Equal Credit Opportunity Act (ECOA) 2012

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Purpose The Federal Government requires financial institutions to educate their associates regarding regulations that govern the financial industry. Since SCUSA is a financial institution, our associates are required to know and comply with government regulations, including the ECOA .

What’s Covered Some of the objectives covered in the ECOA Compliance Course are: Learning the purpose of ECOA compliance Understanding Adverse Action Notice Understanding Credit Application Retention Reviewing SCUSA’s policy

The Equal Credit Opportunity Act is intended to prevent discrimination in credit transactions and requires financial institutions (creditors) to make credit equally available to all creditworthy consumers. The Consumer Financial Protection Bureau (CFPB) enforces compliance with ECOA and may bring an administrative enforcement action against a financial institution for non-compliance. ECOA ECOA prohibits discrimination of any kind. This applies to any type of credit transaction, including activities before, during, and after the extension of credit.

ECOA Race Color Religion National Origin Gender Marital Status ECOA prohibits discrimination in ANY aspect of a credit transaction including loan application, processing, evaluation, and notification process. Also under ECOA, it is unlawful for a creditor to discriminate on a prohibited basis as mentioned below: ECOA Race Color Religion National Origin Gender Marital Status Age (provided the applicant is of legal age) If all or part of a consumer’s income is derived from public assistance programs The applicant has in good faith exercised any right under the Consumer Credit Protection Act

US Code of Federal Regulations, Title 12, Chapter II, Subchapter A, Part 202 – also known as Regulation B Provides guidance regarding the interpretation and enforcement of ECOA. For all credit applications received by SCUSA, whether the credit application is ultimately approved or declined, SCUSA must notify the consumer of the credit approval or adverse action NO LATER THAN thirty (30) calendar days of receipt of the completed credit application.

Adverse Action Notice An Adverse Action Notice (also known as the “Denial Notice”) must be: In writing within thirty (30) calendar days of receipt of the credit application. Include the reason for denial or advise the applicant of their right to request the reason for denial within 60 days of receipt of the notice. Include the contact information for them to obtain this information. Must be sent for a Counter-offer or a Conditional Approval when applicable

Adverse Action Notice (cont.) Adverse Action notice is to be provided for: Declined credit application, for example: Due to insufficient income; lack of employment below minimum income threshold; or due to an unsatisfactory credit history, etc. Counteroffer is made when SCUSA is unwilling to approve the credit in the amount and term originally requested by the applicant, but will grant credit in a different amount or on other terms (i.e. rate, amount financed, maturity date). Incomplete Application is when SCUSA does not have all the necessary information to determine creditworthiness.

Adverse Action Notice (cont.) The Fair Credit Reporting Act (FCRA) requires the Adverse Action Notice to include the following information: If the denial of credit was based in whole or in part on information obtained in a report from the credit reporting agency. The name, address and phone number of the credit reporting agencies that were used. A statement that the consumer has a right to receive a copy of their credit report and to dispute the accuracy of the information in the report. A statement that the credit bureau did not participate in and cannot explain the credit decision. If a credit score is used in setting material terms of credit or in taking adverse action then the credit scores is disclosed in the notice.

ECOA - Declination Letter

ECOA - Counter Letter

Credit Application Retention Regulators permit creditors (SCUSA) to combine the requirements of ECOA and FCRA Adverse Action Notices in one form. Although the rules of ECOA require that only one applicant on a joint application needs to receive the Adverse Action Notice, the FCRA rules require that an Adverse Action Notice be provided to “each applicant” whose credit report was used in the decision to deny the loan. Therefore, SCUSA provides Adverse Action Notices to each applicant and co-applicant to ensure compliance with both laws. Also, the notice reflects the credit score disclosure requirements. All credit applications, whether approved or denied, must be retained for 25-months.

Preventing direct or indirect discrimination SCUSA extends credit in amounts and for periods of time consistent with the applicant’s credit qualifications, and does not encourage or discourage a credit applicant from applying. Discrimination is prohibited whether it is direct (i.e., offering better rates to married couples than to single people) or indirect. Indirect discrimination arises when policies that appear neutral have an adverse effect on a particular group of borrowers who are members of a protected class.

SCUSA’s Indirect Lending Process SCUSA’s method of accepting applications reduces the risk of discrimination on any prohibited basis. Under indirect lending, the Dealership has direct contact with loan applicants and SCUSA has no direct contact with the applicants, but receives their request for credit based on the loan application. All applications are initially scored utilizing our custom scorecards. Once approved, the decision is in the hands of the Dealership as to whether or not they will use our company to finance the loan.

ECOA SCUSA’s Policy It is SCUSA’s policy to follow the regulatory requirements of ECOA and to include the notice requirements of FCRA in the Adverse Action Notice. It is also SCUSA’s policy not to discriminate against any applicant on any prohibited basis. When making a decision to extend credit or to determine the terms of such credit, the underwriting decision cannot be based on any prohibited basis.

SCUSA’s Policy (cont.) If SCUSA’s offer of credit is accepted by the Dealership, then we will apply internal credit policies and procedures to each application package that is delivered to us. If SCUSA denies the request for credit, then we will provide an Adverse Action Letter within 30 days. SCUSA uses the combined ECOA and FCRA Adverse Action Notice.

Purpose The Federal Government requires financial institutions to educate their associates regarding regulations that govern the financial industry. Since SCUSA is a financial institution, our associates are required to know and comply with government regulations, including the ECOA .

What’s Covered - Summary Some of the objectives covered in the ECOA Compliance Course are: Learning the purpose of ECOA compliance Understanding Adverse Action Notice Understanding Credit Application Retention Reviewing SCUSA’s policy

To receive proper credit for completing the course, click the “X” in the lower right corner of the screen. You must also complete the end of course quiz.