What is the Fair Lending Act?

The Fair Lending Act (FLA) is a Texas law that protects citizens from being charged unfair or excessive interest rates and fees on loans or other financial products. This law also prohibits banks from discriminating against consumers based on race, color, religion, national origin, age, sex, marital status, familial status, or receipt of public assistance. The FLA applies to most loans, including mortgages, car loans, and credit cards. The fundamental purpose of the FLA is to ensure that borrowers are treated fairly when receiving financial services from banks. This includes making sure borrowers know all the terms and conditions of a loan before they sign the documents, that banks accurately disclose the interest rate and fees associated with a loan, that all applicants receive equal treatment regardless of their race, color, religion or other protected class, and that banks assess appropriate levels of interest and fees. To ensure FLA compliance, banks must create and maintain documents and records related to loan originations, loan servicing, and any advertising they do for financial products. Banks must also train their employees on the requirements of the FLA and provide consumers with a written disclosure statement outlining the terms of the loan. By protecting borrowers from predatory lending practices, the FLA helps ensure that banks and consumers can “play by the same set of rules” when it comes to financial services. The FLA stands as a reminder that consumers must always be given the chance to make informed decisions when it comes to financial products that affect their lives.

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What is the Fair Lending Act?

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