Fair Lending Report of the Bureau of Consumer Financial Protection, June 2019
| Published date | 08 July 2019 |
| Citation | 84 FR 32420 |
| Record Number | 2019-14384 |
| Section | Notices |
| Court | Consumer Financial Protection Bureau |
Federal Register, Volume 84 Issue 130 (Monday, July 8, 2019)
[Federal Register Volume 84, Number 130 (Monday, July 8, 2019)]
[Notices]
[Pages 32420-32429]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-14384]
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BUREAU OF CONSUMER FINANCIAL PROTECTION
Fair Lending Report of the Bureau of Consumer Financial
Protection, June 2019
AGENCY: Bureau of Consumer Financial Protection.
ACTION: Fair Lending Report of the Bureau of Consumer Financial
Protection.
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SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is
issuing its seventh Fair Lending Report of the Bureau of Consumer
Financial Protection (Fair Lending Report) to Congress. The Bureau is
committed to ensuring fair access to credit and eliminating
discriminatory lending practices. This report describes the Bureau's
fair lending activities in prioritization, supervision, enforcement,
rulemaking, interagency coordination, and outreach for calendar year
2018.
DATES: The Bureau released the June 2019 Fair Lending Report on its
website on June 28, 2019.
FOR FURTHER INFORMATION CONTACT: Bobby Conner, Senior Policy Counsel,
Fair Lending, at 1-855-411-2372. If you require this document in an
alternative electronic format, please contact
[email protected].
SUPPLEMENTARY INFORMATION:
1. Fair Lending Report of the Bureau of Consumer Financial Protection,
June 2019
Message From Kathleen L. Kraninger, Director
This Fair Lending Report describes the Consumer Financial
Protection Bureau's 2018 activities to expand fair, equitable, and
nondiscriminatory access to credit and to ensure that consumers are
protected from discrimination.\1\
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\1\ (12 U.S.C. 5511(b)(2).
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Earlier this spring I outlined my priorities for how the Bureau
will use its tools to carry out our mission. I shared how Congress
granted to the Director the tools of education, regulation,
supervision, and enforcement, each of which serves an important
component in the Bureau's execution of its mission. I believe that the
best application of these tools is to focus on prevention of harm to
consumers and that includes protecting consumers from unfair, deceptive
and abusive acts or practices as well as from discrimination. The
Bureau's very purpose is to ensure that all consumers have access to
consumer financial products and services which is based on having fair,
transparent, and competitive markets.
Protecting consumers from discrimination is one of the primary
objectives laid out in the Dodd-Frank Act--an objective that the Bureau
takes very seriously. Under my leadership, the Bureau will continue to
vigorously enforce fair lending laws in our jurisdiction, and will
stand on guard against unlawful discrimination in credit. In addition
to that core work, the Bureau will continue to explore cutting-edge
fair lending issues including how consumer-friendly innovation can
increase access to credit to all consumers--and especially unbanked and
underbanked consumers and their communities.
I am truly excited to take the Bureau's work in fair lending to a
new level, and I look forward to working with all stakeholders on these
important matters.
Sincerely,
Kathleen L. Kraninger.
Message from Patrice Alexander Ficklin,
Director, Fair Lending.
2018 marked the Office of Fair Lending and Equal Opportunity's
seventh full year of spearheading the Bureau's efforts to fulfill its
fair lending mandate. It was also a year of transition for the Office
as it prepared to move to the Director's office as part of the Office
of Equal Opportunity and Fairness. Throughout the transition, the
Office has continued to focus on promoting fair, equitable, and
nondiscriminatory access to credit and has embarked on new efforts to
coordinate the Bureau's fair lending work both internally, and with
other governmental agencies, industry, and stakeholders to encourage
innovation in expanding responsible credit access.
The Bureau's supervisory and enforcement activity in 2018 focused
on
[[Page 32421]]
mortgage lending, small business lending, and student loan servicing.
Our mortgage lending activity focused on redlining, underwriting,
pricing, steering, servicing, and Home Mortgage Disclosure Act data
integrity. Redlining continues to be a priority for the Bureau in both
mortgage lending and small business lending. The Bureau continues to
facilitate implementation of the 2010 Dodd Frank Act amendments to HMDA
and the subsequent changes under the Economic Growth, Regulatory
Relief, and Consumer Protection Act.\2\
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\2\ Public Law 115-174, 132 Stat. 1296 (2018).
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On July 18, 2018, the Bureau announced the creation of its Office
of Innovation and transitioned the work of Project Catalyst to this new
office. The Bureau encourages responsible innovations that could be
implemented in a consumer-friendly way to help serve populations
currently underserved by the mainstream credit system. The Office
worked closely with Project Catalyst since its inception to increase
consumer access to credit. The Fair Lending office looks forward to the
continued close working relationship with the Office of Innovation.
