Nationwide Mortgage Licensing System (NMLS) Practice Exam

Which of the following methods of disclosure does NOT meet the requirements of the Equal Credit Opportunity Act (ECOA)?

1. E-mail

2. Mailed letter

3. Telephone

4. Faxed letter

The correct answer is: Telephone

The correct choice is based on the fact that the Equal Credit Opportunity Act (ECOA) requires creditors to provide written notice to applicants when adverse action is taken regarding their credit applications. While e-mail, mailed letters, and faxed letters are considered acceptable forms of delivering this required disclosure because they provide a written record that can be easily retained and referenced, the telephone does not provide the same level of documentation or permanence. Telephone communications can lead to misunderstandings and may not leave the applicant with any tangible proof of the information discussed. As such, relying on verbal communication fails to fulfill the intent of the ECOA, which is to ensure that consumers have clear and accessible documentation regarding their credit applications and any adverse actions that may occur.