Earlier this week, the U.S. Court of Appeals for the Second Circuit issued a decision that “sexual orientation” is likely to be relied upon under the prohibited basis of “sex” in ECOA. The article from Ballard & Spahr is a worthwhile read and we have linked it below. While they predict no immediate action at the Federal level through the CFPB, they do warn lenders of the State level issues.
It has been my experience that many lenders do not understand that there are Federal laws regarding discrimination, and State laws as well. In the larger population states such as California, New York, Illinois, Florida along with many others, the state defines additional protected classes outside of ECOA. Make sure that you understand the fair lending protections in each state that you originate, and have them written into your fair lending policy along with the Federal regulations. Both are important to have during an exam.
