"Under the new language, the CFPB explicitly states that ECOA does not recognize the effects test. But creditors remain liable for intentional discrimination, including the use of facially neutral policies as a pretext for discriminatory practices."
"Lenders are prohibited from making any oral, written or visual statement that would lead a reasonable person to believe their credit application would be denied or granted on less favorable terms due to a prohibited characteristic."
"For-profit organizations can no longer use race, color, national origin or sex to determine eligibility. If an organization uses characteristics such as religion, age or income, it must provide per-participant evidence proving that the borrower would not have received credit without the program."
"The Bureau believes that the amendment to the provisions related to disparate impact and discouragement are largely deregulatory in nature and therefore are expected to reduce burden for the covered persons."
In 2020, the bureau requested information on ECOA and proposed new rules in November 2025, receiving about 64,500 comments. The CFPB clarifies that ECOA does not recognize the effects test, but creditors are still liable for intentional discrimination. Lenders must avoid statements that could mislead consumers about credit application outcomes based on prohibited characteristics. For-profit organizations face new eligibility criteria, requiring evidence that borrowers would not receive credit without specific programs. The rule is expected to reduce regulatory burdens for covered entities and will affect numerous depository and nondepository institutions.
Read at www.housingwire.com
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