Which act requires lenders to provide a written reason for the rejection of credit within 30 days of a loan application?

The Equal Credit Opportunity Act (ECOA) is the legislation that mandates lenders to provide a written reason for the rejection of credit applications within 30 days. This requirement is crucial because it promotes transparency in the lending process and helps consumers understand why their applications were declined, allowing them an opportunity to address any issues or rectify their credit situations.

The ECOA aims to prevent discrimination in lending practices, ensuring that all applicants have an equal opportunity to obtain credit regardless of race, color, religion, national origin, sex, marital status, or age. By requiring lenders to disclose the reasons for denial, the act empowers consumers to seek clarification and correct any inaccuracies that may have affected their creditworthiness.

Other acts mentioned focus on different aspects of lending and housing. For instance, the Real Estate Settlement Procedures Act primarily addresses disclosure requirements at the time of loan origination and settlement, while the Community Reinvestment Act is designed to encourage financial institutions to meet the credit needs of the communities in which they operate. The Federal Fair Housing Act primarily prohibits discrimination in housing-related transactions. Thus, while all these acts play important roles in consumer protection and equitable access to credit, it's the ECOA that specifically addresses the requirement for written reasons for credit denials.