Can anyone explain a note related to item M5 in the section entitled “Indicators of potential disparate treatment in Marketing of residential products, such as:” of the Interagency Fair Lending Examination Procedures on page 10? The note reads as follows – “Pre-screened solicitation of potential applicants on a prohibited basis does not violate ECOA. Such solicitations are, however, covered by the FH Act. Consequently, analyses of this form of potential marketing discrimination should be limited to residential loan products subject to coverage under the FH Act.” Why is it not a potential form of marketing discrimination under ECOA?

This is from the Fed's 3/18/03 final rule amending Reg B:

Over the years, there has been concern that Regulation B generally does not apply to marketing through prescreened solicitations. When the regulation was originally implemented in 1975, the definition of ``credit transaction'' included ``solicitation of prospective applicants by advertising or other means.'' Thus, the prohibition against discrimination based on marital status and sex applied to solicitations. In December 1976--when Regulation B was revised to prohibit discrimination based on national origin, race, and other specified bases--the definition of credit transaction omitted any
reference to solicitations. In the final rule, the regulation instead prohibited creditors from discouraging persons on a prohibited basis from applying for credit.