On April 29, 2016, the Consumer Financial Protection Bureau ("CFPB" or "Bureau") issued its fourth Fair Lending Report, which reviews the activities of the Office of Fair Lending and Equal Opportunity for the 2015 calendar year. Last year, the CFPB's fair lending supervisory and public enforcement actions led to $108 million in restitution to consumers and other monetary payments. The Bureau referred eight matters to the Department of Justice ("DOJ"), and DOJ declined to independently investigate two of these matters.
The Report focuses on the following fair lending highlights:
CFPB's Approach: As in past years, the CFPB emphasizes its "risk-based prioritization process" in determining where to direct its resources to address potential fair lending issues. The Bureau evaluates consumer complaints, insight from advocacy groups and agencies, enforcement and supervisory history, market insights, the quality of lenders' compliance management systems, and data analyses in focusing its fair lending efforts.
Supervisory and Enforcement Actions: The Report discusses the four fair lending enforcement actions the CFPB publicly announced this past year, all related to mortgage origination or indirect auto lending. The CFPB also conducted supervisory work in these two areas. With regard to mortgage lending, the CFPB focused on HMDA data integrity and fair lending risks in redlining, underwriting, and pricing. Its auto lending efforts surrounded monitoring potential discrimination from policies that give auto dealers discretion in fixing loan prices; credit approvals and denials; and interest rates quoted to the dealer by the lender. The CFPB also notes its expanded efforts in other "priority markets" including the credit card market and small business lending.
Rulemaking: The Report discusses the CFPB's final rule amending Regulation C, which implements the Home Mortgage Disclosure Act ("HMDA"). The new Regulation C modifies the types of transactions and institutions subject to the rule, creates new data reporting requirements, and amends certain existing reporting requirements. Provisions of the new rule become effective on a rolling basis between 2016 and 2018.
Looking Ahead: The Report notes that mortgage lending, indirect auto lending, and the credit card market will continue to represent major priorities for the CFPB's enforcement and supervisory efforts. In fact, the CFPB strongly encourages indirect auto lenders to review their lending programs carefully to ensure compliance. Also watch for an increased emphasis on small business lending, a market the CFPB states has "so much at stake." Finally, the changes to Regulation C will likely bolster the CFPB's efforts in evaluating fair lending violations.
We will continue to monitor the CFPB's actions in the fair lending arena and will report on major activities here.
* Mrs. Schoenfeld is not admitted in the District of Columbia. She is practicing under the supervision of firm principals
Originally published May 3, 2016
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