Which regulation forbids discouraging applicants or prospective applicants from making or pursuing a loan application on any prohibited basis?

The regulation that forbids discouraging applicants or prospective applicants from making or pursuing a loan application on any prohibited basis is the Equal Credit Opportunity Act, which is implemented by Regulation B. This regulation is designed to prevent discrimination in any aspect of credit transactions based on specific protected characteristics such as race, color, religion, national origin, sex, marital status, or age.

Under Regulation B, creditors are not allowed to discourage applicants from applying for credit, as doing so can create barriers that disproportionately affect certain groups. It is critical to ensure that all individuals have equal access to credit opportunities, and thus the regulation mandates fairness in lending practices. This focus on equitable treatment makes it vital for financial institutions to have policies in place that promote non-discriminatory practices in their lending processes.

In contrast, the other regulations listed—such as Regulation Z, which deals with truth in lending and the disclosure of credit terms; Regulation BB, which focuses on the Community Reinvestment Act and encourages banks to meet the credit needs of the communities in which they operate; and Regulation C, which relates to the Home Mortgage Disclosure Act and requires certain lenders to provide data on mortgage applications—do not emphasize this particular aspect of discouragement based on prohibited characteristics. Therefore, Regulation B