In September 2018, the Office held a symposium, Building a Bridge
to Credit Visibility, the first in a series of planned convenings aimed
at expanding access to credit for consumers who face barriers to
accessing credit. The Bureau estimates that 45 million Americans are
credit invisible or lack sufficient credit history which in turn causes
those consumers to face barriers to accessing credit, or pay more for
credit. The Symposium was attended, both in-person and via web-based
livestream video, by hundreds of stakeholders from industry,
government, think tanks, academia, and consumer advocacy and civil
rights organizations, representing a diverse range of experiences and
perspectives.
Along with the rest of the Bureau, the Office welcomed our new
Director, Kathy Kraninger, in early December 2018 and began work to
implement her commitment to enforce the fair lending laws under the
Bureau's jurisdiction using the tools of education, rulemaking and
guidance, supervision and enforcement.
Since its inception, the Office has done tremendous work in
fulfilling its Dodd-Frank mandate to protect America's consumers from
lending discrimination and promote credit access.\3\
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\3\ See Dodd-Frank Act section 1013(c)(2)(D) (codified at 12
U.S.C. 5493(c)(2)(D)).
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Sincerely,
Patrice Alexander Ficklin.
1. Access to Credit
The Bureau is responsible for providing oversight and enforcement
of Federal laws intended to ensure ``fair, equitable, and
nondiscriminatory access to credit for both individuals and
communities.'' \4\ To achieve the mission, the Bureau focuses both on
preventing discrimination and addressing it when it happens. The Bureau
has available a number of prevention tools: Outreach and education, and
the issuance of guidance, promulgation of regulations, and supervision
and enforcement.
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\4\ 12 U.S.C. 5493(c)(2)(A).
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In 2018, Fair Lending used a number of these tools and increased
its focus on ensuring fair, equitable, and nondiscriminatory access to
credit through: (1) Hosting a symposium on credit invisibility; (2)
establishing collaboration with the new Office of Innovation; (3)
monitoring a No-Action Letter; and (4) prioritizing supervisory reviews
of third-party credit scoring models to further the Bureau's interest
in identifying potential benefits and risks associated with the use of
alternative data and modeling techniques.
1.1 Symposium and Report on Credit Visibility
The CFPB has reported in recent years, in a series of
publications,\5\ that roughly 20 percent of the adult population have
no credit records or very limited credit records with the three
Nationwide Credit Reporting Agencies (NCRAs). As a result, these
``credit invisible'' and ``unscorable'' consumers are unable to fully
participate in the credit marketplace. This can limit their ability to
withstand financial shocks and achieve financial stability.
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\5\ See CFPB Data Point: Becoming Credit Visible (June 2017),
s3.amazonaws.com/files.consumerfinance.gov/f/documents/BecomingCreditVisible_Data_Point_Final.pdf; CFPB, Who Are the Credit
Invisibles? How to Help People with Limited Credit Histories (Dec.
2016), s3.amazonaws.com/files.consumerfinance.gov/f/documents/201612_cfpb_credit_invisible_policy_report.pdf; CFPB, Data Point:
Credit Invisibles (May 2015), files.consumerfinance.gov/f/201505_cfpb_data-point-credit-invisibles.pdf.
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In September 2018, the Bureau convened its first fair lending
Symposium to address the issue of access to credit, entitled Building a
Bridge to Credit Visibility. The Symposium was attended, both in-person
and via web-based livestream video, by hundreds of stakeholders from
industry, government, think tanks, academia, and consumer advocacy and
civil rights organizations, representing a diverse range of experiences
and perspectives. Panelists discussed strategies and innovations for
overcoming barriers faced by credit invisible consumers and unscorable
consumers and expanding credit access. The Symposium was held at CFPB
Headquarters in Washington, DC.
The Bureau's Building a Bridge to Credit Visibility Symposium added
to the growing body of knowledge on the credit invisible population,
sometimes referred to as unbanked and underbanked. The Symposium, and
the Geography of Credit Invisibility data point \6\ released in
conjunction with the Symposium, provided a platform where industry,
consumer and civil rights advocates, regulators, researchers, and other
stakeholders could raise awareness of the issues that credit invisible
and unscorable consumers face, learn more about financial innovation
that is happening, and shape plans for how to continue to increase
future access to credit going forward.
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\6\ See CFPB, Data Point: The Geography of Credit Invisibility
(Sept. 2018), s3.amazonaws.com/files.consumerfinance.gov/f/documents/bcfp_data-point_the-geography-of-credit-invisibility.pdf.
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At the Symposium, a number of stakeholders took part in substantive
panel discussions. During the first panel, each speaker delivered a
short talk on credit, exploring issues such as credit invisibility,
lending deserts, and innovation to expand access to credit. During the
second panel, panelists explored questions related to entry products
that bridge consumers to credit visibility while also preparing them
for financial success. During the third panel, panelists focused on
identifying barriers and solutions to accessing credit in the small
business lending space, and discussed the roles played by different
stakeholders in this space. And finally, during the last panel,
participants discussed the role alternative data and modeling
techniques can play in expanding access to traditional credit.
A few key themes were evident across panel discussions at the
Symposium. These themes can inform action planning for private and
public sector stakeholders from industry, consumer and civil rights
advocacy organizations, academia, and government. Some of these key
themes were:
Strengthen the business case for expanding access to
credit.
