Fair lendingin an email to bureau employees, mulvaney announced that the office of fair lending and equal opportunity will move from the cfpbs supervision, enforcement and fair lending. The manual describes how we supervise and examine these companies and gives our examiners direction on how to assess compliance with federal consumer. Is artificial intelligence a threat to fair lending. Our fair lending guidance, supervisory activity, and enforcement actions have three goals. Many times a lender realizes they have an issue, yet have little to no guidance about to correct the issue or put into place an effective action plan. First, cfpb has identified residential mortgage lending, all lenders and all products, as a primary area of focus. Summary of 3 recent indirect auto lending consent orders from the cfpb. Cfpb hmda regulation c small entity compliance guide version 4. Cfpbs actions are influencing everyones way of thinking, regardless of whether you are directly supervised by the cfpb or a different regulatory body.
Did mick mulvaney just drastically change how the cfpb. Even if a company has the best intentions of following fairlending principles, its debatable whether the artificial intelligence engines that online lenders typically use and that banks are just starting to deploy are capable of making credit decisions without inadvertently lending in affluent sections and not in minority neighborhoods. The cfpbs annual fair lending report covering its 2018 activities was published in todays federal register. How to avoid fair lending enforcement actions american. Several weeks ago, the consumer financial protection bureau cfpb issued a fair lending guidance bulletin. Cfpb identifies 2017 priorities in annual fair lending. Federal register fair lending report of the bureau of. Lessons learned from the cfpb and dojs latest fair. In a new blog post, the cfpb highlights fair lending protections available to small businesses that have been impacted by the covid19 pandemic, particularly minority and womenowned businesses while the blog post emphasizes the cares act paycheck protection program, it is intended to address all credit programs available to small businesses. While the cfpb and other regulators have encouraged the development of consumer lending technologies, they have also warned that new underwriting technologies and models carry the risk of disparate impact in credit outcomes and the potential for fair lending violations, particularly where new modes have not been tested in unfavorable credit. The bulletin introduces new interpretations of the ecoa and regulation b that are not clearly derived from the text of regulation b or its commentary. Cfpb identifies 2017 priorities in annual fair lending report. But, nothing is simple when it comes to fair lending. In key change, cfpb consolidates fair lending oversight in.
As a result, the cfpb guidance implicitly suggests that a lender can be. In a new blog post, the cfpb highlights fair lending protections available to small businesses that have been impacted by the covid19 pandemic, particularly minority and womenowned businesses. The material shown on this site is for informational purposes only and is not an offer to lend or extend credit. Fair lending report of the consumer financial protection bureau. Include any history of fair lending violations, or any areas identified as fair lending risks either in the last fair lending examination report by the cfpb or any state or federal regulator, or new fair lending risks that have emerged since the last fair lending examination. Fair lending considerations outlook live webinar august 6, 20. Our dedication to excellence comes from our depth of resources, including a multidisciplinary team of industry and legal experts, economists and statisticians. The cfpb recently issued its fair lending priorities for 2017. Cfpb takes over fair lending issues but does so in conjunction with state regulators and state. Marketplace lender seeking fair lending guidance receives cfpbs first noaction letter. Refer to cfpb guidance on reporting race and ethnicity 16. And after telling finance execs that dealer discretion is what the bureau is concerned about, she said. Compliance software for cfpb fair lending free demo. Using rate sheets or loan origination software that use clear pricing criteria, and.
This report describes our fair lending activities in innovation, outreach, prioritization, guidance and rulemaking, supervision, and enforcement for calendar year 2019. Cfpb consumer complaint database fair lending diversity. The cfpbs office of fair lending has long been one of the agencys most controversial, accused by republicans and the financial industry of being too aggressive and unfairly targeting auto. Section 8 housing choice voucher homeownership program. The cfpb is the first to focus primarily on the american consumer. The way the cfpb enforces fair lending laws could be about to significantly change after cfpb acting director mick mulvaney reportedly stripped the bureaus office of fair lending of its. In addition, the occ, board, fdic, ncua, and bureau each have fair. As usual, the report described the cfpbs outreach efforts, relevant guidance and rulemakings, interagency coordination, and supervision and. Supervisory guidance consumer financial protection bureau. While at cfpb, he has announced plans to revise regulations collecting information about fair lending, a key tool in assessing whether discrimination even exists.
