t o f a tra n sa c tio n exceeds a c a sh a d v an ce o r cred it lim it. T h e c irc u m sta n c e s (su c h as excessive use o f a c re d it c a rd in a sh o rt p e rio d o f tim e ) su g g est th a t fra u d is involved. T h e a u th o riz a tio n facilities a re n o t fu n ctio n in g . B illing sta te m e n ts h av e b een re tu rn e d to th e c re d ito r fo r lack o f a fo rw a rd in g address. R egulation B C om m entary Paragraph 2(c)(2)(v) 1. Terms o f credit versus type o f credit offered. W h e n an a p p lic a n t applies fo r c re d it a n d th e c re d ito r does n o t offer th e c re d it te rm s re q u e ste d by th e a p p lic a n t (fo r exam ple, th e in te re st ra te , le n g th o f m a tu rity , co lla te ra l, o r a m o u n t o f d o w n p a y m e n t), a d en ial o f th e a p p lic a tio n fo r th a t re a so n is a d v erse a c tio n ( u n less th e c re d ito r m ak es a co u n te ro ffe r th a t is acc e p te d by th e a p p lic a n t) a n d th e a p p lic a n t is e n title d to n o tificatio n u n d e r sectio n 202.9. 2 (e ) Applicant 1. Request to assume loan. I f a m o rtg a g o r sells o r tra n sfe rs th e m o rtg a g e d p ro p e rty a n d th e b u y e r m ak es a n a p p lic a tio n to th e c re d ito r to a ssu m e th e m o rtg a g e loan, th e m o rtg ag ee m u s t tre a t th e b u y e r as an a p p lic a n t u n less its policy is n o t to p e rm it a ssu m p tio n s. 2 ( f ) Application 1. General. A c re d ito r h a s th e la titu d e u n d e r th e re g u la tio n to estab lish its ow n a p p lic a tio n p ro cess a n d to d ecid e th e ty p e a n d a m o u n t o f in fo rm a tio n it w ill re q u ire fro m c re d it a p p lican ts. 2. ‘Procedures established. ” T h e te rm refers to th e a c tu a l p ra c tic e s follow ed by a c re d ito r fo r m a k in g c re d it decisions as w ell as its s ta t ed a p p lic a tio n p ro c e d u re s. F o r exam ple, if a c re d ito r’s sta te d policy is to re q u ire all a p p li c a tio n s to be in w ritin g o n th e c re d ito r’s a p p li c a tio n fo rm , b u t th e c re d ito r also m ak es c re d it decisions based o n o ra l req u ests, th e c re d ito r’s e stab lish ed p ro c e d u re s a re to a c c e p t b o th o ra l a n d w ritte n ap p licatio n s. 3. When an inquiry becomes an application. A c re d ito r is e n c o u ra g e d to p ro v id e c o n su m e rs w ith in fo rm a tio n a b o u t lo a n te rm s. H o w ev er, if in giving in fo rm a tio n to th e c o n su m e r th e c re d ito r also ev aluates in fo rm a tio n a b o u t th e ap p lic a n t, decides to d ecline th e req u est, a n d co m m u n ic a te s th is to th e a p p lic a n t, th e c re d i to r h a s tre a te d th e in q u iry as a n a p p lic a tio n a n d m u s t th e n c o m p ly w ith th e n o tificatio n re q u ire m e n ts u n d e r sectio n 202.9. W h e th e r th e in q u iry becom es a n a p p lic a tio n d ep en d s o n h o w th e c re d ito r re sp o n d s to th e ap p lic a n t, n o t o n w h a t th e a p p lic a n t says o r asks. § 202.2 R egulation B Com m entary 4. Examples o f inquiries that are not applica tions. T h e follow ing exam ples illu s tra te situ a tio n s in w h ich on ly a n in q u iry h as ta k e n place: » W h e n a co n su m e r calls to ask a b o u t lo an te rm s a n d a n em ployee explains th e c re d i to r ’s basic lo a n term s, su ch as in te re st rates, lo a n -to -v a lu e ra tio , a n d d eb t-to in co m e ratio . ° W h e n a c o n su m e r calls to ask a b o u t in te r est ra te s fo r c a r loans, an d , in o rd e r to q u o te th e a p p ro p ria te ra te , th e lo a n officer asks fo r th e m a k e a n d sales p rice o f th e c a r a n d th e a m o u n t o f th e d o w n p a y m e n t, th e n gives th e co n su m e r th e rate. o W h e n a co n su m e r asks a b o u t te rm s fo r a lo a n to p u rc h a s e a h o m e a n d tells th e lo an officer h e r in co m e a n d in te n d e d d o w n p a y m e n t, b u t th e lo an officer o nly explains th e c re d ito r’s lo an -to -v a lu e ra tio policy a n d o th e r b asic len d in g policies, w ith o u t tellin g th e co n su m e r w h e th e r sh e qualifies fo r th e loan. ® W h e n a c o n su m e r calls to ask a b o u t te rm s fo r a lo a n to p u rc h a se v a c a n t la n d a n d states his in co m e an d th e sale p rice o f th e p ro p e rty to be financed, a n d asks w h e th e r h e qualifies fo r a lo an , a n d th e em ployee re sp o n d s by describ in g th e g en eral len d in g policies, ex plaining th a t h e w o u ld n eed to lo o k a t all o f th e a p p lic a n t’s qualifications befo re m a k in g a decision, a n d offering to sen d a n ap p lic a tio n fo rm to th e co n su m er. 5. Completed application—diligence require ment. T h e re g u la tio n defines a c o m p leted a p p lic a tio n in te rm s th a t give a c re d ito r th e la titu d e to estab lish its ow n in fo rm a tio n re q u ire m e n ts. N ev erth eless, th e c re d ito r m u s t a c t w ith re a so n a b le diligence to co llect in fo r m a tio n n e ed ed to co m p lete th e ap p licatio n . F o r exam ple, th e c re d ito r sh o u ld re q u e st in fo rm a tio n fro m th ird p arties, su ch as a c re d it re p o rt, p ro m p tly after receiving th e a p p lic a tio n . I f a d d itio n a l in fo rm a tio n is n e ed ed fro m th e ap p lic a n t, su ch as an a d d re ss o r te le p h o n e n u m b e r need ed to verify e m p lo y m en t, th e c re d ito r sh o u ld c o n ta c t th e a p p lic a n t p ro m p tly . 2 ( j) Credit 1. General. R e g u la tio n B covers a w id er ran g e o f c re d it tra n sa c tio n s th a n R e g u la tio n Z ( T r u th in L e n d in g ). F o r p u rp o se s o f R e g u la tio n B, a tra n sa c tio n is c re d it if th e re is a rig h t to d efer p a y m e n t o f a d e b t— reg ard less o f w h e th e r th e c re d it is fo r p e rso n a l o r c o m m e r cial p u rp o ses, th e n u m b e r o f in sta llm e n ts re q u ire d fo r re p a y m e n t, o r w h e th e r th e tra n sa c tio n is su b ject to a finance charge. 2(1) Creditor 1. Assignees. T h e te rm “ c re d ito r” includes all p e rso n s p a rtic ip a tin g in th e c re d it decision. T h is m a y in c lu d e an assignee o r a p o te n tia l p u rc h a s e r o f th e o b lig a tio n w h o influences th e c re d it d ecision by in d ic a tin g w h e th e r o r n o t it w ill p u rc h a se th e o b lig atio n if th e tra n sa c tio n is c o n su m m a te d . 2. Referrals to creditors. F o r c e rta in p urposes, th e te rm “ c re d ito r” in clu d es perso n s su c h as re a l e sta te b ro k e rs w h o d o n o t p a rtic ip a te in c re d it decisions b u t w h o re g u la rly refer a p p li c a n ts to c re d ito rs o r w h o select o r offer to se lect c re d ito rs to w h o m c re d it req u ests c a n be m ade. T h ese p e rso n s m u s t co m p ly w ith sec tio n 202.4, th e g en e ra l ru le p ro h ib itin g d is c rim in a tio n , a n d w ith sectio n 2 0 2 .5 (a ), on d isc o u ra g in g a p p licatio n s. 2 (p ) Empirically Derived and Other Credit Systems 1. Purpose o f definition. T h e definition u n d e r sectio n 2 0 2 .2 ( p ) ( l ) ( i ) th ro u g h (iv ) sets th e c rite ria th a t a c re d it sy stem m u s t m eet in o r d e r fo r th e system to use age as a p red ictiv e facto r. C re d it system s th a t d o n o t m eet these c rite ria a re ju d g m e n ta l system s a n d m a y c o n sid e r age o nly fo r th e p u rp o se o f d ete rm in in g a “ p e rtin e n t e lem en t o f c re d itw o rth in e ss .” (B o th ty p es o f sy stem s m a y fav o r an elderly ap p lic a n t. See sectio n 2 0 2 .6 ( b ) ( 2 ) .) 2. Periodic revalidation. T h e re g u la tio n does n o t specify ho w o ften c re d it sco rin g system s m u s t be rev a lid a te d . T o m e e t th e re q u ire m e n ts fo r sta tistic a l so u n d n ess, th e c re d it sco rin g system m u s t be re v a lid a te d fre q u e n tly en o u g h to en su re th a t it co n tin u e s to m eet reco g n ized p ro fessio n al sta tistic a l sta n d a rd s. 3 § 202.2 2 (w ) Open-End Credit 1. Open-end real estate mortgages. T h e te rm “ o p e n -e n d c re d it” does n o t in c lu d e n e g o tia te d a d v an ces u n d e r a n o p en -en d re a l esta te m o rtg a g e o r a le tte r o f credit. 2 (z ) Prohibited Basis 1. Persons associated with applicant. “ P ro h ib ite d b asis” as u sed in th is re g u la tio n refers to th e race, co lo r, religion, n a tio n a l origin, sex, m a rita l sta tu s, o r age o f an a p p lic a n t (o r offi cers o f a n a p p lic a n t in th e case o f a c o rp o ra tio n ). T h e te rm also refers to th e c h a ra c te ris tics o f in d iv id u a ls w ith w h o m a n a p p lic a n t is affiliated o r w ith w h o m th e a p p lic a n t asso ci ates. T h is m ean s, fo r exam ple, th a t u n d e r th e g en e ra l ru le sta te d in section 202.4, a c re d ito r m a y n o t d isc rim in a te a g ain st an a p p lic a n t b e cau se o f th a t p e rs o n ’s p e rso n a l o r b usiness dealin g s w ith m e m b e rs o f a c e rta in religion, b ecau se o f th e n a tio n a l o rigin o f a n y p erso n s asso c ia te d w ith th e extension o f c re d it (s u c h as th e te n a n ts in th e a p a rtm e n t co m p lex being fin a n c e d ), o r becau se o f th e ra c e o f o th e r re si d e n ts in th e n e ig h b o rh o o d w here th e p ro p e rty offered as c o lla te ra l is located. 