Explore innovation that expands credit access without
sacrificing consumer protections.
Understand the experience of the credit invisible
population.
Recognize that ``high-touch'' relationships are important.
Conduct more research and data analysis.
[[Page 32422]]
Be mindful that not all credit is equal.
At the Symposium, Jacqueline Reses from Square, Inc. and Square
Capital (``Square'') gave the keynote address. Later in the day, Paul
Watkins, Assistant Director of the Bureau's Office of Innovation,
shared his vision for the new office. Finally, Bureau leaders ended the
Symposium with a ``fireside chat,'' highlighting key themes from the
day and exploring the ways the CFPB's mission provides the Bureau with
tools to engage on these issues.
Additional information including the symposium agenda, a video of
the symposium (with closed-captioning), and an informational blog post
can be found on the Bureau's website.\7\
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\7\ https://www.consumerfinance.gov/about-us/events/archive-past-events/building-bridge-credit-visibility/.
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1.2 Collaboration With Office of Innovation
In 2018, the Bureau prioritized innovation in part to help expand
fair, equitable and nondiscriminatory access to credit to underserved
populations.\8\ To lead this effort, on July 18, 2018, the Bureau
created the Office of Innovation and transitioned the work that was
being done under Project Catalyst to this new office. The Office of
Innovation helps the Bureau fulfill its statutory mandate to promote
competition, innovation, and consumer access within financial services.
To achieve this goal, the new office focuses on creating policies to
facilitate innovation, engaging with entrepreneurs and regulators, and
facilitating identification of outdated and unnecessary regulations.\9\
Fair Lending's focus on fair, equitable, and nondiscriminatory access
to credit for individuals and communities provides for synergy with the
work of the Office of Innovation.
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\8\ Historically, the Office of Fair Lending has worked closely
with the Bureau's Project Catalyst, which was established to
encourage consumer-friendly innovation and entrepreneurship in
markets for consumer financial products and services. Through
Project Catalyst, the Bureau sought to advance consumer-friendly
innovation by way of outreach to innovators, discussion of Special
Purpose Credit Programs, and the No-Action Letter program. By
staffing Project Catalyst Office Hours and engaging in discussions
with No-Action Letter candidates, Fair Lending has worked to advance
innovation.
\9\ Consumer Financial Protection Bureau, Bureau of Consumer
Financial Protection Announces Director for the Office of
Innovation, https://www.consumerfinance.gov/about-us/newsroom/bureau-consumer-financial-protection-announces-director-office-innovation/.
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The Office of Innovation is in the process of revising the Bureau's
No Action Letter (NAL) and trial disclosure policies, and establishing
a Product Sandbox, in order to increase participation by organizations
seeking to advance new products and services. The Bureau encourages
innovative products and services that benefit consumers, including
those that promote fair, equitable, and nondiscriminatory access to
credit. As part of its coordination function, the Office of Fair
Lending engages with potential entrants into the Bureau's Innovation
programs, including those interested in special purpose credit programs
\10\ to help promote credit access for underserved borrowers.
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\10\ Consumer Financial Protection Bureau, Supervisory
Highlights Summer 2016 at 16-18 (June 2016), https://files.consumerfinance.gov/f/documents/Supervisory_Highlights_Issue_12.pdf.
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1.3 Upstart No-Action Letter
In February 2016, the Bureau issued its initial No Action Letter
(NAL) policy, which provides Bureau staff the ability to evaluate an
applicant's consumer financial product or service and signify that
Bureau staff has no present intent to recommend initiation of
supervisory or enforcement action against the entity in respect to the
product or service.\11\
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\11\ The 2016 policy as submitted to the Federal Register is
available at https://files.consumerfinance.gov/f/201602_cfpb_no-action-letter-policy.pdf. As of the issuance of this report, a
revised NAL policy is under consideration. See Section 1.4 for more
information.
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In 2018 Fair Lending continued to monitor Upstart Network, Inc.
(Upstart) under the terms of the no-action letter it received from
Bureau staff on September 14, 2017.
By way of background, Upstart is a company that uses machine
learning in making credit and pricing decisions. Based in San Carlos,
Calif., Upstart provides an online lending platform for consumers to
apply for personal loans, including credit card refinancing, student
loans, and debt consolidation. Upstart evaluates consumer loan
applications using traditional factors such as credit score and income,
as well as incorporating non-traditional sources of information such as
education and employment history.
