3/1/2019 - By Jennifer Paradise, CRCM
In December 2018, the Consumer Financial Protection Bureau (the ‘Bureau’) released its annual Fair Lending Report, covering its fair lending-related activities during 2017. The report includes a listing of the most common Equal Credit Opportunity Act (ECOA)/Regulation B violations, that may serve as a checklist for reviewing your own institutions’ processes.
The most frequently-cited violations by the administrative enforcement agencies, which include the Bureau, Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board (FRB), the National Credit Union Administration (NCUA), and the Office of the Comptroller of the Currency (OCC) were:
At Saltmarsh, we observed several of the violations noted above in our 2018 Loan Compliance Reviews. In furtherance of the last bullet point, we’ve also observed when timely notice of the right to receive an appraisal was not provided for business purpose applications to be secured by a first lien on a dwelling. We encourage you to review this process for business purpose applications within your own institution.
We don’t like to see industry participants receive less than satisfactory exams or consent orders, but we do encourage learning from reports such as this, as well as public enforcement actions. The report details two public enforcement actions taken in 2017; one involving mortgage origination and the other pertaining to credit card account management. In the first case, the Home Mortgage Disclosure Act (HMDA) data contained substantial errors over the course of three years. Both HMDA and ECOA compliance can play a significant part in an institution’s fair lending record. If your institution has an upcoming exam it is wise to be familiar with the Interagency Fair Lending Exam Procedures, and your primary regulator’s related exam procedures.
We understand that fair lending and related processes can be challenging. If you have concerns or questions, email me, or another member of the Saltmarsh Financial Institutions Team.
This article is current as of February 12, 2019, and may not be updated for regulatory changes occurring after this date.
About the Author | Jennifer Paradise, CRCM
Jennifer is a consultant in the Financial Institutions Advisory Group at Saltmarsh, Cleaveland & Gund and has been serving the financial institutions industry since 1990. She is primarily involved in performing fair lending, loan internal audit, loan compliance, and other consulting services for the firm's financial institution clients throughout the region.