Attention on fair lending increased in 2021 with regulators promising “vigorous” enforcement of fair lending laws. Brush up on key how-to’s and lessons learned from enforcement actions with our rundown of some of the year’s top fair lending compliance blog posts on the Ncontracts blog.
The regulatory agencies have been warning for months that they intend to take a tough stance against fair lending violations—and as of October 22, 2021, they have taken action in a huge way.
The Consumer Financial Protection Bureau (CFPB) and Justice Department, with the cooperation of the Office of the Comptroller of the Currency (OCC), have filed a lawsuit against a Trustmark National Bank, a $17 billion-asset bank based in Jackson, Miss., alleging redlining in majority Black and Hispanic neighborhoods in the Memphis, Tenn., area.
2. Watch Out for These Common Fair Lending Violations
It is always better to learn a lesson from someone else’s mistakes. That is why the regulatory agencies periodically publish Supervisory Highlights that give financial institutions a rundown on the most common violations they are seeing—and why they are happening.
Read on to learn about some of the most common and egregious examples of violations including HMDA data and redlining.
3. Mortgage Company Sued by CFPB After Ignoring Compliance, Audit Warnings & a Whistleblower Complaint
Here is a news story to file under “why you should listen when your compliance officer and auditors are concerned.”
The Consumer Financial Protection Bureau (CFPB) is suing 1st Alliance Lending in Hartford, Conn., and three of its executives for knowingly and actively engaging in unlawful mortgage practices that allegedly violated the Truth in Lending Act (TILA), the Fair Credit Reporting Act (FCRA), the Equal Credit Opportunity Act (ECOA), the Mortgage Acts and Practices—Advertising Rule (MAP Rule), and the Consumer Financial Protection Act of 2012 (CFPA).
That’s after the company got into trouble in its home state of Connecticut after a whistleblower alerted the Connecticut Banking Department to unlicensed mortgage origination activity. The company ultimately went out of business in 2019.
4. 7 Ways to Analyze Your Data for Redlining Compliance Risk
Redlining compliance remains a priority for regulators, and redlining risk management remains a key responsibility for financial institutions nationwide.
In this post, you'll learn why redlining data analysis is essential, and seven ways to analyze your data for redlining compliance risk.
5. Lending Compliance & Non-English Speakers: What You Need to Know
For years, regulators, community groups, and others have been encouraging financial institutions to do more to reach unbanked and underbanked populations, especially those with limited English proficiency (LEP). While many financial institutions (FIs) have sought to serve this community, concerns over lending compliance—challenges like fair lending and unfair, deceptive, or abusive acts and practices—have made some lenders cautious when providing products and services in languages other than English.
To help eliminate uncertainty and help institutions better manage the risk, the Consumer Financial Protection Bureau (CFPB) released principles and guidelines to help institutions comply with Dodd-Frank Unfair, Deceptive, and Abusive Acts and Practices (UDAAP) provisions, the Equal Opportunity Act (ECOA), and other laws when providing products and services to LEP consumers.
6. The CRA Examination Process Explained
The Community Reinvestment Act (CRA) was enacted by Congress in 1977 to ensure depository institutions are meeting the credit needs of the local communities. Depository institutions undergo CRA exams about every 3 years, depending on past performance.
This post explains the three phases of a CRA exam and how to ensure that your financial institution is prepared for a successful exam.
7. 3 Common Errors to Avoid with Mortgage Call Reports
The SAFE Act, enacted in 2008, requires all state mortgage licensees to submit a report of loan activity and financial condition to the National Mortgage Licensing System (NMLS). Thus, the beloved Mortgage Call Report was created. Companies that hold a state license or state registration through the NMLS are required to complete a Mortgage Call Report (MCR) on a quarterly basis. Here are 3 common errors to avoid.
8. 3 Ways to Mitigate Redlining Risk
As compliance professionals, we often hear our business partners and management brush off enforcement actions against others with comments like:
“That is not our regulator.”
“They are so much larger than us.”
“We only market our brand.”
But looking at the last year of headline-making enforcement, size and regulator were not key factors. Complaints, lending data, and marketing efforts drove investigations.
9. Beware Fair Lending Risk in Loan Originator Compensation Programs
Loan originator compensation is a key source of fair lending risk. Through the years, we have seen both regulator guidance and DOJ settlements that encourage the proactive management of Regulation Z and fair lending compliance.
Here are best practices for mitigating this risk.
10. The 8 Steps to Scoping a Fair Lending Compliance Exam
When it comes to fair lending exams, surprises aren’t fun. What will the examiners look at? How do they decide what to cover?
This blog post digs into Part 1: Examination Scope Guidelines of the Interagency Fair Lending Exam Procedures and the eight steps regulators take when scoping a Fair Lending exam.
There you have it, folks...our top ten blog articles on fair lending for 2021! Read up, and you’ll be well prepared for 2022.
Related: How to Build a Strong Fair Lending & Redlining Compliance Management System
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