The no-action letter issued to Upstart signified that Bureau staff
has no present intent to recommend initiation of supervisory or
enforcement action against Upstart with respect to the Equal Credit
Opportunity Act. The letter applies to Upstart's model for underwriting
and pricing applicants as described in the company's application
materials. The no-action letter is specific to the facts and
circumstances of the particular company and does not serve as an
endorsement of the use of any particular variables or modeling
techniques. In 2018 Fair Lending monitored Upstart under the terms of
the 2017 NAL. Under the terms of the no-action letter issued by Bureau
staff, Upstart agreed to share certain information with the CFPB
regarding the loan applications it receives, how it decides which loans
to approve, and how it will mitigate risk to consumers, as well as
information on how its model expands access to credit for traditionally
underserved populations. In addition, Upstart agreed as part of its
request for a NAL to employ other consumer safeguards. These
safeguards, which are described in the application materials posted on
the Bureau's website, include ensuring compliance with adverse action
notice requirements, and ensuring that all of its consumer-facing
communications are timely, transparent, and clear, and use plain
language to convey to consumers the type of information that will be
used in underwriting.
The CFPB expects that this information will further its
understanding of how the types of practices employed by Upstart impact
access to credit generally and for traditionally underserved
populations, as well as the application of compliance management
systems for these emerging practices.
1.4 Models
When making credit decisions, lenders often rely on proprietary or
third-party credit scoring models. In recent years, new third-party
credit scoring models have been developed for lenders based on
information beyond the contents of a consumer's core credit file. The
use of alternative data and modeling techniques may expand access to
credit or lower credit cost and, at the same time, present fair lending
risks.
In 2018, Fair Lending recommended supervisory reviews of third-
party credit scoring models so that the Bureau ``keep[s] pace with the
evolution of technology in consumer financial products and services in
order to accomplish its strategic goals and objectives.'' \12\ These
recommended reviews would focus on obtaining information and learning
about the models and compliance systems of third-party credit scoring
companies for the purpose of assessing fair lending risks to consumers
and whether the models are likely to increase access to credit.
Observations from these reviews are expected to further the Bureau's
interest in identifying potential benefits and risks associated with
the use of
[[Page 32423]]
alternative data and modeling techniques.
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\12\ CFPB Strategic Plan for FY 2018-2022, https://files.consumerfinance.gov/f/documents/cfpb_strategic-plan_fy2018-fy2022.pdf.
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A significant focus of the Bureau's interest in models is ways that
alternative data and modeling may expand access to credit for consumers
who are credit invisible or who lack enough credit history to obtain a
credit score. The Bureau is also interested in other potential benefits
associated with the use of alternative data and modeling techniques
that may directly or indirectly benefit consumers, including enhanced
creditworthiness predictions, more timely information about a consumer,
lower costs, and operational improvements.
2. Outreach: Promoting Fair Lending Compliance and Education
A key tool that the Bureau uses to help prevent lending
discrimination is outreach and education. Pursuant to Dodd-Frank,\13\
the Office of Fair Lending regularly engages in outreach with Bureau
stakeholders, including consumer advocates, civil rights organizations,
industry, academia, and other government agencies, to: (1) Educate them
about fair lending compliance and access to credit issues and (2) hear
their views on the Bureau's work to inform the Bureau's policy
decisions.
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\13\ Dodd-Frank Act section 1013(c)(2)(C) (codified at 12 U.S.C.
5493(c)(2)(C)).
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The Bureau is committed to communicating directly with all
stakeholders on its policies, compliance expectations, and fair lending
priorities, and to receiving valuable input about fair lending issues
and how innovation can promote fair, equitable, and nondiscriminatory
access to credit.
2.1 Blog Posts
The Bureau regularly uses its blog as a tool to communicate
effectively to consumers and other stakeholders on timely issues,
emerging areas of concern, Bureau initiatives, and more. In 2018 the
Bureau published four blog posts related to fair lending topics
including: Providing consumers updated information about a fair lending
enforcement action,\14\ announcing the Bureau's day -long Symposium,
Building a Bridge to Credit Visibility,\15\ announcing the release of a
new research report on the geographic patterns of credit
invisibility,\16\ and noting the release of the fair lending annual
report on 2017 activities.\17\
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\14\ Patrice Alexander Ficklin, What you need to know to get
money from the settlement with Bancorp South Bank for alleged
discrimination, Consumer Financial Protection Bureau (June 5, 2018),
https://www.consumerfinance.gov/about-us/blog/what-you-need-know-get-money-settlement-bancorpsouth-bank-alleged-discrimination/.
\15\ Patrice Alexander Ficklin, Save the date for the `Building
a Bridge to Credit Visibility' symposium, Consumer Financial
Protection Bureau (Aug. 02, 2018), https://www.consumerfinance.gov/about-us/blog/save-date-building-bridge-credit-visibility-symposium/.
\16\ Ken Brevoort & Patrice Ficklin, New research report on the
geography of credit invisibility, Consumer Financial Protection
Bureau (Sept. 19, 2018), https://www.consumerfinance.gov/about-us/blog/new-research-report-geography-credit-invisibility/.
\17\ Patrice Alexander Ficklin, Promoting fair, equitable, and
nondiscriminatory access to credit: 2017 Fair Lending Report (Dec.
4, 2018), https://www.consumerfinance.gov/about-us/blog/promoting-fair-equitable-and-nondiscriminatory-access-credit-2017-fair-lending-report/.
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The Bureau's blog posts, including those related to fair lending,
may be accessed at www.consumerfinance.gov/blog.
