All in Fair Lending

DOJ Announces $1.3 Million Settlement with Evolve Bank

Adam Witmer
Regulatory Update, Fair Lending

On September 29, 2022, the DOJ announced that it has secured an agreement to resolve allegations that Evolve Bank & Trust engaged in lending discrimination on the basis of race, sex and national origin in the pricing of its residential mortgage loans from at least 2014 through 2019. Under the department’s settlement, which is subject to the approval of the District Court, Evolve Bank will establish a settlement fund of $1.3 million to compensate affected borrowers and will also pay a $50,000 civil penalty.

VIDEO: What is Redlining?

VIDEO: What is Redlining?

Adam Witmer
Fair Lending

In this Compliance Clip (video), Adam provides a general overview of one of the hottest topics in fair lending: redlining. In doing so, Adam provides examples of allegations of redlining as well as specific areas the Department of Justice has said it will focus on when determining whether a lender has redlined a particular area. Plus, Adam changes the way he ends this Compliance Clip, based on a recommendation from his son - that you won’t want to miss.

CFPB and DOJ Files Complaint Against Trident for Discrimination Against Minority Families

Adam Witmer
Regulatory Update, Fair Lending

On July 27, 2022, the CFPB and DOJ took action to end Trident Mortgage Company’s intentional discrimination against families living in majority-minority neighborhoods in the greater Philadelphia area. The CFPB and DOJ allege Trident redlined majority-minority neighborhoods through its marketing, sales, and hiring actions. If entered by the court, the settlement would require Trident to pay a $4 million civil penalty to the CFPB for victims’ relief fund.

VIDEO: Appraisal Discrimination Example

VIDEO: Appraisal Discrimination Example

Adam Witmer
Fair Lending

In this Compliance Clip, Adam discusses a hot topic in fair lending: appraisal discrimination. This is a topic that comes from our recent Fair Lending Hot Topics program and is something that every financial institution should be aware of, as regulators have said they are seeing “a wave” of this issue across the country.

VIDEO: Analyzing HMDA Data for Fair Lending

VIDEO: Analyzing HMDA Data for Fair Lending

Adam Witmer
Fair Lending, HMDA

In this Compliance Clip (video), Adam discusses how the regulators are analyzing HMDA data for fair lending and explains why financial institutions should be analyzing their own data as well - even if they aren’t a HMDA reporter. This is a topic that was covered in our upcoming Fair Lending Hot Topics program.

Companies Using Black-Box Credit Models Not Exempt from ECOA

Adam Witmer
Regulatory Update, Fair Lending, Adverse Action

On May 26, 2022, the CFPB confirmed that federal anti-discrimination law requires companies to explain to applicants the specific reasons for denying an application for credit or taking other adverse actions, even if the creditor is relying on credit models using complex algorithms. The CFPB published a Consumer Financial Protection Circular to remind the public, including those responsible for enforcing federal consumer financial protection law, of creditors’ adverse action notice requirements under the ECOA.

VIDEO: Discrimination Based on Religion

VIDEO: Discrimination Based on Religion

Adam Witmer
Fair Lending

In this Compliance Clip, Adam discusses one of the topics that is included in our Spring 2022 Quarterly Compliance Update, that is - the CFPB found lenders discriminating against applicants based on religious beliefs. While discrimination based on religion has long been prohibited, Adam explains that release by the CFPB show us a trend in fair lending that all financial institutions should be ready for. In addition, the CFPB also expressed its concern about digital redlining, a topic that Adam also talked about in another Compliance Clip. A transcript of this video is now available.

CFPB Outlines Options to Prevent Algorithmic Bias in Home Valuations

Adam Witmer
Regulatory Update, Fair Lending

On 2/23/2022, the CFPB outlined options to ensure that computer models used to help determine home valuations are accurate and fair. The options will now be reviewed to determine their potential impact on small businesses. According to the CFPB’s release, automated valuation models can pose fair lending risks to homebuyers and homeowners. The CFPB is particularly concerned that without proper safeguards, flawed versions of these models could digitally redline certain neighborhoods and further embed and perpetuate historical lending, wealth, and home value disparities.

Interagency Statement on Special Purpose Credit Programs Under the ECOA and Reg B

Adam Witmer
Regulatory Update, Regulation B, Fair Lending

On 2/22/2022, the FRB, FDIC, NCUA, OCC, CFPB, HUD, the DOJ, and the FHFA issued an interagency statement to remind creditors of the ability under the Equal Credit Opportunity Act (ECOA) and Regulation B to establish special purpose credit programs to meet the credit needs of specified classes of persons. The statement focuses on the special purpose credit options under ECOA and Regulation B, which have been publicly committed by many financial institutions to better serve underserved communities.

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