The marketplace lending industry, which has doubled in size roughly every nine months, 1 has been subject to recent cautionary guidance issued by many federal. Fair lending fair servicing consumer finance enforcement. A fair lending strategists helps lenders evaluate, design and execute a strategy to assist in the compliance of fair lending regulations. Cfpb announces adjusted 2020 assetsize threshold exemption. Describe and evaluate the entitys fair lending compliance program, including management participation. Apr 19, 2017 the three 2017 priority areas are the same as those identified by patrice ficklin, associate director of the cfpbs office of fair lending, in her december 2016 blog post that outlined the cfpb s fair lending priorities for 2017. Lessons learned from cfpbdoj fairlending action by craig nazzaro on june 29, the consumer financial protection bureau and the department of justice demonstrated their continued emphasis on fair lending with the announcement of a joint action against bancorpsouth for discriminatory mortgage lending practices. Fair lending report of the consumer financial protection. The fair housing act fhact prohibits discrimination in all aspects of.
The cfpbs focus has been on fair lending as well as auto dealership finance and mortgage servicing. It seems hard to argue with the notion that an agency should ensure that institutions comply with fairlending laws. Respa requirements as a loan closing issue, and fair lending as a possible discriminatory loan underwriting or loan pricing issue. On this page, we provide regulatory guidance and compliance resources, supervisory process and guidance documents, and information on the bureaus registration and submission programs. Compliancetech is the nations most distinguished fair lending consultant and software developer of fair lending, hmda and cra analytical solutions. The bureau is committed to ensuring fair access to credit and eliminating discriminatory lending practices. Fair lending and equal credit opportunity act ecoa regulation b. The cfpbs reaction has been predictable, and even may be beneficial. It includes the office of supervision examinations, the office of supervision policy and the office of enforcement. This supervision and examination manual provides internal guidance to our supervisory staff. Lessons learned from the cfpb and dojs latest fair lending enforcement action. Supervision and examinations consumer financial protection.
Cfpb 2019 fair lending report highlights alternative. The cfpb guidance explicitly states that the bureau gives favorable consideration to banks that improve internal controls and procedures designed to prevent and detect a recurrence of such violations and change business practices, policies and. The cfpb, which was provided authority over equal credit opportunity act pursuant to the doddfrank wall street reform and consumer protection act, announced it was accepting consumer complaints related to marketplace lending in march, 2016. In key change, cfpb consolidates fair lending oversight in supervision and enforcement unit on february 1, 2018 legal, newsbytes the consumer financial protection bureau will remove daytoday oversight and enforcement authority from its office of fair lending and. Cfpb 2019 fair lending report highlights alternative scoring models. The bureau periodically releases policy guidance, including compliance bulletins. Credit reporting, fair lending fair servicing, ftc, tila on january 17, 2020, the federal trade commission ftc settled with several operators of a credit repair scheme for alleged violations of sections b and 19 of the ftc act, 15 u. These resources provide guidance on how to comply with fair lending laws. Cfpb, fair lending, rulemaking, small business lending.
Cfpb issues correction to final rule on adjusted 2020 hoepa. Fair lending cfpb takes over fair lending issues but does so in conjunction with state regulators and state enforcement as well as federal reserve, usdoj will see larger more widespread issues handled by cfpb and smaller issues states more regulatorsincreased enforcement dodd frank act explicitly mentions fair lending. Redlining, reverse redlining, disparate impact pricing, practices that discourage applicants, disparate treatment in loan servicing, new hmda fields and cra eligibility are some of the critical risks that require a proactive, practical approach to mitigate and manage. The bureau of consumer financial protection bureau is issuing its sixth fair lending report of the bureau of consumer financial protection fair lending report to congress.