2.2 Supervisory Highlights
Supervisory Highlights has long been a report that anchors the
Bureau's efforts to communicate about the Bureau's supervisory
activity. More information about the fair lending topics discussed this
year in Supervisory Highlights can be found in Section 5.1.1 of this
Report. As with all Bureau resources, all editions of Supervisory
Highlights are available on www.consumerfinance.gov/reports.
2.3 Speaking Engagements and Roundtables
Staff from the Bureau's Office of Fair Lending and Equal
Opportunity participated in a number of outreach speaking events and
roundtables throughout 2018 to: (1) Educate them about fair lending
compliance and access to credit issues and (2) hear their views on the
Bureau's work to inform the bureau's policy decisions. In these events,
staff shared information on fair lending priorities, emerging issues,
and heard feedback from stakeholders on fair lending issues and how
innovation can promote fair, equitable, and nondiscriminatory access to
credit. Some examples of the topics covered include fair lending
priorities, fair lending model governance, innovations in lending,
redlining, HMDA, small business lending, alternative data, and
installment lending contracts. In addition to these outreach events,
the 2018 Symposium, discussed in Section 1.1 of this Report, served as
a principal vehicle to exchange information related to access to credit
to inform the Bureau's policy making activity.
3.0 Guidance and Rulemaking
3.1 HMDA Exemptions Under EGRRCPA
As part of the Bureau's efforts to enforce Home Mortgage Disclosure
Act (HMDA) and its implementing regulation, Regulation C, on August 31,
2018, the Bureau issued an interpretive and procedural rule to
implement and clarify the requirements of section 104(a) of the
Economic Growth, Regulatory Relief, and Consumer Protection Act
(EGRRCPA), which earlier in 2018 amended certain provisions of
HMDA.\18\
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\18\ Public Law 115-174, 132 Stat. 1296 (2018).
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The rule clarifies that insured depository institutions and insured
credit unions covered by a partial exemption have the option of
reporting exempt data fields as long as they report all data fields
within any exempt data point for which they report data; clarifies that
only loans and lines of credit that are otherwise HMDA reportable count
toward the thresholds for the partial exemptions; clarifies which of
the data points in Regulation C are covered by the partial exemptions;
designates a non-universal loan identifier for partially exempt
transactions for institutions that choose not to report a universal
loan identifier; and clarifies the exception to the partial exemptions
for negative Community Reinvestment Act examination history. The rule
also provided that at a later date, the Bureau would initiate a notice-
and-comment rulemaking to incorporate these interpretations and
procedures into Regulation C and further implement the Act.\19\
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\19\ Consumer Financial Protection Bureau, Partial Exemptions
from the Requirements of the Home Mortgage Disclosure Act Under the
Economic Growth, Regulatory Relief, and Consumer Protection Act
(Regulation C) (September 7, 2018), 45325-45333, 83 FR 45325,
https://www.federalregister.gov/documents/2018/09/07/2018-19244/partial-exemptions-from-the-requirements-of-the-home-mortgage-disclosure-act-under-the-economic.
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The Bureau also engaged in a number of non-rulemaking activities to
facilitate the EGRRCPA implementation. The Bureau reviewed its
compliance guides and examination manuals to make appropriate updates,
as well as engaged with stakeholders regarding the issuance of guidance
to meet the statutory requirements and facilitate compliance.\20\
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\20\ Kelly Cochran, Fall 2018 rulemaking agenda (October 17,
2018), https://www.consumerfinance.gov/about-us/blog/fall-2018-rulemaking-agenda/.
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3.2 HMDA Data Disclosure
On December 21, 2018, the Bureau issued final policy guidance
describing
[[Page 32424]]
modifications that it intends to apply to the HMDA data reported by
financial institutions before the data are made public on the loan
level. In issuing the guidance, the Bureau considered how appropriately
to protect applicant and borrower privacy while also fulfilling HMDA's
public disclosure purposes. The policy guidance applies to data
compiled by financial institutions in 2018 that will be made available
to the public beginning in 2019. In addition, after consideration of
stakeholder comments urging that determinations concerning the
disclosure of loan-level HMDA data be effectuated through more formal
processes, the Bureau also has decided to add a new notice-and-comment
rulemaking to govern the disclosure of HMDA data in future years, which
was included in the Bureau's Fall 2018 rulemaking agenda.
3.3 ECOA and Regulation B
On May 21, 2018, in response to the enactment of a Congressional
resolution disapproving the Bureau's indirect auto lending guidance,
the Bureau's former Acting Director issued a statement indicating the
Bureau's intent to reexamine requirements of the ECOA regarding the
disparate impact doctrine in light of recent Supreme Court case law
addressing the availability of disparate impact legal theory under the
Fair Housing Act.\21\
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\21\ Statement of the Bureau of Consumer Financial Protection on
enactment of S.J. Res. 57 (May 21, 2018), https://www.consumerfinance.gov/about-us/newsroom/statement-bureau-consumer-financial-protection-enactment-sj-res-57/; see also Fall 2018
Regulatory Agenda Preamble (Aug. 30, 2018), available at https://www.reginfo.gov/public/jsp/eAgenda/StaticContent/201810/Preamble_3170.html.