2. National origin. A c re d ito r m a y n o t refuse to g ra n t c re d it becau se an a p p lic a n t com es fro m a p a rtic u la r c o u n try b u t m a y ta k e th e a p p lic a n t’s im m ig ra tio n sta tu s in to ac c o u n t. A c re d ito r m a y also ta k e in to a c c o u n t an y a p p licab le law , re g u la tio n , o r executive o rd e r re stric tin g dealin g s w ith citizens (o r th e g o v ern m e n t) o f a p a rtic u la r c o u n try o r im posing lim ita tio n s re g a rd in g c re d it ex ten d e d fo r th e ir use. 3. Public assistance program. A n y federal, state, o r lo cal g o v e rn m e n ta l assistan ce p ro g ra m th a t p ro v id es a c o n tin u in g , p erio d ic in com e su p p le m e n t, w h e th e r p re m ise d o n e n ti tle m e n t o r need, is “ p u b lic a ssistan ce” fo r p u rp o ses o f th e reg u la tio n . T h e te rm in clu d es (b u t is n o t lim ite d to ) A id to F am ilies w ith D e p e n d e n t C h ild re n , food stam p s, re n t a n d m o rtg a g e su p p le m e n t o r assistan ce p ro g ra m s, Social S ecu rity a n d S u p p le m e n ta l S ecu rity I n com e, a n d u n e m p lo y m e n t co m p en satio n . O nly ph y sician s, h o sp itals, a n d o th e rs to w h o m th e benefits a re pay ab le n eed co n sid e r M e d ic a re a n d M e d ic a id as p u b lic assistance. 4 R egulation B C om m entary SE C T IO N 202.3— Limited Exceptions for Certain Classes o f Transactions 1. Scope. T h is sectio n relieves b u rd e n s w ith re g a rd to c e rta in ty p es o f c re d it fo r w h ic h full a p p lic a tio n o f th e p ro c e d u ra l re q u ire m e n ts o f th e re g u la tio n is n o t needed. A ll classes o f tra n sa c tio n s re m a in su b ject to th e g en eral ru le given in sectio n 202.4, b a rrin g d isc rim in a tio n o n a p ro h ib ite d basis, a n d to an y o th e r p ro v isio n n o t specifically excepted. 3 (a ) Public-Utilities Credit 1. Definition. T h is definition applies o n ly to c re d it fo r th e p u rc h a s e o f a u tility service, su c h as elec tricity , gas, o r te le p h o n e service. C re d it p ro v id e d o r offered by a p u b lic u tility fo r som e o th e r p u rp o se — su c h as fo r financing th e p u rc h a s e o f a gas d ry e r, te le p h o n e e q u ip m e n t, o r o th e r d u ra b le goods, o r fo r in s u la tio n o r o th e r h o m e im p ro v e m e n ts— is n o t excepted. 2. Security deposits. A u tility c o m p a n y is a c re d ito r w h e n it su p p lies u tility service a n d bills th e u se r a fte r th e service h a s b een p ro v id ed. T h u s, an y c re d it te rm (s u c h as a re q u ire m e n t fo r a se c u rity d e p o sit) is su b ject to th e reg u la tio n . 3 ( c ) Incidental Credit 1. Examples. I f a service p ro v id e r (s u c h as a h o sp ita l, d o c to r, la w y e r o r re ta ile r) allow s th e c lie n t o r c u sto m e r to d efer th e p a y m e n t o f a bill, th is d e fe rra l o f a d e b t is c re d it fo r p u rp o s es o f th e re g u la tio n , even th o u g h th e re is n o finance c h a rg e a n d n o a g re e m e n t fo r p a y m e n t in in stallm en ts. B ecause o f th e ex cep tio n s p ro vid ed by th is sectio n , how ever, th e se p a rtic u la r c re d it ex ten sio n s a re ex cep ted fro m c o m p lian ce w ith c e rta in p ro c e d u ra l re q u ire m e n ts as specified in th e reg u la tio n . 3 (d ) Business Credit 1. Definition. T h e te s t fo r d e c id in g w h e th e r a tra n a c tio n qualifies as b u sin ess c re d it is o n e o f p rim a ry p u rp o se. F o r exam ple, a n o p en -en d c re d it a c c o u n t u sed fo r b o th p e rso n a l a n d b u s iness p u rp o se s is n o t b usiness c re d it unless th e p rim a ry p u rp o se o f th e a c c o u n t is b u sin ess-re lated . A c re d ito r m a y rely on a n a p p lic a n t’s § 202.5 R egulation B Com m entary sta te m e n t o f th e req u ested . p u rp o se fo r th e c re d it Paragraph 3(d)(3) 1. Notification. A c re d ito r is re q u ire d in all cases to n o tify a business c re d it a p p lic a n t o f a c tio n ta k e n o n a n ap p lic a tio n w ith in a re a so n ab le tim e o r receiving a co m p leted a p p lic a tio n . T h is n o tificatio n m a y be w ritte n o r oral. a c t— to p ro m o te th e a v ailab ility o f c re d it on a n o n d isc rim in a to ry basis— sectio n 2 0 2 .5 (a ) covers a cts o r p ra c tic e s d ire c te d a t p o te n tia l ap p lican ts. P ra c tic e s p ro h ib ite d by th is section in clu d e— ° ° 3 (e ) Government Credit 1. Credit to governments. T h e exception re lates to c re d it e x ten d e d to (n o t b y ) g o v e rn m e n ta l en tities. F o r exam ple, c re d it e x ten d e d to a local g o v e rn m e n t by a c re d ito r in th e p ri v ate se c to r is covered b y th is exception, b u t c re d it ex ten d e d to c o n su m ers by a fed eral o r sta te h o u sin g agency does n o t qualify for sp ecial tre a tm e n t u n d e r th is category. SE C T IO N 202.4— General Rule Prohibiting Discrimination 1. Scope o f section. T h e g en eral ru le sta te d in sectio n 202.4 covers all dealings, w ith o u t ex c ep tio n , betw een a n a p p lic a n t a n d a c re d ito r, w h e th e r o r n o t a d d ressed by o th e r p rovisions o f th e re g u latio n . O th e r sectio n s o f th e re g u la tio n id en tify specific p ractices th a t th e B o a rd h a s decid e d are im perm issible b ecause th e y c o u ld re s u lt in c re d it d isc rim in a tio n o n a basis p ro h ib ite d by th e act. T h e g en eral ru le covers, fo r exam ple, ap p lic a tio n p ro c e d u re s, c rite ria u sed to e v alu a te c re d itw o rth in e ss, a d m in is tra tio n o f acco u n ts, a n d tre a tm e n t o f d elin q u e n t o r slow acco u n ts. T h u s, w h e th e r o r n o t specif ically p ro h ib ite d elsew here in th e re g u la tio n , a c re d it p ra c tic e th a t tre a ts a p p lic a n ts d ifferen t ly on a p ro h ib ite d basis violates th e law b ecause it v iolates th e g en eral rule. ° 2. Affirmative advertising. A c re d ito r m ay af firm atively solicit o r e n c o u ra g e m em b ers o f tra d itio n a lly d isa d v a n ta g e d g ro u p s to ap p ly fo r cre d it, especially g ro u p s th a t m ig h t n o t n o rm a lly seek c re d it fro m th a t cre d ito r. 5 (b ) General Rules Concerning Requests for Information 1. Requests for information. T h is section gov e rn s th e ty p es o f in fo rm a tio n th a t a c re d ito r m a y g ath er. S ection 202.6 g o verns how in fo rm a tio n m ay be used. 5 (d ) Other Limitations on Information Requests Paragraph 5(d)(1) 1. Indirect disclosure o f prohibited informa tion. T h e fa c t th a t c e rta in c re d it-re la te d in fo r m a tio n m ay in d ire c tly disclose m a rita l sta tu s does n o t b a r a c re d ito r fro m seeking su c h in fo rm atio n . F o r exam ple, th e c re d ito r m ay ask a b o u t— ° SE C T IO N 202.5— Rules Concerning Taking of Applications ° 5 (a ) Discouraging Applications 1. Potential applicants. G en e ra lly , th e re g u la tio n ’s p ro te c tio n s ap p ly o n ly to p e rso n s w ho h av e re q u e ste d o r received a n ex ten sio n o f cre d it. In k eeping w ith th e p u rp o se o f th e a sta te m e n t th a t th e a p p lic a n t sh o u ld n o t b o th e r to apply, a fte r th e a p p lic a n t states th a t h e is re tire d use o f w ords, sym bols, m o d els o r o th e r fo rm s o f c o m m u n ic a tio n in ad v ertisin g th a t express, im p ly , o r suggest a d isc rim i n a to ry p referen ce o r a policy o f exclusion in v io latio n o f th e a c t use o f interview sc rip ts th a t d isco u rag e a p p licatio n s o n a p ro h ib ite d basis. ° th e a p p lic a n t’s o b lig a tio n to pay alim ony, ch ild su p p o rt, o r se p a ra te m a in te n a n c e th e so u rce o f in co m e to be u sed as th e b a sis fo r rep ay in g th e c re d it req u ested , w h ich co u ld disclose th a t it is th e in co m e o f a spouse w h e th e r an y o b lig atio n disclosed by th e a p p lic a n t h a s a co-obligor, w h ich co u ld disclose th a t th e co -o b lig o r is a sp o u se o r fo rm e r spouse 5 § 202.5 ° th e o w n e rsh ip o f assets, w h ic h c o u ld d is close th e in te re st o f a spouse Paragraph 5(d)(2) 1. Disclosure about income. T h e sam p le a p p li c a tio n fo rm s in ap p e n d ix B to th e re g u la tio n illu s tra te h o w a c re d ito r m ay in fo rm a n a p p li c a n t o f th e rig h t n o t to disclose alim o n y , ch ild su p p o rt, o r se p a ra te m a in te n a n c e incom e. 2. General inquiry about source o f income. Since a g en eral in q u iry a b o u t th e so u rce o f in co m e m a y le a d a n a p p lic a n t to disclose ali m o ny, c h ild su p p o rt, o r se p a ra te m a in te n a n c e , a c re d ito r m a y n o t m ak e su c h a n in q u iry on a n a p p lic a tio n fo rm w ith o u t p re fa c in g th e re q u e st w ith th e d isclosure re q u ire d b y th is p a ra g ra p h . 