CFPB ISSUES ANNUAL FAIR LENDING REPORT AND IDENTIFIES PRIORITIES FOR 2017

On April 14, 2017, the CFPB released its fifth Fair Lending Report reflecting the Bureau’s rulemaking, supervision, enforcement, interagency collaboration, and outreach activities for 2016 as well as its fair lending priorities for 2017.

Perhaps most importantly for financial institutions is the Report’s identification of fair lending priorities for 2017, which includes redlining, mortgage and student loan servicing, and small business lending, as well as the method for identifying fair lending priorities. The Report notes that: 1) In relation to redlining, the CFPB will work to “evaluate whether lenders have intentionally discouraged prospective applicants in minority neighborhoods”; 2) For mortgage and student loan servicing, the CFPB will work to “determine whether some borrowers who are behind on their mortgage or student loan payments have more difficulty working out a new solution with the servicer because of their race, ethnicity, age, or gender”; and 3) For small business lending, the CFPB will be focusing on potential ways to implement Section 1071 of the Dodd Frank Act, which requires the compilation and submission of certain data on credit applications for women-owned, minority-owned, and small businesses to ensure business owners have better access to credit.

The Report also highlights that in 2016:
• Fair lending supervisory and public enforcement actions resulted in approximately $46 million in remediation to harmed consumers.
• The Bureau issued a Request for Information on HMDA data submission guidelines, published a Bureau Official Approval pursuant to section 706(e) of the ECOA concerning the new Uniform Residential Loan Application and the collection of expanded HMDA information about ethnicity and race in 2017, and on March 24, 2017, the Bureau published a proposed rule that would amend Regulation B’s ethnicity and race information collection provisions.
• Interagency coordination efforts include the revised Interagency Consumer Compliance Rating System, the Interagency Task Force on Fair Lending (CFPB, FTC, DOJ, HUD, FDIC, FRB, NCUA, OCC, and the Federal Housing Finance Agency), and the Interagency Working Group on Fair Lending Enforcement (CFPB, DOJ, HUD, and FTC).
• Bureau personnel have engaged in dialogue with stakeholders on issues including the use of public assistance income in underwriting, redlining, disparate treatment, disparate impact, HMDA data collection and reporting, indirect auto financing, the use of proxy methodology, and the unique challenges facing LEP and lesbian, gay, bisexual and transgender (LGBT) consumers in accessing credit.

The CFPB’s Fair Lending Report is available here.

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