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On April 19, 2019, the Bureau announced that it would be conducting
a symposia series exploring consumer protections in the financial
services marketplace. One topic of the symposia series is disparate
impact and the Equal Credit Opportunity Act.\22\ Details regarding the
symposium will be announced on the Bureau's website at a later time.
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\22\ Consumer Financial Protection Bureau Announces Symposia
Series (April 8, 2019), https://www.consumerfinance.gov/about-us/newsroom/bureau-announces-symposia-series/.
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3.4 Small Business Data Collection
Section 1071 of the Dodd-Frank Act amends ECOA to require financial
institutions to collect, report, and make public certain information
concerning credit applications made by women-owned, minority-owned, and
small businesses. The amendments to ECOA made by the Dodd-Frank Act
require that specific data be collected, maintained, and reported,
including but not limited to the type of loan applied for, the amount
of credit applied for, the type of action taken with regard to each
application, the census tract of the principal place of business of the
loan applicant, and the race, sex, and ethnicity of the principal
owners of the business. The Dodd-Frank Act also provides authority for
the Bureau to require any additional data that the Bureau determines
would aid in fulfilling the purposes of section 1071.
In connection with its Fall 2018 Rulemaking Agenda,\23\ the Bureau
announced that in light of the need to focus additional resources on
various HMDA initiatives, the Bureau had adjusted its timeline for
implementing the statutory directive contained in section 1071 from
pre-rule status to longer-term action status. More recently, in
connection with its Spring 2019 Rulemaking Agenda,\24\ the Bureau
announced it intends to recommence work later this year to develop
rules to implement section 1071 of the Dodd-Frank Act. The Bureau will
recommence its work on section 1071 with a symposium on small business
loan data collection.\25\ Details regarding the symposium will be
announced on the Bureau's website at a later time.
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\23\ Kelly Cochran, Fall 2018 rulemaking agenda (October 17,
2018), https://www.consumerfinance.gov/about-us/blog/fall-2018-rulemaking-agenda/.
\24\ Diane Thompson, Spring 2019 rulemaking agenda (May 22,
2019), https://www.consumerfinance.gov/about-us/blog/spring-2019-rulemaking-agenda/.
\25\ Consumer Financial Protection Bureau Announces Symposia
Series (April 8, 2019), https://www.consumerfinance.gov/about-us/newsroom/bureau-announces-symposia-series/.
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3.5 Amicus Program
The Bureau files amicus, or friend-of-the-court, briefs in
significant court cases concerning the federal consumer financial
protection laws, including ECOA. These amicus briefs provide the courts
with Bureau views on significant consumer financial protection issues.
Information regarding the Bureau's amicus program, including a
description of the amicus briefs it has filed, is available on the
Bureau's website.\26\
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\26\ https://www.consumerfinance.gov/policy-compliance/amicus/.
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4. Supervision and Enforcement Prioritization
4.1 Risk-Based Prioritization
Because Congress charged the Bureau with responsibility for
overseeing many lenders and products, SEFL, including the Office of
Fair Lending, have long-used a risk-based approach to prioritize
supervisory examinations and enforcement activity, to help ensure focus
on areas that present substantial risk of credit discrimination for
consumers.\27\ This same approach continued in 2018.
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\27\ For additional information regarding the Bureau's risk-
based approach in prioritizing supervisory examinations, see Section
3.2.3, Risk-Based Approach to Examinations, Supervisory Highlights
Summer 2013, available at http://files.consumerfinance.gov/f/201308_cfpb_supervisory-highlights_august.pdf.
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As part of the prioritization process, the Bureau identifies
emerging developments and trends by monitoring key consumer financial
markets. If this market intelligence identifies fair lending risks in a
particular market that require further attention, that information is
incorporated into the prioritization process to determine the type and
extent of attention required to address those risks.
The fair lending prioritization process incorporates a number of
additional factors as well, including: Tips and leads from industry
whistleblowers, advocacy groups, and government agencies; supervisory
and enforcement history; consumer complaints; and results from analysis
of HMDA and other publicly available data.
4.2 Fair Lending Supervisory and Enforcement Priorities
While the Bureau remains committed to ensuring that consumers are
protected from discrimination in all credit markets under its legal
authority, as a result of its annual risk-based prioritization process
in 2018, the Bureau identified the following new focus areas for fair
lending examinations or investigations:
Student Loan Origination: Whether there is discrimination
in policies and practices governing underwriting and pricing.
Debt Collection and Model Use: Whether there is
discrimination in policies and practices governing auto servicing and
credit card collections, including the use of models that predict
recovery outcomes.
The Bureau's fair lending supervision work also continued to focus
on mortgage origination, mortgage servicing, and small business
lending, as in previous years.