3. Specific inquiry about sources o f income. A c re d ito r n eed n o t give th e d isclo su re if th e in q u iry a b o u t in co m e is specific a n d w o rd e d in a w ay th a t is u n lik ely to lead th e a p p lic a n t to disclose th e fa c t th a t in co m e is d eriv e d fro m alim o n y , ch ild su p p o rt, o r se p a ra te m a in te n a n c e p ay m en ts. F o r exam ple, a n a p p lic a tio n fo rm th a t asks a b o u t specific ty p e s o f in co m e su c h as salary , w ages, o r in v e stm e n t in co m e n eed n o t in c lu d e th e disclosure. 5 (e ) W ritten Applications 1. Requirement for written applications. T h e re q u ire m e n t o f w ritte n ap p lic a tio n s fo r c e rta in types o f d w ellin g -re lated loans is in te n d e d to assist th e fed eral su p erv iso ry agencies in m o n ito rin g c o m p lia n c e w ith th e E C O A a n d th e F a ir H o u sin g A ct. M o d el a p p lic a tio n fo rm s are p ro v id e d in ap p e n d ix B to th e reg u la tio n , a lth o u g h u se o f a p rin te d fo rm o f a n y k in d is n o t re q u ire d . A c re d ito r w ill satisfy th e re q u ire m e n t b y w ritin g do w n th e in fo rm a tio n th a t it n o rm a lly co n sid ers in m a k in g a c re d it decision. T h e c re d ito r m ay c o m p lete th e a p p lic a tio n on b e h a lf o f a n a p p lic a n t a n d n eed n o t re q u ire th e a p p lic a n t to sign th e a p p licatio n . 2. Telephone applications. A c re d ito r th a t a c cepts a p p lic a tio n s by te le p h o n e fo r dw ellingre la te d c re d it co v ered by sectio n 202.13 c a n m e e t th e re q u ire m e n ts fo r w ritte n a p p lic a tio n s 6 R egulation B C om m entary by w ritin g d o w n p e rtin e n t in fo rm a tio n th a t is p ro v id e d b y th e a p p lic a n t (s ). 3. Computerized entry. In fo rm a tio n e n tered d ire c tly in to a n d re ta in e d by a c o m p u te riz e d sy stem qualifies as a w ritte n a p p lic a tio n u n d e r th is p a ra g ra p h . (See th e c o m m e n ta ry to sectio n 2 0 2 .1 3 (b ).) SE C T IO N 202.6— Rules Concerning Evaluation of Applications 6 (a ) General Rule Concerning Use of Information 1. General. W h e n ev a lu a tin g a n a p p lic a tio n fo r c re d it, a c re d ito r g en erally m a y co n sid e r a n y in fo rm a tio n o b tain ed . H o w ev er, a c re d i to r m a y n o t c o n sid e r in its e v a lu a tio n o f c re d itw o rth in e ss a n y in fo rm a tio n th a t it is b a rre d by sectio n 202.5 fro m ob tain in g . 2. Effects test. T h e effects te s t is a ju d ic ia l d o c trin e th a t w as dev elo p e d in a series o f e m p lo y m e n t cases d e cid e d by th e S u p rem e C o u rt u n d e r title Y II o f th e C ivil R ig h ts A c t o f 1964 (4 2 U S C 2000e e t se q .). C o n g re ssio n a l in te n t th a t th is d o c trin e ap p ly to th e c re d it a re a is d o c u m e n te d in th e S en ate R e p o rt th a t a c c o m p a n ie d H .R . 6516, N o . 94-589, pp. 4-5; a n d in th e H o u se R e p o rt th a t a c c o m p a n ie d H .R . 6516, N o . 94-210, p. 5. T h e a c t a n d re g u la tio n m a y p ro h ib it a c re d ito r p ra c tic e th a t is d is c rim in a to ry in effect becau se it h a s a d is p ro p o rtio n a te ly n e g ativ e im p a c t o n a p ro h ib ite d basis, even th o u g h th e c re d ito r h a s n o in te n t to d isc rim in a te a n d th e p ra c tic e a p p e a rs n e u tr a l o n its face, un less th e c re d ito r p ra c tic e m eets a leg itim ate b u sin ess n eed th a t c a n n o t re a so n a b ly be ach ie v ed as w ell by m ean s th a t a re less d is p a ra te in th e ir im p a c t. F o r ex am ple, re q u irin g th a t a p p lic a n ts h av e incom es in excess o f a c e rta in a m o u n t to q u alify fo r an o v e rd ra ft line o f c re d it c o u ld m e a n th a t w o m en a n d m in o rity a p p lic a n ts w ill b e rejected a t a h ig h e r ra te th a n m e n a n d n o n m in o rity a p p lican ts. I f th e re is a d e m o n s tra b le re la tio n ship b etw een th e in c o m e re q u ire m e n t a n d c re d itw o rth in e ss fo r th e level o f c re d it in volved, how ever, use o f th e in co m e sta n d a rd w o u ld likely b e p erm issible. § 202.6 R egulation B Com m entary 6 (b ) Specific Rules Concerning Use of Information Paragraph 6(b)(1) 1. Prohibited basis—marital status. A c re d ito r m a y n o t u se m a rita l sta tu s as a basis fo r d e te r m in in g th e a p p lic a n t’s c re d itw o rth in ess. H o w ever, a c re d ito r m a y co n sid er a n a p p lic a n t’s m a rita l sta tu s fo r th e p u rp o se o f asc e rta in in g th e c re d ito r’s rig h ts a n d rem ed ies applicab le to th e p a rtic u la r ex ten sio n o f c red it. F o r ex am ple, in a secu red tra n sa c tio n involving real p ro p e rty , a c re d ito r co u ld ta k e in to a c c o u n t w h e th e r sta te law gives th e a p p lic a n t’s spouse a n in te re st in th e p ro p e rty being offered as collateral. ° ° 2. Prohibited basis— special-purpose credit. In a sp ecial-p u rp o se c re d it p ro g ra m , a c re d ito r m a y c o n sid e r a p ro h ib ite d basis to d e te rm in e w h e th e r th e a p p lic a n t possesses a c h a ra c te ristic need ed fo r eligibility. (See se ctio n 2 02.8.) Paragraph 6(b)(2) 1. Favoring the elderly. A n y sy stem o f ev alu a tin g c re d itw o rth in e ss m ay fa v o r a c re d it a p p lic a n t w h o is age 62 o r older. 2. Consideration o f age in a credit scoring sys tem. A ge m a y be ta k e n d ire c tly in to a c c o u n t in a c re d it sco rin g system th a t is “ d e m o n s tra bly a n d sta tistic a lly so u n d ,” as defined in sec tio n 2 0 2 .2 ( p ) , w ith one lim ita tio n : a n a p p li c a n t w h o is 62 y ears o ld o r o ld e r m u s t be tre a te d a t least as fav o rab ly as a n y o n e w h o is u n d e r age 62. 3. Consideration o f age in a judgmental sys tem. In a ju d g m e n ta l system , defined in sec tio n 2 0 2 .2 (t), a c re d ito r m a y n o t ta k e age d i re c tly in to a c c o u n t in any a sp ect o f th e c re d it tra n sa c tio n . F o r exam ple, th e c re d ito r m ay n o t reject a n a p p lic a tio n o r te rm in a te a n a c c o u n t becau se th e a p p lic a n t is 60 y ears old. B u t a c re d ito r th a t uses a ju d g m e n ta l system m a y re la te th e a p p lic a n t’s age to o th e r in fo r m a tio n a b o u t th e a p p lic a n t th a t th e c re d ito r co n sid ers in e v alu a tin g cre d itw o rth in e ss. F o r exam ple: ° A c re d ito r m a y c o n sid er th e a p p lic a n t’s o c c u p a tio n a n d le n g th o f tim e to re tire m e n t to a sc e rta in w h e th e r th e a p p lic a n t’s in co m e (in c lu d in g re tire m e n t in c o m e ) w ill su p p o rt th e e x ten sio n o f c re d it to its m a tu rity . A c re d ito r m a y c o n sid e r th e ad eq u acy o f an y secu rity offered w h en th e te rm o f th e c re d it ex ten sio n exceeds th e life e x p e c ta n cy o f th e a p p lic a n t a n d th e c o st o f re a liz in g on th e c o lla te ra l c o u ld exceed th e a p p lic a n t’s equity. (A n eld erly a p p lic a n t m ig h t n o t q ualify fo r a 5 p e rc e n t dow n, 30-year m o rtg a g e lo a n b u t m ig h t qualify w ith a la rg e r d o w n p a y m e n t o r a s h o rte r lo a n m a tu rity .) A c re d ito r m a y co n sid e r th e a p p lic a n t’s age to assess th e significance o f th e le n g th o f th e a p p lic a n t’s em p lo y m e n t (a yo u n g a p p lic a n t m a y h av e ju s t e n te re d th e jo b m a rk e t) o r le n g th o f tim e a t a n ad d ress (a n e ld erly a p p lic a n t m a y re c e n tly have re tire d a n d m o v ed fro m a lo n g -te rm re s id e n c e ). 4. Consideration o f age in a combined system. A c re d ito r u sing a c re d it sco rin g system th a t qualifies as “ em p irically d e riv e d ” u n d e r sec tio n 202.2 (p ) m a y c o n sid e r o th e r facto rs (s u c h as a c re d it re p o rt o r th e a p p lic a n t’s cash flow ) o n a ju d g m e n ta l basis. D o in g so w ill n o t n eg ate th e classification o f th e c re d it sco rin g c o m p o n e n t o f th e c o m b in e d system as “ d e m o n s tra b ly a n d sta tistic a lly s o u n d .” W hile age co u ld be u se d in th e c re d it sco rin g p o r tio n , how ever, in th e ju d g m e n ta l p o rtio n age m a y n o t be c o n sid e re d d irectly . I t m ay be u sed o n ly fo r th e p u rp o se o f d e te rm in in g a “ p e rtin e n t e lem en t o f c re d itw o rth in e ss .” (See c o m m e n t 6 ( b ) ( 2 ) - 3 .) 5. Consideration o f public assistance. W h en c o n sid erin g in co m e d eriv ed fro m a p u b lic as sistan ce p ro g ra m , a c re d ito r m a y ta k e in to a c co u n t, fo r ex am p le— ° ° ° th e le n g th o f tim e an a p p lic a n t w ill likely re m a in eligible to receive su ch in co m e w h e th e r th e a p p lic a n t w ill c o n tin u e to qualify fo r benefits based o n th e sta tu s o f th e a p p lic a n t’s d e p e n d e n ts (s u c h as A id to F am ilies w ith D e p e n d e n t C h ild re n o r So cial S ecu rity p a y m e n ts to a m in o r) w h e th e r th e c re d ito r c a n a tta c h o r g arn ish th e in co m e to a ssu re p a y m e n t o f th e d e b t in th e ev en t o f d efau lt 7 § 202.6 Paragraph 6(b)(5) 1. Consideration o f an individual applicant. A c re d ito r m u s t ev alu a te incom e d eriv ed fro m p a rt-tim e em p lo y m en t, alim o n y , c h ild su p p o rt, se p a ra te m ain ten an ce, re tire m e n t b en e fits, o r p u b lic assistan ce (a ll re fe rre d to as “ p ro te c te d in c o m e ” ) on a n in d iv id u a l basis, n o t o n th e basis o f aggregate sta tistic s, a n d m u s t assess its reliab ility o r u n re lia b ility by an a ly z in g th e a p p lic a n t’s a c tu a l c irc u m stan ces, n o t by an aly z in g sta tistic a l m easu res d eriv ed fro m a group. 