<img src="https://ws.zoominfo.com/pixel/pIUYSip8PKsGpxhxzC1V" width="1" height="1" style="display: none;">

Fair Lending and Reverse Redlining... Can Banks Ever Win?

author Justin Smith
1 min read
May 23, 2011

Once again, Fair Lending, Redlining and Reverse Redlining are in the spotlight. Can community banks win in this regulatory environment?Prior to the mortgage crisis, regulators encouraged banks to improve their Fair Lending and CRA (Community Reinvestment Act) efforts and market mortgages to poor minorities with weak credit. Now, banks are being persecuted for those same loans for "Reverse Redlining" or "Predatory Lending".

Banks price loans based on risk. Higher risk loans are priced higher. Now these same loans that banks were encouraged to make prior to the mortgage crisis are being targeted for increased scrutiny by the government.

A recent article in Investors Business Daily sums this up. It's a good quick read: http://www.investors.com/NewsAndAnalysis/Article/572091/201105121901/Holders-Anti-Bank-Witch-Hunt.aspx 

In order to succeed in this regulatory environment, you have to know the story your data tells!

As a compliance officer, a detailed working knowledge of lending by census tract is helpful. One must also review census tract minority composition. For higher minority census tracts, focus on application, origination and denial numbers (Redlining) and high rate loan frequency and average loan rate (Reverse Redlining).

Community bank compliance officers are in a tough position right now. The only way to combat this sort of double talk is with the numbers.

TRUPOINT Partners can help you with your CRA, Fair Lending, and HMDA compliance. We're always here to help.

Subscribe to the Nsight Blog

All Topics Risk & Compliance Product Insight Banks Lending Compliance Credit Unions Risk Management Fair Lending Nfairlending Cluster: Risk Management Compliance Lending Compliance Management Integrated Risk Blog Regulatory Compliance Management Nrisk News & Updates HMDA Risk Mortgage Lenders Vendor Management Ncomply Business Resiliency CRA Lending Compliance Blog Vendor CFPB Ncontinuity Business Continuity Third-Party Vendor Management Cybersecurity Fintech NVendor Strategic Planning Ncyber Regulatory Updates Ntransmittal Audits & Findings OCC Regulatory Compliance Company Culture Audit Nverify Compliance Management Exams FDIC Nfindings Findings NCUA Contract Management Employee Intranet Business Continuity Management Contract FRB Findings Management Enterprise Risk Management FFIEC Ncontracts manager Third-Party Vendors Vendor Risk Vendor Risk Management Wealth Management 1071 ABA Bank Access Control Artificial Intelligence Audit Findings Board Portal Call Report Compliance Risk Cybersecurity Assessment Digital Tansformation Due Diligence Efficiency Employee Engagement Exam findings FIEC Governance and Risk Management Inc. 5000 Internal Audit Management Mortgage Lending Nboardportal Verify integrated risk management
GFI's Fair Lending Lawsuit Underscores “Beware-the-Double-D” Warning
Fair Lending

GFI's Fair Lending Lawsuit Underscores “Beware-the-Double-D” Warning

Apr 9, 2012 1 min read
Are Your Written Lending Policies Keeping Pace with the Economic Environment?
Fair Lending

Are Your Written Lending Policies Keeping Pace with the Economic Environment?

Oct 20, 2022 3 min read
Please Respond Mr. Geithner
CRA

Please Respond Mr. Geithner

Sep 12, 2011 1 min read