All in Fair Lending

VIDEO: Disparate Impact

VIDEO: Disparate Impact

Adam Witmer
Fair Lending

In this video, Adam talks about the third type of discrimination recognized by the courts: disparate impact.  He explains the main source of this type of discrimination and gives a few examples of what to look for.

CFPB Seeking Comments on Preventing Discrimination

Adam Witmer
Fair Lending, Regulatory Update

In July of 2020, the CFPB issued a Request for Informatino on the Equal Credit Opportunity Act and Regulation B which is seeking comments and information to identify opportunities to prevent credit discrimination, encourage responsible innovation, promote fair, equitable, and nondiscriminatory access to credit, address potential regulatory uncertainty, and develop viable solutions to regulatory compliance challenges under the Equal Credit Opportunity Act (ECOA) and Regulation B. Comments are due 60 days after publication in the Federal Register.

HUD Terminates Fair Housing Rule

Adam Witmer
Fair Lending, Regulatory Update

On 7/23/2020, the U.S. Department of Housing and Urban Development (HUD) announced the termination of the Obama Administration’s Affirmatively Furthering Fair Housing (AFFH) regulation issued in 2015. According to HUD, this rule “proved to be complicated, costly, and ineffective— so much so that Secretary Carson essentially removed its burden on communities by suspending the regulation’s 92 question grading tool in January 2018.” Replacing this rule is a brand-new rule called Preserving Community and Neighborhood Choice. According to HUD, this rule

CFPB Releases 2019 Fair Lending Report to Congress

Adam Witmer
Regulatory Update, Fair Lending

On April 30, 2020, the CFPB released their annual Fair Lending Report to Congress that highlights how in 2019 the CFPB continued to focus their fair lending efforts on mortgage lending, student loans, small business lending and other market areas. The CFPB also explains that they encouraged consumer-friendly innovation to, among other things, expand access to unbanked and underbanked consumers and their communities.

Incomplete Applications

Adam Witmer
Regulation B, Fair Lending

This is a guest post by one of our Compliance Cohort members, Jennifer Johnson.  Jennifer is a Vice President and Chief Risk Officer at a $225 million community bank, and shares her years of experience in multiple banks with us in this article.

In a previous article, we discussed those frustrating customers who come to us with bits and pieces of the information we need to make a loan decision, providing us with an incomplete application. If you’re OCD like me, those situations drive you more than a little crazy, especially when you know that you have obligations to notify the customer of your decision within 30 days of receipt of the request. So how do you handle these scenarios without pulling out your hair? I have a simple solution…

CFPB Releases Annual Fair Lending Report for 2018

Adam Witmer
Regulatory Update, Fair Lending, Regulation B

On June 28, 2019, the CFPB released their annual report on fair lending.  Coming just seven months after the last annual report to congress (12/4/18), this annual report to Congress describes the Bureau’s fair lending activities in innovation, outreach, prioritization, guidance and rulemaking, supervision, and enforcement for calendar year 2018.  This is the first report released under new CFPB Director, Kathleen Kraninger.

NOTE: The 2018 CFPB fair lending report to Congress will be included in our 2Q 2019 Regulatory Update program, which will be released in July of 2019, covering all of the regulatory changes that a compliance professional needs to be aware of from the activity that occurred during the 2nd Q of 2019.

Redlining & Branching Networks

Redlining & Branching Networks

Adam Witmer
Fair Lending

In this Compliance Clip (video), Adam takes a look how a financial institution’s branching network could have an impact on redlining risk. The clip provides two visual maps as Adam reviews what redlining would look like visually, when it comes to a branching network.

Can a Lender Have Denial Authority?

Can a Lender Have Denial Authority?

Adam Witmer
Fair Lending

In this Compliance Clip (video), Adam answers a question regarding lender "denial authority. Specifically, the question relates to whether a lender’s “denial authority” can be greater than their authority to approve loans. In his answer, Adam explains where one should look for the answer and provides some concerns to consider.

Comparative vs Overt Disparate Treatment

Adam Witmer
Fair Lending, Regulation B

Fair lending continues to be one of the highest risk areas for any creditor.  Deficiencies can result in significant penalties, fines, and other enforcement actions.  Therefore, each creditor must understand the different types of fair lending violations that could be cited during a fair lending audit or compliance examination.  In other words, if a creditor if familiar with what an examiner will be looking for, they will be more likely to self-identify and correct the issue before it becomes a significant exam violation.

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