2. Payments consistently made. In d e te rm in ing th e lik elih o o d o f c o n siste n t p a y m e n ts o f alim o n y , ch ild su p p o rt, o r se p a ra te m a in te n an ce, a c re d ito r m ay c o n sid er fa c to rs su c h as w h e th e r p a y m e n ts a re received p u rs u a n t to a w ritte n ag re e m e n t o r c o u rt decree; th e le n g th o f tim e th a t th e p ay m en ts h av e b een received; w h e th e r th e p a y m e n ts are re g u la rly received b y th e a p p lic a n t; th e availab ility o f c o u rt o r o th e r p ro c e d u re s to com pel p ay m e n t; a n d th e c re d itw o rth in e ss o f th e p a y o r, in c lu d in g th e c re d it h is to ry o f th e p a y o r w h en it is available to th e c re d ito r. 3. Consideration o f income. A c re d ito r n eed n o t c o n sid e r in co m e a t all in e v a lu a tin g c re d itw o rth in ess. I f a c re d ito r does c o n sid e r in com e, th e re a re sev eral a c cep tab le m e th o d s, w h e th e r in a c re d it sco rin g o r a ju d g m e n ta l system : ° « ° A c re d ito r m a y score o r ta k e in to a c c o u n t th e to ta l su m o f all incom e sta te d by th e a p p lic a n t w ith o u t ta k in g steps to e v alu a te th e incom e. A c re d ito r m a y e v alu a te each c o m p o n e n t o f th e a p p lic a n t’s incom e, a n d th e n score o r ta k e in to a c c o u n t reliab le in co m e se p a ra te ly fro m in co m e th a t is n o t reliable, o r th e c re d ito r m a y d isre g a rd th a t p o rtio n o f in co m e th a t is n o t reliable b efo re a g g re g a t ing it w ith reliab le incom e. A c re d ito r th a t does n o t ev alu a te all in co m e c o m p o n e n ts for reliab ility m u s t tre a t as reliab le an y c o m p o n e n t o f p ro te c te d in co m e th a t is n o t evaluated. In co n sid e rin g th e se p a ra te c o m p o n e n ts o f an a p p lic a n t’s incom e, th e c re d ito r m a y n o t a u to m a tic a lly d is c o u n t o r ex clu d e fro m c o n R egulation B C om m entary sid e ra tio n an y p ro te c te d incom e. A n y d is c o u n tin g o r ex clu sio n m u s t be based on th e a p p lic a n t’s a c tu a l c ircu m stan ces. 4. Part-time employment, sources o f income. A c re d ito r m a y score o r ta k e in to a c c o u n t th e fa c t th a t an in d iv id u a l a p p lic a n t h a s m o re th a n o n e so u rce o f e a rn e d in co m e— a fu ll-tim e a n d a p a rt-tim e jo b o r tw o p a rt-tim e jo b s. A c re d ito r m a y also score o r tr e a t e a rn e d in co m e fro m a se c o n d a ry so u rce d ifferently th a n e a rn e d in c o m e fro m a p rim a ry source. H o w ever, th e c re d ito r m a y n o t sco re o r o th erw ise ta k e in to a c c o u n t th e n u m b e r o f so u rces fo r p ro te c te d in co m e— fo r exam ple, re tire m e n t incom e, Social S ecurity, alim ony. N o r m ay th e c re d ito r tr e a t n egatively th e fa c t th a t an a p p lic a n t’s o n ly e a rn e d in co m e is d eriv ed fro m a p a rt-tim e jo b . Paragraph 6(b)(6) 1. Types o f credit references. A c re d ito r m ay re s tric t th e ty p es o f c re d it h is to ry a n d c re d it referen ces th a t it w ill co n sid er, p ro v id e d th a t th e re s tric tio n s a re ap p lied to all c re d it a p p li c a n ts w ith o u t re g a rd to sex, m a rita l sta tu s, o r a n y o th e r p ro h ib ite d basis. H o w ev er, on th e a p p lic a n t’s req u est, a c re d ito r m u s t co n sid er c re d it in fo rm a tio n n o t re p o rte d th ro u g h a c re d it b u re a u w h en th e in fo rm a tio n re la te s to th e sam e ty p es o f c re d it referen ces a n d h is to ry th a t th e c re d ito r w o u ld c o n sid e r if re p o rte d th ro u g h a c re d it b u re a u . Paragraph 6(b)(7) 1. National origin—immigration status. T h e a p p lic a n t’s im m ig ra tio n sta tu s a n d ties to th e c o m m u n ity (s u c h as em p lo y m e n t a n d c o n tin u e d resid en ce in th e a re a ) c o u ld h av e a b e a r ing on a c re d ito r’s ab ility to o b ta in rep a y m e n t. A cc o rd in g ly , th e c re d ito r m a y c o n sid e r a n d differentiate, fo r exam ple, b etw een a n o n c iti zen w h o is a lo n g -tim e re s id e n t w ith p e rm a n e n t re sid e n t sta tu s a n d a n o n c itiz e n w h o is te m p o ra rily in th is c o u n try o n a s tu d e n t visa. 2. National origin— citizenship. U n d e r th e re g u la tio n , a d e n ia l o f c re d it o n th e g ro u n d th a t a n a p p lic a n t is n o t a U n ite d S tates citizen is n o t p e r se d isc rim in a tio n based o n n a tio n a l origin. § 202.7 R egulation B Com m entary SE C T IO N 202.7— Rules Concerning Extensions o f Credit 7 (a ) Individual Accounts 1. Open-end credit—authorized user. A c re d i to r m a y n o t re q u ire a c re d itw o rth y a p p lic a n t seeking a n in d iv id u a l c re d it a c c o u n t to p ro vide a d d itio n a l sig n atu res. H ow ever, th e c re d ito r m ay c o n d itio n th e d esig n atio n o f a n a u th o riz e d u se r b y th e a c c o u n t h o ld e r o n th e a u th o riz e d u se r’s beco m in g c o n tra c tu a lly lia ble fo r th e a c c o u n t, as lo n g as th e c re d ito r does n o t d ifferen tiate on a n y p ro h ib ite d basis in im p o sin g th is re q u ire m e n t. 2. Open-end credit—choice o f authorized user. A c re d ito r th a t p e rm its a n a c c o u n t h o ld e r to d esig n ate an a u th o riz e d u se r m a y n o t re s tric t th is d e sig n a tio n o n a p ro h ib ite d basis. F o r ex am ple, if th e c re d ito r allow s th e d e sig n a tio n o f spouses as a u th o riz e d users, th e c re d ito r m ay n o t refuse to a c cep t a n o n sp o u se as an a u th o riz e d user. 3. Overdraft authority on transaction ac counts. I f a tra n sa c tio n a c c o u n t (s u c h as a c h eck in g a c c o u n t o r N O W a c c o u n t) in clu d es an o v e rd ra ft line o f c red it, th e c re d ito r m ay re q u ire th a t all p erso n s a u th o riz e d to d ra w on th e tra n sa c tio n a c c o u n t assu m e liability fo r an y o v erd raft. 7 (b ) Designation o f Name 1. Single name on account. A c re d ito r m ay re q u ire th a t jo in t a p p lic a n ts o n a n a c c o u n t d esig n ate a single n am e fo r p u rp o se s o f a d m in iste rin g th e a c c o u n t a n d th a t a single n a m e be em bossed on an y c re d it c a r d ( s ) is su ed on th e a c c o u n t. B u t th e c re d ito r m a y n o t re q u ire th a t th e n a m e be th e h u s b a n d ’s nam e. (See sectio n 202.10 fo r ru les gov ern in g th e fu rn ish in g o f c re d it h isto ry o n ac c o u n ts h eld by sp o u ses.) 7 ( c ) Action Concerning Existing OpenEnd Accounts Paragraph 7(c)(1) 1. Termination coincidental with marital status change. W h e n an a c c o u n t h o ld e r’s m a r ital sta tu s changes, a c re d ito r g enerally m ay n o t te rm in a te th e a c c o u n t u n less it h as evi d ence th a t th e a c c o u n t h o ld e r is u n a b le o r u n w illing to repay. B u t th e c re d ito r m a y te rm i n a te an a c c o u n t o n w h ic h b o th spouses are jo in tly liable, even if th e a c tio n coincides w ith a c h a n g e in m a rita l sta tu s, w h e n one o r b o th spouses— ° ° ° re p u d ia te resp o n sib ility fo r fu tu re ch arg es o n th e jo in t a c c o u n t re q u e st se p a ra te a c c o u n ts in th e ir ow n nam es re q u e s t th a t th e jo in t a c c o u n t be closed 2. Updating information. A c re d ito r m a y p e rio d ic a lly re q u e st u p d a te d in fo rm a tio n fro m a p p lic a n ts b u t m a y n o t u se events re la te d to a p ro h ib ite d basis— su c h as a n a p p lic a n t’s re tire m e n t, re a c h in g a p a rtic u la r age, o r ch an g e in n a m e o r m a rita l s ta tu s — to trig g e r su c h a req u est. Paragraph 7(c)(2) 1. Procedure pending reapplication. A c re d i to r m a y re q u ire a re a p p lic a tio n fro m a c o n tra c tu a lly liable p a rty , even w h en th e re is no evidence o f unw illin g n ess o r in a b ility to repay, if (1 ) th e c re d it w as b a se d o n th e qualifica tio n s o f a p erso n w h o is n o lo n g e r available to su p p o rt th e c re d it a n d (2 ) th e c re d ito r h as in fo rm a tio n in d ic a tin g th a t th e a c c o u n t h o ld e r’s in co m e b y itse lf m a y be insufficient to s u p p o rt th e cre d it. W h ile a re a p p lic a tio n is pen d in g , th e c re d ito r m u s t allow th e a c c o u n t h o ld e r fu ll access to th e a c c o u n t u n d e r th e existing c o n tra c t term s. T h e c re d ito r m ay specify a re aso n ab le tim e p e rio d w ith in w h ich th e a c c o u n t h o ld e r m u s t su b m it th e re q u ire d in fo rm atio n . 