By Katalina M. Bianco, J.D.
The Consumer Financial Protection Bureau recentky published its third Fair Lending Report to Congress recounting fair lending activities in supervision, enforcement, rulemaking, interagency coordination, outreach, and interagency reporting during 2014.. According to the CFPB, it has taken “important strides” over the last year in its efforts to protect consumers from credit discrimination and broaden access to credit, as it identifies new fair lending risks and monitors institutions for compliance.
The report provides some insight into the areas that the bureau has targeted as areas of concern. The current fair lending report sees the CFPB applying fair lending principles to mortage lending, indirect auto lending, and Home Mortgage Disclosure Act reporting.
Patrice Alexander Ficklin, Director of Fair Lending and Equal Opportunity at the bureau, notes that the current report focuses on the bureau’s progress in identifying areas of fair lending risk and ensuring compliance, plus how the bureau endeavors to inform, educate, and learn from institutions and markets that it oversees. She states that, over the last year, the CFPB’s fair lending supervisory and public enforcement actions directed institutions to provide approximately $224 million in remediation to about 303,000 consumers. Ficklin adds that 2014 marked the Office of Fair Lending’s second public enforcement action in the credit cards market.
Progress. The report highlights a number of areas in which the bureau and Office of Fair Lending “have taken important strides over the last year in our efforts to protect consumers from credit discrimination and broaden access to credit, as we identify new fair lending risks and monitor institutions for compliance.”
Mortgage lending. The bureau’s Fair Lending supervision program has included Equal Credit Opportunity Act-targeted reviews at institutions responsible for approximately 40 percent of the applications and originations reported pursuant to HMDA. Mortgage lending continues to be a key priority for the Office of Fair Lending, with a focus on HMDA data integrity and potential fair lending risks in the areas of redlining, underwriting, and pricing.
Indirect auto lending. The bureau continued its work in overseeing and enforcing compliance with ECOA in indirect auto lending through supervisory and enforcement activity, including monitoring compliance with its previous supervisory and enforcement actions. The CFPB also released a Supervisory Highlights report specifically dedicated to activity in this area.
Credit cards. The bureau continued its fair lending work in the credit cards market. In June 2014, the CPB announced a public enforcement action against Synchrony Bank, formerly known as GE Capital, for failing to provide certain debt settlement offers to consumers based on national origin. Because the company self-identified the violation and fully cooperated, the bureau assessed no civil money penalties. However, the company provided $169 million in consumer relief to about 108,000 borrowers excluded from debt relief offers.
Rulemaking and guidance. In August 2014, the CFPB published a proposed rule to amend Regulation C, which implements HMDA, to require covered lenders to report additional data elements, among other changes. It received several hundred comments on the proposal. In November 2014, the bureau issued a guidance bulletin reminding lenders that requiring unnecessary documentation from consumers who receive Social Security disability income may raise fair lending risk. The ECOA prohibits discrimination against an applicant because all or part of the applicant’s income derives from any public assistance program. The bulletin outlined the standards and guidelines that may help lenders comply with the law and help to ensure that consumers who receive Social Security disability income have fair and equal access to credit. In addition, the report adds, throughout the year, the Office of Fair Lending collaborates with the Office of Supervision to provide guidance and information on market trends through Supervisory Highlights.
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