CFPB issues 2015 fair lending report

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The CFPB has issued a report covering its fair lending activities during 2015.  The report states that in 2015, CFPB fair lending supervisory and public enforcement actions required institutions to provide approximately $108 million in remediation.  Much of the information contained in the report was the subject of previous blog posts.

Like its 2014 fair lending report, the 2015 report begins with a discussion of the types of information considered by the CFPB in its risk-based prioritization approach for determining “how best to address areas of potential fair lending harm to consumers in the entities, products, and markets under our jurisdiction.”  In the report’s section on supervisory activities, the CFPB reviews information previously provided in its Summer 2015, Fall 2015, and Winter 2015 editions of Supervisory Highlights.  In the section on enforcement, the CFPB reviews several fair lending public enforcement actions and its implementation of several consent orders.  It also notes that in 2015, the CFPB referred 8 matters to the Department of Justice.

The enforcement section also includes a discussion of pending fair lending investigations.  The CFPB states that in 2015 mortgage lending remained a top priority, with the CFPB focusing its fair lending enforcement efforts on redlining.  The report indicates that at the end of 2015, “the Bureau had a number of authorized enforcement actions in settlement negotiations and pending investigations.”  In addition, in 2015, the CFPB “also focused on institutions’ indirect auto lending, specifically discrimination resulting from lender compensation policies that give auto dealers discretion to set loan prices.”  The report states that at the end of 2015, the CFPB “had a number of authorized enforcement actions in settlement negotiations and pending investigations.”  The report also indicates the CFPB “had a number of pending investigations in other markets including credit cards” at the end of 2015.

In the section on rulemaking, the CFPB discusses its final rule amending Regulation C (which implements HMDA) and its progress in developing rules on the collection of small business lending data to implement Section 1071 of Dodd-Frank.  (Section 1071 amended the ECOA to require financial institutions to collect and maintain certain data in connection with credit applications made by women- or minority-owned businesses and small businesses.)  We recently reported that the CFPB had filled the position of Assistant Director for the Office of Small Business Lending Markets.  The CFPB’s job posting indicated that the Assistant Director would head the CFPB’s team involved in developing rules to implement Section 1071.

The report indicates that the first stage of the CFPB’s Section 1071 work will be focused on outreach and research, after which it “will begin developing proposed rules concerning the data to be collected and determining the appropriate procedures and privacy protections needed for  information-gathering and public disclosure.”  The report states that the CFPB “has begun to explore some of the issues involved in the rulemaking, including engaging numerous stakeholders about the statutory reporting requirements,” and “is also considering how best to work with other agencies to, in part, gain insight into existing small business data knowledge in this area, including the credit process; existing data collection processes; and the nature, extent, and management of fair lending risk.”

Two other sections of the report discuss the CFPB’s coordination with other federal agencies on fair lending issues (such as through an interagency task force and working groups) and outreach to industry and consumers (such as through its webinars, blog posts, compliance bulletins and supervisory highlights).  There is also a discussion of a Memorandum of Understanding  (MOU) that the CFPB entered into with HUD on September 2, 2015 “delineating how each agency will use and properly share information to enhance fair lending compliance and interagency collaboration around institutions and issues over which the two agencies share jurisdiction.”  (Curiously, the report does not contain a link to the MOU, and our attempt to find the MOU on the CFPB’s website was unsuccessful.)

Under the MOU, HUD can access the CFPB’s Government Portal to view consumer complaints and give reports to the CFPB on fair lending complaints received by HUD.  Additionally, the MOU includes the agencies’ agreement to: coordinate joint fair lending investigations to minimize duplication of efforts; meet quarterly to discuss current fair lending investigations of entities within both agencies’ jurisdiction; coordinate actions, including determining whether multiple or joint actions are necessary and appropriate; notify each agency of relevant information under specified circumstances; and meet annually to assess the implementation of the MOU.

The last section of the report is intended to satisfy certain ECOA and HMDA reporting requirements, including providing a summary of other agencies’ ECOA enforcement efforts and reporting on the utility of certain HMDA reporting requirements.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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