7 (d ) Signature o f Spouse or Other Person 1. Qualified applicant. T h e sig n a tu re ru les en su re th a t qualified a p p lic a n ts a re able to ob ta in c re d it in th e ir ow n n am es. T h u s, w h en an a p p lic a n t req u ests in d iv id u a l cre d it, a c re d ito r g enerally m a y n o t re q u ire th e sig n a tu re o f a n o th e r p e rso n unless th e c re d ito r h a s first d e te rm in e d th a t th e a p p lic a n t alo n e does n o t qualify fo r th e c re d it req u ested . 9 § 202.7 2. Unqualified applicant. W h e n a n a p p lic a n t ap p lies fo r in d iv id u a l c re d it b u t does n o t alo n e m e e t a c re d ito r’s sta n d a rd s, th e c re d ito r m ay re q u ire a cosigner, g u a ra n to r o r th e like— b u t c a n n o t re q u ire th a t it be th e spouse. (See c o m m e n ta ry to section 2 0 2 .7 ( d ) ( 5 ) a n d ( 6)-) Paragraph 7(d)(1) 1. Joint applicant. T h e te rm “jo in t a p p lic a n t” refers to som eone w h o applies c o n te m p o ra n e ously w ith th e a p p lic a n t fo r sh a re d o r jo in t cre d it. I t does n o t refer to so m eo n e w hose sig n a tu r e is re q u ire d by th e c re d ito r as a c o n d i tio n fo r g ra n tin g th e c re d it req u ested . Paragraph 7(d)(2) 1. Jointly owned property. In d e te rm in in g th e v alu e o f th e a p p lic a n t’s in te re st in jo in tly o w n ed p ro p e rty , a c re d ito r m a y co n sid e r fac to rs su c h as th e fo rm o f o w n e rsh ip a n d th e p ro p e rty ’s su scep tib ility to a tta c h m e n t, ex ecu tio n , severance, o r p a rtitio n a n d th e co st o f su c h actio n . I f th e a p p lic a n t’s in te re st in th e p ro p e rty does n o t su p p o rt th e a m o u n t a n d te rm s o f c re d it so u g h t, th e c re d ito r m a y give th e a p p lic a n t som e o th e r o p tio n o f p ro v id in g a d d itio n a l su p p o rt fo r th e e x ten sio n o f cred it, fo r exam p le— ° ° ° re q u irin g a n a d d itio n a l p a rty u n d e r sec tio n 2 0 2 .7 ( d ) ( 5 ) offering to g ra n t th e a p p lic a n t’s re q u e st on a secu red c re d it basis ask in g fo r th e sig n a tu re o f th e co -o w n e r o f th e p ro p e rty o n a n in s tru m e n t th a t en su res access to th e p ro p e rty b u t does n o t im pose p e rso n a l liability unless n ecessary u n d e r sta te law 2. Need for signature—reasonable belief. A c re d ito r’s reaso n ab le b elief as to w h a t in s tru m e n ts n eed to be signed by a p e rso n o th e r th a n th e a p p lic a n t sh o u ld be s u p p o rte d by a th o ro u g h review o f p e rtin e n t s ta tu to ry a n d d e cisional law o r a n o p in io n o f th e sta te a tto rn e y general. Paragraph 7(d)(3) 1. Residency. In assessing th e c re d itw o rth i ness o f a p e rso n w h o applies fo r c re d it in a 10 R egulation B C om m entary c o m m u n ity p ro p e rty state, a c re d ito r m a y a s su m e th a t th e a p p lic a n t is a re s id e n t o f th e sta te un less th e a p p lic a n t in d ic a te s otherw ise. Paragraph 7(d)(4) 1. Creation o f enforceable lien. Som e sta te law s re q u ire th a t b o th spouses jo in in e x e c u t in g a n y in s tru m e n t by w h ic h re a l p ro p e rty is en cu m b e red . I f a n a p p lic a n t offers su c h p ro p e rty as se c u rity fo r cre d it, a c re d ito r m a y re q u ire th e a p p lic a n t’s sp ouse to sign th e in s tru m e n ts n ecessary to c re a te a v alid se c u rity in te re st in th e p ro p e rty . T h e c re d ito r m a y n o t re q u ire th e sp ouse to sign th e n o te evidencing th e c re d it o b lig a tio n if signing only th e m o r t gage o r o th e r se c u rity a g re e m e n t is sufficient to m a k e th e p ro p e rty available to satisfy th e d e b t in th e ev en t o f defau lt. H o w ev er, if u n d e r sta te law b o th spouses m u s t sign th e n o te to c re a te a n en fo rceab le lien, th e c re d ito r m a y re q u ire th e m to do so. 2. Need for signature— reasonable belief. G e n erally, a sig n a tu re to m a k e th e se c u re d p ro p e r ty availab le w ill only be n e ed ed o n a se c u rity a g reem en t. A c re d ito r’s reaso n ab le b elie f th a t, to e n su re access to th e p ro p e rty , th e sp o u se’s sig n a tu re is n eed ed o n a n in s tru m e n t th a t im poses p e rs o n a l liability sh o u ld be s u p p o rte d by a th o ro u g h review o f p e rtin e n t s ta tu to ry a n d d ecisio n al law o r a n o p in io n o f th e sta te a tto rn e y g eneral. 3. Integrated instruments. W h e n a c re d ito r uses a n in te g ra te d in s tru m e n t th a t com bines th e n o te a n d th e se c u rity a g reem en t, th e sp ouse c a n n o t b e re q u ire d to sign th e in te g ra t ed in s tru m e n t if th e sig n a tu re is only need ed to g ra n t a se c u rity in te re st. B u t th e spouse c o u ld be ask ed to sign a n in te g ra te d in s tru m e n t th a t m ak es clea r— fo r exam ple, by a leg e n d p lace d n e x t to th e sp o u se’s sig n a tu re — th a t th e sp o u se’s sig n a tu re is o n ly to g ra n t a se c u rity in te re st a n d th a t signing th e in s tru m e n t does n o t im pose p e rso n a l liability. Paragraph 7(d)(5) 1. Qualifications o f additional parties. In es ta b lish in g guidelines fo r eligibility o f g u a ra n to rs, cosigners, o r sim ila r a d d itio n a l p a rtie s, a c re d ito r m a y re s tric t th e a p p lic a n t’s choice o f a d d itio n a l p a rtie s b u y m a y n o t d isc rim in a te § 202.8 R egulation B Com m entary on th e basis o f sex, m a rita l sta tu s o r a n y o th e r p ro h ib ite d basis. F o r exam ple, th e c re d ito r co u ld re q u ire th a t th e a d d itio n a l p a rty live in th e c re d ito r’s m a rk e t area. 2. Income o f another person. A n a p p lic a n t w ho re q u e sts in d iv id u a l c re d it rely in g on th e in co m e o f a n o th e r p erso n (s u c h as a sp o u se) m ay be re q u ire d to p ro v id e th e sig n a tu re o f th e o th e r p erso n to m a k e th e in co m e available to p ay th e d ebt. In c o m m u n ity p ro p e rty states, th e sig n a tu re m ay be re q u ire d if th e a p p lic a n t relies o n th e se p a ra te in co m e o f a n o th e r person, i.e., in co m e th a t as a m a tte r o f sta te law is n o t co m m u n ity p ro p e rty . 3. Renewals. I f th e b o rro w e r’s c re d itw o rth i ness is re e v a lu a te d w h en a c re d it o b lig atio n is renew ed, th e c re d ito r m u s t d e te rm in e w h e th e r a n a d d itio n a l p a rty is still w a rra n te d a n d , if n o t, release th e a d d itio n a l p a rty . Paragraph 7(d)(6) 1. Guarantees. A g u a ra n te e o n a n ex ten sio n o f c re d it is p a rt o f a c re d it tra n sa c tio n a n d th e re fo re su b ject to th e re g u latio n . T h e ru les in sectio n 2 0 2 .7 (d ) b a r a c re d ito r fro m re q u ir ing th e sig n a tu re o f a guarantor’s spouse ju s t as th e y b a r th e c re d ito r fro m re q u irin g th e sig n a tu re o f an applicant’s spouse. F o r exam ple, w h en all officers o f a closely h e ld c o rp o ra tio n a re re q u ire d to p e rso n ally g u a ra n te e a c o rp o ra te loan, th e c re d ito r m ay n o t a u to m a tic a lly re q u ire th a t spouses o f m a rrie d officers also sign. H o w ev er, a n ev a lu a tio n o f th e financial c irc u m sta n c e s o f an officer m a y in d ic a te th a t a n a d d itio n a l sig n a tu re is necessary, a n d th is m a y be th e sig n a tu re o f a spouse in a p p ro p ri a te circ u m sta n c e s. d e te rm in in g eligibility a n d p re m iu m ra te s for in su ra n c e , a n d n o t in m a k in g th e c re d it decision. SE C T IO N 202.8— Special-Purpose Credit Programs 8 (a ) Standards for Programs 1. Determining qualified programs. The B o a rd does n o t d e te rm in e w h e th e r in d iv id u a l p ro g ra m s qualify fo r sp e cial-p u rp o se c re d it sta tu s, o r w h e th e r a p a rtic u la r p ro g ra m b en e fits a n “ eco nom ically d isa d v a n ta g e d class o f p e rs o n s.” T h e agency o r c re d ito r a d m in is te r ing o r offering th e lo a n p ro g ra m m u s t m ak e th ese decisions re g a rd in g th e sta tu s o f its p ro g ra m . 2. Compliance with a program authorized by federal or state law. A c re d ito r does n o t vio la te R e g u la tio n B w h e n it com plies in good fa ith w ith a re g u la tio n p ro m u lg a te d by a gov e rn m e n t agency im p le m e n tin g a specialp u rp o s e c re d it p ro g ra m u n d e r section 2 0 2 .8 ( a ) ( 1 ) . I t is th e ag en cy ’s resp o n sib ility to p ro m u lg a te a re g u la tio n th a t is co n siste n t w ith fed eral a n d sta te law . 3. Expressly authorized. C re d it p ro g ra m s a u th o riz e d b y fed eral o r sta te law in c lu d e p ro g ra m s offered p u rs u a n t to federal, state, o r lo cal sta tu te , re g u la tio n o r o rd in a n c e , o r by ju d ic ia l o r a d m in is tra tiv e o rd e r. 4. Creditor liability. A refu sal to g ra n t c re d it to a n a p p lic a n t is n o t a v io la tio n o f th e a c t o r re g u la tio n if th e a p p lic a n t does n o t m e e t th e eligibility re q u ire m e n ts u n d e r a sp ecial-p u r pose c re d it p ro g ra m . 