Interagency fair lending examination procedures ffiec. In this article he helps you to consider what your company needs to do for consumer feedback and complaint resolution. Offering only qualified mortgages probably wont be a fair. We work to ensure fair, equitable, and nondiscriminatory access to credit for both individuals and communities through. The bureau is committed to ensuring fair, equitable, and nondiscriminatory access to credit for both individuals and communities. Cfpb issues guidance for transfers of residential mortgage servicing by eric j. Guidance in the appendix to the interagency fair lending examination procedures provides details on how to. That is not surprising given the subprime mortgage crisis of only a few years ago, the underwriting deficiencies that were allowed to take place, the resulting foreclosure rate for residential mortgages, and the severe impact all. The bureau provides different forms of guidance and compliance resources to help you understand and comply with our rules and the statutes we implement. Cfpb fair lending guidance for indirect auto lendersits not. Cfpb guidance to mitigate fair lending risk is based on new interpretations. This is an excellent article from garth graham at stratmor group. Fair lending compliance resources national credit union. The cfpbs 20 guidance pressured auto lenders to eliminate or limit a dealers.
Fti consultings fair lending analytics suite leadr is an exemplary forensic mortgage loan reunderwriting and fair lending analytic tool that can capture more than 400 data points and evaluate a wide range of alleged underwriting andor fair lending deficiencies. Cfpb supervision and examination manual the supervision and examination manual is our guide for examiners to use in overseeing companies that provide consumer financial products or services. Feb 01, 2018 the office of fair lending and equal opportunity has headed up some of the cfpbs most highprofile cases, including a 2015 settlement against hudson city savings bank, a new jerseybased bank. Recently, regulators have stepped up fair lending enforcement actions. Mar 11, 2014 glenn roberts points to zurichs new dealer compliance suite, which is designed to standardize a dealers desking process. Doddfrank established the office of fair lending and equal opportunity the office of fair lending within the cfpb, and charged it with providing oversight and enforcement of federal. Consumer financial protection bureau office of the. Brett is a previous member of complis customer success team, where she helped clients get the most out of their platform and achieve their unique goals. Discretion and fair lending risk how to comply cfpb topics 4 cfpb supervisory authority large banks. Recently, the cfpb stirred up a hornets nest by issuing guidance on discretionary pricing of car loans for lenders that purchase them from auto dealers. It does not bind the cfpb and does not create any rights, benefits, or defenses, substantive or procedural, that are enforceable by any party in any manner.
Cfpb issues guidance on fair lending practices housingwire. Fair lending and the cfpb understanding the current. Dec 20, 2017 i think theres some guidance in the cfpb exam manual. In key change, cfpb consolidates fair lending oversight in supervision and enforcement unit on february 1, 2018 legal, newsbytes the consumer financial protection bureau will remove daytoday oversight and enforcement authority from its office of fair lending and equal opportunity, according to reports today.
Fair lending considerations outlook live webinar august 6, 20 consumer financial protection bureau federal reserve board u. On december 23, 2019, the cfpb announced the assetsize exemption threshold adjustment for creditors, including depository institutions, under regulation z, which implements the truth in lending act. Cfpbs 2017 fair lending priorities subject to inquiry. The three 2017 priority areas are the same as those identified by patrice ficklin, associate director of the cfpbs office of fair lending, in her december 2016 blog post that outlined the cfpb s fair lending priorities for 2017. Now he is stripping the office of fair lending of its supervision and enforcement role, and moving what remains to a personnel office that reports to the director.