The Bureau's mortgage origination work continued to focus on: (a)
Redlining and whether lenders intentionally discouraged prospective
applicants living in or seeking credit in minority neighborhoods from
applying for credit; (b) assessing whether there is discrimination in
underwriting and pricing processes as well as steering; and (c) HMDA
data integrity and
[[Page 32425]]
validation (supporting ECOA exams) as well as HMDA diagnostic work
(monitoring and assessing new rule compliance).
The Bureau's mortgage servicing fair lending supervision work
explored whether there is discrimination in the default servicing
processes at particular institutions, and focused on whether there are
weaknesses in fair lending-related compliance management systems.
The Bureau's small business lending supervision work focused on
assessing whether (1) there is discrimination in application,
underwriting, and pricing processes, (2) creditors are redlining, and
(3) there are weaknesses in fair lending related compliance management
systems.
The Bureau also continued to vigorously enforce Federal fair
lending laws, including ECOA and HMDA. One key area on which the Bureau
focused its fair lending enforcement efforts was addressing potential
discrimination in mortgage lending, including the unlawful practice of
redlining.
5. Fair Lending Supervision
One of the Bureau's consumer protection tools is its supervisory
examinations. The Bureau's fair lending supervision program assesses
compliance with ECOA and HMDA at banks and nonbanks over which the
Bureau has supervisory authority. Supervision activities in 2018 ranged
from assessments of institutions' fair lending compliance management
systems to in-depth reviews of products or activities that may pose
heightened fair lending risks to consumers. As part of its fair lending
supervision program, the Bureau conducted three types of fair lending
reviews: ECOA baseline reviews, ECOA targeted reviews, and HMDA data
integrity reviews.
As a general matter, if such a review finds that an institution's
fair lending compliance is inadequate or creates fair lending risk, the
Bureau communicates its supervisory recommendations to the institution
to help the institution consider fair lending compliance programs
commensurate with the size and complexity of the institution and its
lines of business.\28\ In circumstances where examinations identify
violations of fair lending laws, institutions may be required to
provide remediation and restitution to consumers, along with other
appropriate relief. In accordance with law, the Bureau is mandated to
refer matters to the Justice Department when it has reason to believe
that a creditor has engaged in a pattern or practice of lending
discrimination in violation of ECOA.\29\ The Bureau also may refer
other potential ECOA violations to the Justice Department, at its
discretion.\30\
---------------------------------------------------------------------------
\28\ For recent updates to the types of supervisory
communications, see https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/bcfp_bulletin-2018-01_changes-to-supervisory-communications.pdf.
\29\ 15 U.S.C. 1691e(g).
\30\ Id.
---------------------------------------------------------------------------
5.1.1 Fair Lending Supervisory Developments
The Bureau published various supervision program developments
related to fair lending in the Summer 2018 edition of Supervisory
Highlights. Those developments are also summarized below.\31\
---------------------------------------------------------------------------
\31\ Consumer Financial Protection Bureau, Supervisory
Highlights Summer 2018 at 18-20 (September 2018), https://www.consumerfinance.gov/documents/6817/bcfp_supervisory-highlights_issue-17_2018-09.pdf.
---------------------------------------------------------------------------
5.1.2 HMDA Implementation and New Data Submission Platform
The Summer 2018 edition of Supervisory Highlights \32\ noted its
prior statement regarding HMDA implementation and discussed updates to
HMDA related to the enactment of the EGRRCPA.
---------------------------------------------------------------------------
\32\ Id.
---------------------------------------------------------------------------
On December 21, 2017, the Bureau issued a public statement
regarding HMDA implementation.\33\ The statement indicated that, ``for
HMDA data collected in 2018 and reported in 2019 the Bureau does not
intend to require data resubmission unless data errors are material.
Furthermore, the Bureau does not intend to assess penalties with
respect to errors in data collected in 2018 and reported in 2019.'' The
Bureau further indicated that examinations of 2018 HMDA data would be
diagnostic in nature, serving to help institutions identify compliance
weakness and crediting good faith efforts.\34\ The statement also noted
that the Bureau ``intends to engage in a rulemaking to reconsider
various aspects of the 2015 HMDA Rule such as the institutional and
transactional coverage tests and the rule's discretionary data
points.'' \35\
---------------------------------------------------------------------------
\33\ CFPB Issues Public Statement on Home Mortgage Disclosure
Act Compliance (December 21, 2017), available at https://www.consumerfinance.gov/about-us/newsroom/cfpb-issues-public-statement-home-mortgage-disclosure-act-compliance/.
\34\ Id.
\35\ Id.
---------------------------------------------------------------------------
In January 2018, the Bureau launched a new HMDA Platform to collect
and publish HMDA data. The HMDA Platform is operated by the Bureau on
behalf of the members of the Federal Financial Institutions Examination
Council (FFIEC) and the Department of Housing and Urban Development.
The new platform modernizes the HMDA collection process, and aims to
reduce the time to deliver HMDA data to the public. New capabilities
will continue to be added to this platform, including a forthcoming
publication query tool and Application Programming Interface (API) that
will replace the previous API.
