CFMP Regulation & Compliance Memory Tricks for Fair Lending and Advertising

Notes

UDAAP

Unfair, Deceptive, Abusive Advertising & Promotions; protects consumers from misleading marketing practices.

UDAAP Memory Trick

"Unclear, Deceptive Ads Are Prohibited"

UDAAP Application

Applies when advertisements could mislead consumers, such as teaser rates or unclear offers.

UDAAP Key Question

Is the message fair and clear?

UDAAP Historical Context

Established under the Dodd-Frank Act of 2010 to enhance consumer protection.

UDAAP Example

A bank advertising a loan with hidden fees violates UDAAP.

ECOA

Equal Credit Opportunity Act; ensures fair lending practices for all individuals.

ECOA Memory Trick

"Everyone Can Obtain Approval (fairly)"

ECOA Application

Applies when marketing or lending practices discriminate against protected groups.

ECOA Key Question

Is anyone left out or treated differently?

ECOA Historical Context

Enacted in 1974; prohibits discrimination based on race, color, religion, national origin, sex, marital status, or age.

ECOA Example

Denying a loan based on an applicant’s race violates ECOA.

CRA

Community Reinvestment Act; encourages banks to meet credit needs of all communities, especially LMI areas.

CRA Memory Trick

"Care Reaches All communities"

CRA Application

Applies when loans or investments are directed toward underserved neighborhoods.

CRA Key Question

Does this help underserved neighborhoods?

CRA Historical Context

Enacted in 1977 to combat redlining and promote equitable access to credit.

CRA Example

Investing in affordable housing in LMI areas demonstrates CRA compliance.

Reg Z

Truth in Lending Act; requires clear disclosure of credit terms.

Reg Z Memory Trick

"Z for Zero Hidden Terms"

Reg Z Application

Applies when advertisements include credit terms like APR or payment amounts.

Reg Z Key Question

Are specific rates or terms shown?

Reg Z Historical Context

Established in 1968 to promote informed consumer decision-making.

Reg Z Example

Clearly disclosing APR and total loan cost complies with Reg Z.

TRID

TILA-RESPA Integrated Disclosure; combines TILA and RESPA for mortgage disclosures.

TRID Memory Trick

"Tell Real Info at Disclosure"

TRID Application

Applies when providing Loan Estimates or Closing Disclosures.

TRID Key Question

Are we at the loan closing stage?

TRID Historical Context

Implemented in 2015 to simplify mortgage disclosures.

TRID Example

Providing clear Loan Estimates and Closing Disclosures complies with TRID.

Reg DD

Truth in Savings Act; requires clear information about deposit accounts.

Reg DD Memory Trick

"Deposit Disclosure"

Reg DD Application

Applies when advertising deposit accounts including APY, fees, or minimum balances.

Reg DD Key Question

Are we promoting a deposit product?

Reg DD Historical Context

Enacted in 1991 to promote informed consumer savings decisions.

Reg DD Example

Clearly advertising APY and fees complies with Reg DD.

Fair Lending Definition

Focuses on who is offered credit and ensures equal access to financial products.

UDAAP Definition Focus

Focuses on what is communicated in advertising to ensure messages are not misleading.

Fair Lending vs UDAAP Trick

Fair Lending = Who you offer to; UDAAP = What you say

Fair Lending Application

Evaluated through eligibility and targeting practices.

UDAAP Application Focus

Evaluated through advertising and promotional content.

UDAAP Short Answer

Ensures fairness by prohibiting misleading or deceptive advertising and requiring clear, accurate messaging.

ECOA Short Answer

Prevents discrimination against protected groups, promoting equitable access to credit.

CRA Short Answer

Encourages investment in underserved communities to promote economic development.

Reg Z Short Answer

Enhances transparency by requiring clear disclosure of credit terms like APR.

TRID Short Answer

Improves consumer understanding by mandating clear loan estimates and closing disclosures.

Fair Lending vs UDAAP Summary

Fair Lending governs access to credit; UDAAP governs clarity and fairness of marketing messages.