I think theres some guidance in the cfpb exam manual. Were not saying dealers should do the work and add value for free. Comply fair lending is a robust software solution based on the ffiec federal financial institutions examination counci and cfpb consumer financial protection bureau fair lending examination procedures and is the simplest and most cost effective way to monitor potential risk associated with lending performance. The bureau expects to issue guidance later this year to govern public disclosure of home mortgage disclosure act hmda data for 2018. To learn more about our fair lending efforts, check out our recent report to congress or our recent blog posts. But i think the cfpb is more inclined to see inquiries as complaints than the rest of the world is. The cfpb will continue to evaluate whether lenders have intentionally avoided lending in minority neighborhoods. In 3 recent consent orders, the cfpb has offered guidance on indirect auto and fair lending compliance, particularly related to dealer compensation. Cfpb fair lending guidance for indirect auto lendersits. We certainly have had clients who only log their escalated complaints. Now he is stripping the office of fair lending of its supervision and enforcement role, and moving what remains to. The consumer financial protection bureau is giving guidance to mortgage lenders because there are potential mistakes they can make in lending to applicants whose income includes vouchers from the. When congress passed a resolution last year to repeal the cfpbs guidance on discrimination in auto lending, mulvaney, now the white house.
Offering only qualified mortgages probably wont be a fair lending risk by mara gawarecki fri, oct 25, 20 in response to inquiries, five federal agencies have issued a statement offering guidance about the fair lending risk banks may pick up if they choose to only offer qualified mortgages. According to its december blog post, the cfpb plans to increase its focus on the following three areas, which it describes as presenting a substantial risk of credit discrimination for consumers. Cfpb fair lending guidance for indirect auto lendersits not just about cars. According to the report, in 2019 the bureau continued to focus on promoting fair, equitable, and nondiscriminatory access to credit, highlighting several fair lending priorities that continued from years past such as mortgage lending. Cfpb issues correction to final rule on adjusted 2020. Disclosure statement vandyk mortgage is not affiliated with any governmental agency. As marketplace lending continues to be a growing segment of the financial service industry, participants are under a greater impetus to be fully aware of their compliance obligations in the face of growing regulatory attention. Cfpb issues 2019 fair lending report to congress buckley. On april 30, the cfpb issued its annual fair lending report to congress, which outlines the bureaus efforts in 2019 to fulfill its fair lending mandate. On november 29, 2019, the cfpb issued a rule correcting the home ownership and equity protection act of 1984 hoepa annual threshold adjustment in the cfpbs final rule published august 1, 2019, in the federal register. In addition, the occ, board, fdic, ncua, and bureau each have fair lending examination procedures. When the afsas stinebert questioned ficklin about what an adequate monitoring program looked like, she referred back to the bureaus fair lending guidance. For statutes, regulations, and guidance referenced in this booklet, consult those. Ncua fair lending compliance program for federal credit unions frequently.
Changes to cfpb fair lending office undermine anti. Describe the entitys fa ir lending supervisory history. See cfpb press release, cfpb now accepting complaints on consumer loans from online marketplace lender. Cfpb issues guidance for transfers of residential mortgage. Marketplace lender seeking fair lending guidance receives. That, i think, is a little too thin in todays environment.
As these consent order show, fair lending risk can. The guidance in this introduction is intended to help examiners recognize fair lending issues that may have a potential disparate impact. Step two identify compliance program discrimination risk factors. While the blog post emphasizes the cares act paycheck protection program, it is intended to address all credit programs available to small businesses. Supervision, enforcement, fair lending division consumer. Posted in consumer financial protection bureau cfpb, fair lending, rulemaking, small business lending, small creditors last week, the cfpb announced that it will hold a symposium on section 1071 of the doddfrank wall street reform and consumer protection act doddfrank act on november 6, 2019. Mulvaney announced that the office of fair lending and equal opportunity will move from the cfpbs supervision, enforcement and fair. This booklet focuses on compliance with the fair housing act, equal credit. Fair lending and the cfpb understanding the current landscape.