Texas Real Estate Brokerage Sales Apprentice Education (SAE) Practice Exam

Which act makes it illegal for a lender to discriminate against borrowers?

1. Equal Opportunity Act

2. Equal Credit Opportunity Act

3. Fair Housing Act

4. Consumer Credit Protection Act

The correct answer is: Equal Credit Opportunity Act

The Equal Credit Opportunity Act (ECOA) is the legislation that specifically prohibits lenders from discriminating against borrowers based on certain protected characteristics, such as race, color, religion, national origin, sex, marital status, age, or receipt of public assistance. This act ensures that all individuals have fair access to credit and seeks to prevent discrimination in lending practices. The ECOA mandates that lenders must evaluate borrowers solely on their creditworthiness and ability to repay a loan, rather than on demographic factors or personal attributes unrelated to their financial status. This is crucial for promoting equality in the lending process and fostering an inclusive economy. While the Fair Housing Act also addresses discrimination, it primarily focuses on housing-related discrimination in the sale or rental of housing and does not specifically pertain to credit. The Equal Opportunity Act is often confused with ECOA but is not specifically targeted at lending discrimination. The Consumer Credit Protection Act focuses primarily on the disclosure of credit terms and protecting consumers from unfair lending practices, but it does not specifically address discrimination. Thus, ECOA is the correct answer as it directly tackles the issue of discrimination by lenders against potential borrowers.