Final answer:
Fair lending rules apply to all phases of a credit transaction, ensuring equitable treatment for all loan applicants and prohibiting discrimination. They are monitored by the Federal Reserve and are part of the Equal Credit Opportunity Act.
Step-by-step explanation:
Fair lending rules are designed to ensure a fair and equitable treatment of all loan applicants and these rules apply to all phases of a credit transaction. This includes every step from before the application is received, during the loan underwriting process, and in the setting of rates, terms, and conditions.
These rules are part of the Equal Credit Opportunity Act (ECOA), which prohibits discrimination based on age, race, sex, marital status, and other such factors in any aspect of a credit transaction. The Federal Reserve (the Fed) monitors banks and other financial institutions to ensure compliance with these consumer protection laws, which also include the requirement for banks to publicly disclose loan distribution data geographically, by sex, and race of loan applicants.