Credit Discrimination Laws

The civil rights movement has also had an impact on the granting of consumer loans in recent years. Among the most important new civil rights laws involving consumer credit are the Equal Credit Opportunity Act of 1974 and its amendments in 1976, the Fair Housing Act of 1968, the Home Mortgage Disclosure Act of 1975, and the Community Reinvestment Act of 1977. the fundamental purposes of these laws is to outlaw discrimination in the grating of credit due to the age, color, marital status, national origin, race, religious affiliation , or sex of the borrower. They are motivated by growing public support for fair and equal treatment in both public and private transactions and a greater measure of social responsibility in the allocation of credit. These new laws represent a major shift of focus in the regulation of the financial marketplace. Heretofore, the laws and regulations governing the behavior of lenders have stressed safety and the making of sound loans. Today, however, the lender must be able to justify in terms of fairness and objectivity, not only the loans that are made, but also those that are not made.