7 (e ) Insurance 8 (b ) Rules in Other Sections 1. Differences in terms. D ifferences in th e availability, ra te s, a n d o th e r te rm s o n w h ich c re d it-re la te d c a su a lty in su ra n c e o r c re d it life, h e a lth , a c cid en t, o r disability in su ra n c e is of fered o r p ro v id e d to an a p p lic a n t does n o t vio late R e g u la tio n B. 1. Applicability o f rules. A c re d ito r th a t re je c ts a n a p p lic a tio n b ecau se th e a p p lic a n t does n o t m e e t th e eligibility re q u ire m e n ts (c o m m o n c h a ra c te ristic o r financial need, fo r ex a m p le ) m u s t n e v erth eless n o tify th e a p p lic a n t o f a c tio n ta k e n as re q u ire d b y sectio n 202.9. 2. Insurance information. A c re d ito r m a y o b ta in in fo rm a tio n a b o u t an a p p lic a n t’s age, sex, o r m a rita l s ta tu s fo r in su ra n c e p u rp o ses. T h e in fo rm a tio n m a y o nly be used, how ever, fo r 8 (c ) Special Rule Concerning Requests and Use o f Information 1. Request o f prohibited information. T h is sec- 11 § 202.8 tio n p e rm its a c re d ito r to re q u e s t a n d c o n sid er c e rta in in fo rm a tio n th a t w o u ld o th e rw ise be p ro h ib ite d by sectio n s 202.5 a n d 202.6 to d e te rm in e a n a p p lic a n t’s eligibility fo r a p a rtic u la r p ro g ra m . 2. Examples. E xam ples o f p ro g ra m s u n d e r w h ic h th e c re d ito r can a sk fo r a n d co n sid e r in fo rm a tio n re la te d to a p ro h ib ite d basis a re — ° ° energy co n se rv a tio n p ro g ra m s to assist th e elderly, fo r w h ic h th e c re d ito r m u s t c o n sid e r th e a p p lic a n t’s age p ro g ra m s u n d e r a M in o rity E n te rp rise S m all B usiness In v e stm e n t C o rp o ra tio n , fo r w h ic h a c re d ito r m u s t co n sid e r th e a p p lic a n t’s m in o rity statu s 8 (d ) Special Rule in the Case of Financial Need 1. Request o f prohibited information. T h is sec tio n p e rm its a c re d ito r to re q u e s t a n d co n sid e r c e rta in in fo rm a tio n th a t w o u ld o th erw ise be p ro h ib ite d by sections 202.5 a n d 202.6, a n d to re q u ire sig n a tu re s th a t w o u ld o th erw ise be p ro h ib ite d by section 2 0 2 .7 (d ). 2. Examples. E xam ples o f p ro g ra m s in w h ic h financial n eed is a c rite rio n a re — ° o su b sid ized h o u sin g p ro g ra m s fo r low - to m o d e ra te -in c o m e hou seh o ld s, fo r w h ic h a c re d ito r m a y h av e to co n sid e r th e a p p li c a n t’s re c e ip t o f alim ony o r ch ild su p p o rt, th e sp o u se ’s o r p a re n ts’ incom e, etc. s tu d e n t lo a n p ro g ra m s b a se d o n th e fa m i ly ’s financial need, fo r w h ich a c re d ito r m a y h av e to c o n sid er th e sp o u se’s o r p a r e n ts ’ financial resources 3. Student loans. In a g u a ra n te e d stu d e n t lo an p ro g ra m , a c re d ito r m ay o b ta in th e sig n a tu re o f a p a re n t as a g u a ra n to r w h en re q u ire d by fed eral o r sta te law o r agency reg u la tio n , o r w h en th e stu d e n t does n o t m e e t th e c re d ito r’s s ta n d a rd s o f cre d itw o rth in e ss. (See sections 2 0 2 .7 ( d ) ( 1 ) a n d ( 5 ) .) T h e c re d ito r m ay n o t re q u ire an a d d itio n a l sig n a tu re w h en a s tu d e n t h a s a w o rk o r c re d it h is to ry th a t satisfies th e c re d ito r’s sta n d a rd s. SE C T IO N 202.9— Notifications 1. Use o f the term “adverse action. ” T h e regu- 12 R egulation B C om m entary la tio n does n o t re q u ire th a t a c re d ito r use th e te rm “ ad v erse a c tio n ” in c o m m u n ic a tin g to a n a p p lic a n t th a t a re q u e st fo r a n ex ten sio n o f c re d it h a s n o t b een ap p ro v ed . In n o tify in g an a p p lic a n t o f ad v erse a c tio n as defined b y sec tio n 2 0 2 .2 ( c ) ( 1 ) , a c re d ito r m a y use an y w o rd s o r p h ra se s th a t describ e th e a c tio n ta k en on th e a p p licatio n . 2. Expressly withdrawn applications. W h e n a n a p p lic a n t expressly w ith d ra w s a c re d it a p p li catio n , th e c re d ito r is n o t re q u ire d to co m p ly w ith th e n o tificatio n re q u ire m e n ts u n d e r sec tio n 202.9. (T h e c re d ito r m u st, how ever, c o m ply w ith th e re c o rd -re te n tio n re q u ire m e n ts o f th e re g u la tio n . See sectio n 2 0 2 .1 2 ( b ) ( 3 ) .) 3. When notification occurs. N o tific a tio n o c c u rs w h e n a c re d ito r delivers o r m ails a n o tic e to th e a p p lic a n t’s la st k n o w n a d d re ss o r, in th e case o f a n o ra l n o tificatio n , w h en th e c re d ito r c o m m u n ic a te s th e c re d it decisio n to th e a p p lic a n t. 4. Location o f notice. T h e n o tificatio n s re q u ire d u n d e r sectio n 202.9 m a y a p p e a r o n ei th e r o r b o th sides o f a fo rm o r letter. 9 (a ) Notification of Action Taken, EC O A Notice, and Statement o f Specific Reasons Paragraph 9(a)(1) 1. Timing o f notice— when an application is complete. O n ce a c re d ito r h a s o b ta in e d all th e in fo rm a tio n it n o rm a lly co n sid ers in m a k in g a c re d it decision, th e a p p lic a tio n is c o m p lete a n d th e c re d ito r h a s 30 d ay s in w h ic h to n o ti fy th e a p p lic a n t o f th e c re d it decision. (See also c o m m e n t 2 ( f ) -5.) 2. Notification o f approval. N o tific a tio n o f a p p ro v a l m a y be express o r by im p licatio n . F o r exam ple, th e c re d ito r w ill satisfy th e no tifica tio n re q u ire m e n t w h en it gives th e a p p lic a n t th e c re d it c a rd , m oney, p ro p e rty , o r services req u ested . 3. Incomplete application— denial for reasons other than incompleteness. W h e n a n a p p lic a tio n is m issin g in fo rm a tio n b u t p ro v id es suffi cie n t d a ta fo r a c re d it decision, th e c re d ito r m ay ev alu a te th e a p p lic a tio n a n d n o tify th e R egulation B Com m entary a p p lic a n t u n d e r th is sectio n as a p p ro p ria te . I f c re d it is d enied, th e a p p lic a n t m u s t be given th e specific reaso n s fo r th e c re d it d en ial (o r n o tic e o f th e rig h t to receive th e re a s o n s); in th is in sta n c e th e in co m p leten ess o f th e a p p li c a tio n c a n n o t be given as th e reaso n fo r th e denial. 4. Length o f counteroffer. S ection 2 0 2 .9 (a ) ( l ) ( i v ) does n o t re q u ire a c re d ito r to h o ld a cou n tero ffer op en fo r 90 d ay s o r an y o th e r p a rtic u la r le n g th o f tim e. 5. Counteroffer combined with adverse-action notice. A c re d ito r th a t gives th e a p p lic a n t a com b in ed co u n tero ffer a n d ad v e rse -a c tio n n o tice th a t com plies w ith section 2 0 2 .9 ( a ) ( 2 ) n eed n o t send a seco n d a d v erse-actio n n o tice if th e a p p lic a n t does n o t a c cep t th e c o u n te ro f fer. A sam ple o f a c o m b in ed n o tic e is c o n ta in e d in fo rm C -4 o f a p p en d ix C to th e reg u latio n . 6. Denial o f a telephone application. W h e n an a p p lic a tio n is conveyed by m ean s o f telep h o n e a n d adverse a c tio n is tak en , th e c re d ito r m u s t re q u e st th e a p p lic a n t’s n am e a n d a d d re ss in o rd e r to p ro v id e w ritte n n o tificatio n u n d e r th is section. I f th e a p p lic a n t declines to p ro vide th a t in fo rm a tio n , th e n th e c re d ito r h a s n o fu rth e r no tificatio n resp onsibility. 9 (b ) Form o f ECO A Notice and Statement o f Specific Reasons Paragraph 9(b)(1) 1. Substantially similar notice. T h e E C O A n o tic e sen t w ith a n o tificatio n o f a c re d it d e n i al o r o th e r a d v erse ac tio n w ill co m p ly w ith th e re g u la tio n if it is “ su b sta n tia lly sim ila r” to th e n o tic e c o n ta in e d in section 2 0 2 .9 ( b ) ( 1 ) . F o r exam ple, a c re d ito r m ay a d d a reference to th e fa c t th a t th e E C O A p e rm its age to be c o n sid e re d in c e rta in c re d it sco rin g system s, o r a d d a referen ce to a sim ilar sta te s ta tu te o r re g u la tio n a n d to a sta te en fo rc e m e n t agency. Paragraph 9(b)(2) 1. Number o f specific reasons. A c re d ito r m u s t disclose th e p rin c ip a l reaso n s fo r d en y in g an a p p lic a tio n o r ta k in g o th e r adv erse actio n . § 202.9 T h e re g u la tio n does n o t m a n d a te th a t a specif ic n u m b e r o f reaso n s be disclosed, b u t d isclo su re o f m o re th a n fo u r reaso n s is n o t likely to be help fu l to th e ap p lic a n t. 2. Source o f specific reasons. T h e specific re a sons disclosed u n d e r sectio n 2 0 2 .9 ( a ) ( 2 ) a n d ( b ) ( 2 ) m u s t re la te to a n d a c c u ra te ly describ e th e fa c to rs ac tu a lly co n sid e re d o r sco red b y a c red ito r. 3. Description o f reasons. A c re d ito r n eed n o t describ e h o w o r w hy a fa c to r ad v ersely affect ed a n ap p lic a n t. F o r exam ple, th e n o tice m ay say “ le n g th o f re sid e n c e ” ra th e r th a n “ to o s h o rt a p e rio d o f resid en ce.” 4. Credit scoring system. I f a c re d ito r bases th e d e n ial o r o th e r a d v erse a c tio n on a c re d it sc o rin g system , th e reaso n s d isclosed m u s t re la te only to th o se fa c to rs a c tu a lly sco red in th e system . M o reo v er, n o fa c to r th a t w as a p rin c ip a l re a so n fo r a d v erse a c tio n m a y be ex c lu d e d fro m d isclosure. T h e c re d ito r m u st disclose th e a c tu a l re a so n s fo r d e n ia l (fo r ex am ple, “ age o f a u to m o b ile ” ) even if th e re la tio n sh ip o f th a t fa c to r to p re d ic tin g c re d itw o r th in e ss m a y n o t be c le a r to th e ap p lic a n t. 5. Credit scoring—method fo r selecting rea sons. T h e re g u la tio n does n o t re q u ire th a t an y o n e m e th o d be u sed fo r selecting reaso n s fo r a c re d it d e n ial o r o th e r a d v erse a c tio n th a t is based o n a c re d it sco rin g system . V arious m e th o d s w ill m e e t th e re q u ire m e n ts o f th e reg u la tio n . O ne m e th o d is to id en tify th e fac to rs fo r w h ich th e a p p lic a n t’s score fell fu r th e s t below th e av erag e sco re fo r e ach o f th o se fa c to rs achieved by a p p lic a n ts w hose to ta l score w as a t o r slig h tly above th e m in im u m passin g score. A n o th e r m e th o d is to identify th e fa c to rs fo r w h ic h th e a p p lic a n t’s score fell fu rth e s t below th e av erag e score fo r each o f th o se fa c to rs achieved by all ap p lican ts. T hese av erage scores c o u ld be c a lc u la te d d u rin g th e d ev elo p m en t o r use o f th e system . A n y o th e r m e th o d th a t p ro d u c e s re su lts su b sta n tia lly sim ilar to e ith e r o f th e se m e th o d s is also a c cep ta b le u n d e r th e reg u latio n . 