Special-Purpose Credit - 12 CFR 202.8

ABC

The term "special-purpose credit program" refers to a credit program that is designed to meet the particular credit needs of a specific group of people who are often underserved by traditional credit programs. 12 CFR 202.8 is a federal regulation that defines special-purpose credit programs and sets forth certain requirements that these programs must meet in order to comply with anti-discrimination laws.

Option A suggests that any credit assistance program authorized by federal or state law for the benefit of an economically disadvantaged class of persons is a special-purpose credit program. This is not entirely accurate. While many special-purpose credit programs may be designed to assist economically disadvantaged individuals or groups, not all programs that benefit such groups are necessarily special-purpose credit programs.

Option B suggests that any credit assistance program offered by a not-for-profit organization for the benefit of its members or for the benefit of an economically disadvantaged class of person is a special-purpose credit program. This is also not entirely accurate. While some not-for-profit organizations may offer special-purpose credit programs, not all credit programs offered by not-for-profit organizations are necessarily special-purpose credit programs.

Option C is the correct answer. It correctly states that a special-purpose credit program must not discriminate on a prohibited basis. However, it can require its participants to share a particular characteristic (such as race or sex) provided the requirement was not established to evade the requirements of the Equal Credit Opportunity Act (ECOA). If the participants must share a common characteristic, the bank may collect information on that characteristic to determine eligibility. This means that a special-purpose credit program can be designed to meet the credit needs of a specific group of people, as long as the program does not discriminate on the basis of prohibited factors such as race, gender, age, or national origin.

Option D is incorrect. It suggests that if a program includes financial need as a criterion, the creditor can never request or consider information regarding the applicant. This is not accurate. While a creditor may not discriminate against an applicant on the basis of financial need, they may still request and consider information about an applicant's financial status as part of the credit evaluation process.