What is the purpose of the Equal Credit Opportunity Act (ECOA)?

The Equal Credit Opportunity Act (ECOA) is designed specifically to prevent discrimination in credit transactions. It establishes that all individuals should have an equal opportunity to apply for and receive credit, regardless of personal characteristics such as race, color, religion, national origin, sex, marital status, or age. This means that lenders cannot refuse credit, charge different terms, or set different conditions based on these factors. The core purpose of ECOA is to promote fairness and equality in lending practices, ensuring that everyone has access to credit on just and fair terms.

While encouraging homeownership, facilitating loan modifications, and regulating interest rates are important aspects of the broader housing and lending environment, they are not the primary focus of the ECOA. The act's main goal is to combat discriminatory practices and support equitable treatment in the credit marketplace.