6. Judgmental system. I f a c re d ito r uses a ju d g m e n ta l system , th e re a so n s fo r th e den ial o r o th e r ad v erse ac tio n m u s t re la te to th o se 13 § 202.9 fa c to rs in th e a p p lic a n t’s re c o rd a c tu a lly re view ed by th e p e rso n m a k in g th e decision. 7. Combined credit scoring and judgmental system. I f a c re d ito r denies a n a p p lic a tio n b a se d o n a c re d it e v alu a tio n sy stem th a t em plo y s b o th c re d it sco rin g a n d ju d g m e n ta l c o m p o n e n ts, th e reaso n s fo r th e d e n ia l m u s t co m e fro m th e co m p o n e n t o f th e system th a t th e a p p lic a n t failed. F o r exam ple, if a c re d ito r in itia lly c re d it scores an a p p lic a tio n a n d d e nies th e c re d it re q u e st as a re s u lt o f th a t sc o r ing, th e reaso n s disclosed to th e a p p lic a n t m u s t re la te to th e facto rs sco red in th e system . I f th e a p p lic a tio n passes th e c re d it sco rin g stage b u t th e c re d ito r th e n denies th e c re d it re q u e st b a se d on a ju d g m e n ta l assessm en t o f th e a p p lic a n t’s re c o rd , th e re a so n s disclosed m u s t re la te to th e facto rs review ed ju d g m e n tally , even if th e facto rs w ere also c o n sid ered in th e c re d it sco rin g c o m p o n en t. 8. Automatic denial. Som e c re d it-d ecisio n m e th o d s c o n ta in featu res th a t call fo r a u to m a tic d e n ial b ecause o f one o r m o re n egative fa c to rs in th e a p p lic a n t’s re c o rd (s u c h as th e a p p lic a n t’s p rev io u s b a d c re d it h is to ry w ith th a t c re d ito r, th e a p p lic a n t’s d e c la ra tio n o f b a n k ru p tc y , o r th e fact th a t th e a p p lic a n t is a m in o r). W h e n a c re d ito r denies th e c re d it re q u e st becau se o f an a u to m a tic -d e n ia l facto r, th e c re d ito r m u s t disclose th a t specific facto r. 9. Combined ECOA-FCRA disclosures. T h e E C O A req u ires d isclosure o f th e p rin c ip a l re a so n s fo r den y in g o r ta k in g o th e r ad v erse a c tio n o n a n ap p lic a tio n fo r a n ex ten sio n o f c re d it. T h e F a ir C re d it R e p o rtin g A c t re q u ire s a c re d ito r to disclose w h en it h a s based its d ecision in w h o le o r in p a rt o n in fo rm a tio n fro m a so u rce o th e r th a n th e a p p lic a n t o r fro m its ow n files. D isclosing th a t a c re d it re p o rt w as o b ta in e d a n d u sed to d en y th e a p p li ca tio n , as th e F C R A requires, does n o t satisfy th e E C O A re q u ire m e n t to disclose specific reasons. F o r exam ple, if th e a p p lic a n t’s c re d it h is to ry reveals d elin q u e n t c re d it ob lig atio n s a n d th e a p p lic a tio n is den ied fo r th a t reason, to satisfy sectio n 2 0 2 .9 ( b ) ( 2 ) th e c re d ito r m u s t disclose th a t th e a p p lic a tio n w as d en ied b ecau se o f th e a p p lic a n t’s d e lin q u e n t c re d it obligations. T o satisfy th e F C R A re q u ire m e n t, th e c re d ito r m u s t also disclose th a t a 14 R egulation B C om m entary c re d it re p o rt w as o b ta in e d a n d u sed to den y c red it. S am p le fo rm s C -l th ro u g h C-5 o f a p p e n d ix C o f th e re g u la tio n p ro v id e fo r th e tw o disclosures. 9 ( c ) Incomplete Applications Paragraph 9(c)(2) 1. Reapplication. I f in fo rm a tio n re q u e ste d by a c re d ito r is su b m itte d b y a n a p p lic a n t a fte r th e ex p ira tio n o f th e tim e p e rio d d e sig n a te d by th e c re d ito r, th e c re d ito r m a y re q u ire th e a p p lic a n t to m a k e a n ew ap p licatio n . Paragraph 9(c)(3) 1. Oral inquiries for additional information. I f th e a p p lic a n t fails to p ro v id e th e in fo rm a tio n in re sp o n se to a n o ra l req u est, a c re d ito r m u s t send a w ritte n n o tic e to th e a p p lic a n t w ith in th e 3 0-day p e rio d specified in sectio n 2 0 2 .9 (c ) (1 ) a n d (c ) (2 ) . I f th e a p p lic a n t does p ro v id e th e in fo rm a tio n , th e c re d ito r sh all ta k e a c tio n on th e a p p lic a tio n a n d n o tify th e a p p lic a n t in a c c o rd a n c e w ith sectio n 2 0 2 .9 (a ). 9 (g ) Applications Submitted Through a Third Party 1. Third parties. T h e n o tificatio n o f ad v erse a c tio n m a y b e given b y o n e o f th e c re d ito rs to w h o m a n a p p lic a tio n w as su b m itte d . A lte rn a tively, th e th ird p a rty m a y be a n o n c re d ito r. 2. Third-party notice— enforcement agency. I f a single a d v erse a c tio n n o tic e is bein g p ro v id ed to a n a p p lic a n t o n b e h a lf o f several c re d i to rs a n d th e y a re u n d e r th e ju risd ic tio n o f d iffe re n t fed eral e n fo rc e m e n t agencies, th e n o tice n eed n o t n a m e each agency; d isc lo su re o f an y one o f th e m w ill suffice. 3. Third-party notice— liability. W h e n a n o tice is to be p ro v id e d th ro u g h a th ird p a rty , a c re d ito r is n o t liable fo r a n a c t o r om issio n o f th e th ird p a rty th a t c o n stitu te s a v io la tio n o f th e re g u la tio n if th e c re d ito r a c c u ra te ly a n d in a tim ely m a n n e r p ro v id e d th e th ird p a rty w ith th e in fo rm a tio n n ecessary fo r th e n o tificatio n a n d m a in ta in s re a so n a b le p ro c e d u re s a d a p te d to p re v e n t su c h violations. § 2 0 2 .1 2 R egulation B Com m entary SE C T IO N 202.10— Furnishing o f Credit Information 1. Scope. T h e re q u ire m e n ts o f section 202.10 fo r d esig n atin g a n d re p o rtin g c re d it in fo rm a tio n ap p ly o n ly to c re d ito rs th a t fu rn ish c re d it in fo rm a tio n to c re d it b u re a u s o r to o th e r c re d ito rs. T h e re is n o re q u ire m e n t th a t a c re d ito r fu rn ish c re d it in fo rm a tio n o n its acco u n ts. 2. Reporting on all accounts. T h e re q u ire m e n ts o f sectio n 202.10 ap p ly only to a c c o u n ts h e ld o r u sed by spouses. H ow ever, a c re d ito r h a s th e o p tio n to d esig n ate all jo in t ac c o u n ts (o r all ac c o u n ts w ith a n a u th o riz e d u se r) to reflect th e p a rtic ip a tio n o f b o th p a r ties, w h e th e r o r n o t th e a c c o u n ts a re h e ld by perso n s m a rrie d to each o th e r. 3. Designating accounts. In d esig n atin g a c c o u n ts a n d re p o rtin g c re d it in fo rm a tio n , a c re d ito r n eed n o t d istin g u ish b etw een a c c o u n ts on w h ic h th e spouse is a n a u th o riz e d u se r a n d a c c o u n ts on w h ich th e spouse is a c o n tra c tu a lly liable p a rty . 4. File and index systems. T h e re g u la tio n does n o t re q u ire th e c re a tio n o r m a in te n a n c e o f se p a ra te files in th e n a m e o f e ach p a rtic ip a n t on a jo in t o r u se r acco u n t, o r re q u ire a n y o th er p a rtic u la r sy stem o f rec o rd k e e p in g o r in dexing. I t req u ires only th a t a c re d ito r be able to re p o rt in fo rm a tio n in th e n a m e o f e ach spouse o n a c c o u n ts co v ered by sectio n 202.10. T h u s, if a c re d ito r receives a c re d it in q u iry a b o u t th e wife, it sh o u ld be able to lo c a te h e r c re d it file w ith o u t asking th e h u s b a n d ’s nam e. 10(a) Designation of Accounts 1. New parties. W h e n new p a rtie s w h o are spouses u n d e rta k e a legal o b lig atio n on a n a c co u n t, as in th e case o f a m o rtg a g e -lo a n a ssu m p tio n , th e c re d ito r sh o u ld ch an g e th e d esig n atio n o n th e a c c o u n t to reflect th e new p a rtie s a n d sh o u ld fu rn ish su b seq u en t c re d it in fo rm a tio n o n th e a c c o u n t in th e new nam es. SE C T IO N 202.12— Record Retention 1 2 (a ) Retention o f Prohibited Information 1. Receipt o f prohibited information. U nless th e c re d ito r specifically re q u e ste d su c h in fo r m a tio n , a c re d ito r does n o t v io late th is sectio n w h en it receives p ro h ib ite d in fo rm a tio n fro m a c o n su m e r re p o rtin g agency. 