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ALEXANDRIA, Va.-Routinely adding to the debts of a loan applicant who does not report any housing expense could result in an illegal “disparate impact” under antidiscrimination law, NCUA told Utah’s supervisor of credit unions. In a legal opinion letter (04-0936), NCUA Associate General Counsel Sheila Albin wrote, “We think this practice could result in a disparate impact on younger applicants.” She continued, “Federal antidiscrimination rules prohibit lenders from using age to determine whether to provide credit to an applicant. A policy that is facially neutral as to age or another prohibited factor, such as race, color, religion, national origin, sex, or religion, may constitute illegal discrimination if it results in a disproportionately adverse impact on a protected class of applicants, despite the absence of intent to discriminate.” However, Albin said, “a lender may consider the circumstances surrounding an individual applicant’s lack of housing expense and may determine the facts in a particular case warrant an adjustment. We believe, however, a blanket policy of adding an amount to every applicant’s debts to compensate for the absence of a stated housing expense is improper and could result in illegal discrimination under the federal fair lending rules.”

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