2. Use o f retained information. A lth o u g h a c re d ito r m a y k eep in its files p ro h ib ite d in fo r m a tio n as p ro v id e d in se ctio n 2 0 2 .1 2 (a ), th e c re d ito r m a y u se th e in fo rm a tio n in e v a lu a t ing c re d it a p p lic a tio n s o n ly if p e rm itte d to do so by sectio n 202.6. 1 2(b ) Preservation o f Records 1. Copies. A copy o f th e o rig in a l re c o rd in c lu d es c a rb o n copies, p h o to co p ies, m icrofilm o r m icrofiche copies, o r copies p ro d u c e d by an y o th e r a c c u ra te re trie v a l system , su c h as d o c u m e n ts sto re d and re p ro d u c e d by c o m p u te r. 2. Computerized decisions. A c re d ito r th a t e n te rs in fo rm a tio n ite m s fro m a w ritte n a p p li c a tio n in to a c o m p u te riz e d o r m e c h a n iz e d sys te m a n d m ak es th e c re d it decision m e c h a n i cally, based o n ly o n th e item s o f in fo rm a tio n e n te re d in to th e sy stem , m a y c o m p ly w ith sec tio n 2 0 2 .1 2 (b ) b y re ta in in g th e in fo rm a tio n a c tu a lly en tered . I t is n o t re q u ire d to sto re th e co m p le te w ritte n a p p lic a tio n , n o r is it re q u ire d to e n te r th e re m a in in g item s o f in fo r m a tio n in to th e system . I f th e tra n sa c tio n is su b ject to sectio n 202.13, how ever, th e c re d i to r is re q u ire d to e n te r a n d re ta in th e d a ta on p e rso n a l c h a ra c te ristic s in o rd e r to com ply w ith th e re q u ire m e n ts o f th a t section. Paragraph 12(b)(3) 2. Request to change designation o f account. A re q u e st to c h a n g e th e m a n n e r in w h ich in fo rm a tio n c o n c e rn in g an a c c o u n t is fu rn ish e d 1. Withdrawn and brokered applications. In m o s t cases, th e 2 5 -m o n th re te n tio n p e rio d fo r a p p lic a tio n s ru n s fro m th e d a te a n o tificatio n is se n t to th e a p p lic a n t g ra n tin g o r den y in g th e c re d it req u ested . In c e rta in tra n sa c tio n s, a does n o t a lte r th e legal liab ility o f e ith e r sp o u se u p o n th e a c c o u n t a n d does n o t re q u ire a c re d ito r to c h a n g e th e n a m e in w h ic h th e a c c o u n t is m ain tain ed . c re d ito r is n o t o b lig ated to p ro v id e a n o tic e o f th e a c tio n tak en . (See, fo r exam ple, c o m m e n t 9 -2.) In su c h cases, th e 25-m o n th re q u ire m e n t ru n s fro m th e d a te o f ap p lic a tio n , as w h en — 15 § 2 0 2 .1 2 ° ° an a p p lic a tio n is w ith d ra w n by th e a p p lic a n t an a p p lic a tio n is su b m itte d to m o re th a n one c re d ito r o n b e h a lf o f th e ap p lic a n t, a n d th e a p p lic a tio n is a p p ro v e d by one o f th e o th e r c re d ito rs SE C T IO N 202.13— Information for M onitoring Purposes 1 3 (a ) Information to Be Requested 1. Natural person. Section 202.13 ap p lies only to a p p lic a tio n s fro m n a tu ra l p ersons. 2. Principal residence. T h e re q u ire m e n ts o f se c tio n 202.13 ap p ly o n ly if a n a p p lic a tio n re lates to a dw elling th a t is o r w ill be occu p ie d b y th e a p p lic a n t as th e p rin c ip a l residence. A c re d it a p p lic a tio n re la te d to a v a c a tio n h o m e o r a re n ta l u n it is n o t covered. In th e case o f a tw o - to fo u r-u n it dw elling, th e a p p lic a tio n is co v ered if th e a p p lic a n t in te n d s to o ccu p y one o f th e u n its as a p rin c ip a l residence. 3. Temporary financing. A n a p p lic a tio n fo r te m p o ra ry financing to c o n s tru c t a dw elling is n o t su b ject to sectio n 202.13. B u t a n a p p lic a tio n fo r b o th a te m p o ra ry lo a n to finance c o n s tru c tio n o f a dw elling a n d a p e rm a n e n t m o r t gage lo a n to ta k e effect u p o n th e co m p le tio n o f c o n stru c tio n is su b ject to sectio n 202.13. 4. New principal residence. A p e rso n ca n h av e o n ly o n e p rin c ip a l residence a t a tim e. H o w ev er, if a p e rso n bu y s o r b u ild s a new dw elling th a t w ill b eco m e th a t p e rso n ’s p rin c ip a l re si d en ce w ith in a y e a r o r u p o n c o m p le tio n o f c o n stru c tio n , th e new dw elling is c o n sid ered th e p rin c ip a l resid en ce for p u rp o se s o f section 202.13. 5. Refinancings. A c re d ito r w h o receives an ap p lic a tio n to c h an g e th e te rm s a n d c o n d i tio n s o f an existing extension o f c re d it m a d e by th a t c re d ito r fo r th e p u rc h a se o f th e a p p li c a n t’s dw elling m a y re q u e st th e m o n ito rin g in fo rm a tio n ag ain b u t is n o t re q u ire d to d o so if it w as o b ta in e d in th e e a rlie r tra n sa c tio n . 1 3 (b ) Obtaining o f Information 1. Forms for collecting data. A c re d ito r m ay c o llect th e in fo rm a tio n specified in section 16 R egulation B Com m entary 2 0 2 .1 3 (a ) e ith e r o n a n a p p lic a tio n fo rm o r on a se p a ra te fo rm re fe rrin g to th e a p p licatio n . 2. Written applications. T h e re g u la tio n re q uires w ritte n a p p lic a tio n s fo r th e ty p es o f c re d it co v ered by sectio n 202.13. A c re d ito r ca n satisfy th is re q u ire m e n t by re c o rd in g in w ritin g o r by m ean s o f c o m p u te r th e in fo rm a tio n th a t th e a p p lic a n t p ro v id es o ra lly a n d th a t th e c re d ito r n o rm a lly co n sid ers in a c re d it decision. 3. Telephone, mail applications. I f an a p p li c a n t d oes n o t ap p ly in p e rso n fo r th e c re d it re q u e ste d , a c re d ito r does n o t h av e to c o m p lete th e m o n ito rin g in fo rm a tio n . For exam ple: ° • W h e n a c re d ito r accep ts a n a p p lic a tio n by telep h o n e, it does n o t h av e to re q u e s t th e m o n ito rin g in fo rm a tio n . W h e n a c re d ito r a ccep ts an a p p lic a tio n by m ail, it d o es n o t h av e to m a k e a sp ecial re q u e st to th e a p p lic a n t if th e a p p lic a n t fails to co m p le te th e m o n ito rin g in fo rm a tio n o n th e a p p lic a tio n fo rm se n t to th e c re d ito r. I f it is n o t ev id e n t o n th e face o f th e a p p lic a tio n th a t it w as received by m a il o r te lep h o n e, th e c re d ito r sh o u ld in d ic a te o n th e fo rm o r o th e r a p p lic a tio n re c o rd h o w th e a p p lic a tio n w as received. 4. Applications through loan-shopping services. W h e n a c re d ito r accep ts a n a p p lic a tio n th ro u g h a n unaffiliated lo a n -sh o p p in g service, it does n o t h av e to re q u e st th e m o n ito rin g in fo rm a tio n . 5. Inadvertent notation. I f a c re d ito r in a d v e r te n tly o b ta in s th e m o n ito rin g in fo rm a tio n in a d w ellin g -re lated tra n sa c tio n n o t co v ered by se ctio n 202.13, th e c re d ito r m a y p ro cess a n d re ta in th e a p p lic a tio n w ith o u t v io latin g th e reg u la tio n . 1 3 (c) Disclosure to A pplicant(s) 1. Procedures for providing disclosures. T h e disclo su res to a n a p p lic a n t re g a rd in g th e m o n ito rin g in fo rm a tio n m a y be p ro v id e d in w rit ing. A p p e n d ix B c o n ta in s a sam p le disclosure. A c re d ito r m a y devise its ow n d isclo su re so long as it is su b sta n tia lly sim ilar. T h e c re d ito r R egulation B Com m entary need n o t o ra lly re q u e st th e a p p lic a n t to p ro vide th e m o n ito rin g in fo rm a tio n if it is re q u e ste d in w ritin g . A ppendix B th is sectio n re q u ire s th a t th e y be c o rre c te d p ro sp ectiv e ly only. 13(d ) Substitute Monitoring Program 1. Substitute program. A n en fo rcem en t ag en cy m a y a d o p t, u n d e r its estab lish ed ru le m a k ing o r en fo rc e m e n t p ro ced u res, a p ro g ra m re q u irin g c re d ito rs u n d e r its ju risd ic tio n to collect in fo rm a tio n in a d d itio n to th a t re q u ire d by th is section. SE C T IO N 202.14— Enforcement, Penalties, and Liabilities A P P E N D IX B — Model Application Form s 1. FHLMC/FNMA form— residential loan application. T h e re sid e n tia l lo a n a p p lic a tio n fo rm (F H L M C 6 5 /F N M A 1003) a n d su p p le m e n ta l fo rm (F H L M C 6 5 A /F N M A 1003A ) p re p a re d by th e F e d e ra l H o m e L o a n M o rt gage C o rp o ra tio n a n d th e F e d e ra l N a tio n a l M o rtg a g e A sso c ia tio n c o m p ly w ith th e re q u ire m e n ts o f th is reg u la tio n . 1 4 (c) Failure o f Compliance 1. Inadvertent errors. In a d v e rte n t e rro rs in clude, b u t a re n o t lim ited to, c lerical m istake, c a lc u la tio n e rro r, c o m p u te r m a lfu n c tio n , a n d p rin tin g e rro r. A n e rro r o f legal ju d g m e n t is n o t an in a d v e rte n t e rro r u n d e r th e re g u latio n . 2. Correction o f error. F o r in a d v e rte n t e rro rs th a t o c c u r u n d e r sections 202.12 a n d 202.13, 2. FHLMC/FNMA form — home-improve ment loan application. T h e h o m e -im p ro v e m e n t a n d energy lo a n a p p lic a tio n fo rm (F H L M C F o rm 7 0 3 /F N M A F o rm 1012) p re p a re d by th e F e d e ra l H o m e L o a n M o rt gage C o rp o ra tio n a n d th e F e d e ra l N a tio n a l M o rtg a g e A sso c ia tio n co m p ly w ith th e re q u ire m e n ts o f th is reg u la tio n . 17
@FedFRASER