The previous Bureau HMDA Explorer and API that are scheduled to be
retired had been designed to support a previous generation of HMDA data
and were not able to accommodate the expanded data points in the 2018
collection that were added pursuant to the 2015 HMDA Rule. The tool had
not had any major updates since its release in 2013. In order to
prepare for the retirement of the old site, the Bureau conducted a
number of interviews with community groups and HMDA stakeholders over
last summer to develop a new set of requirements based on the needs of
data users. The new query tool, HMDA Data Browser, will be released
late Summer 2019 on the new HMDA Platform.
The Summer 2018 Supervisory Highlights also discussed the Bureau's
July 5, 2018 public statement regarding recent HMDA amendments under
the EGRRCPA. The EGRRCPA provided partial exemptions for some insured
depository institutions and insured credit unions from certain HMDA
requirements. The Bureau indicated that the EGRRCPA would not affect
the format of the HMDA Loan Application Registry (LAR).\36\
Institutions that were no longer required to report certain data fields
under the EGRRCPA would instead enter an exemption code in the field.
On August 31, 2018, the Bureau published an updated Filing Instructions
Guide which added exemption codes to the requisite data fields under
the EGRRCPA.\37\
---------------------------------------------------------------------------
\36\ Consumer Financial Protection Bureau, Supervisory
Highlights Summer 2018 at 19 (September 2018), https://www.consumerfinance.gov/documents/6817/bcfp_supervisory-highlights_issue-17_2018-09.pdf.
\37\ Filing Instructions Guide for HMDA Data Collected in 2018
(August 2018), https://s3.amazonaws.com/cfpb-hmda-public/prod/help/2018-hmda-fig-2018-hmda-rule.pdf.
---------------------------------------------------------------------------
More information about the HMDA-related topics discussed this year
in Supervisory Highlights can be found in Section 3 of this Report.
5.1.3 Small Business Lending Review Procedures
The Summer 2018 edition of Supervisory Highlights \38\ reported on
the Bureau's fair lending work in small
[[Page 32426]]
business lending where the Bureau seeks to ensure that creditors do not
discriminate on any prohibited bases. The Supervisory Highlights
discussed the procedures and methodologies used as part of the Bureau's
small business examination process.
---------------------------------------------------------------------------
\38\ Id. at 20-21.
---------------------------------------------------------------------------
Each ECOA small business lending review includes a fair lending
assessment of the institution's Compliance Management System (CMS)
related to small business lending. To conduct this portion of the
review, examinations use Module II of the ECOA Baseline Review
Modules.\39\ CMS reviews include assessments of the institution's board
and management oversight, compliance program (policies and procedures,
training, monitoring and/or audit, and complaint response), and service
provider oversight.
---------------------------------------------------------------------------
\39\ Equal Credit Opportunity Act (ECOA) Baseline Review
Procedures (April 2019), https://www.consumerfinance.gov/policy-compliance/guidance/supervision-examinations/equal-credit-opportunity-act-ecoa-baseline-review-procedures/.
---------------------------------------------------------------------------
Examinations also use the Interagency Fair Lending Examination
Procedures, which have been adopted in the Bureau's Supervision and
Examination Manual. In some ECOA small business lending reviews,
examination teams may evaluate an institution's fair lending risks and
controls related to origination or pricing of small business lending
products. Some reviews may include a geographic distribution analysis
of small business loan applications, originations, loan officers, or
marketing and outreach, in order to assess potential redlining risk.
As with other in-depth ECOA reviews, ECOA small business lending
reviews may include statistical analysis of lending data in order to
identify fair lending risks and appropriate areas of focus during the
examination. Notably, statistical analysis is only one factor taken
into account by examination teams that review small business lending
for ECOA compliance. Reviews typically include other methodologies to
assess compliance, including policy and procedure reviews, interviews
with management and staff, and reviews of individual loan files.
6.0 Fair Lending Enforcement
In addition to supervision, the Bureau's enforcement function is
another tool to protect consumers. The Bureau conducts investigations
of potential violations of HMDA and ECOA, and if it believes a
violation has occurred, can file a complaint either through its
administrative enforcement process or in federal court. In 2018, the
Bureau opened and continued a number of fair-lending-related
investigations, however, it did not bring fair lending-related
enforcement actions.
The Bureau refers matters with ECOA violations to the DOJ when it
has reason to believe that a creditor has engaged in a pattern or
practice of lending discrimination.\40\ A referral does not prevent the
Bureau from taking its own independent action to address a violation.
---------------------------------------------------------------------------
\40\ 15 U.S.C. 1691e(g).
---------------------------------------------------------------------------
6.1 Implementing Enforcement Orders
When an enforcement action is resolved through a public enforcement
order, the Bureau (together with the Justice Department, when relevant)
takes steps to ensure that the respondent or defendant complies with
the requirements of the order. As appropriate to the specific
requirements of individual public enforcement orders, the Bureau may
take steps to ensure that borrowers who are eligible for compensation
receive remuneration and that the defendant has complied with the
injunctive provisions of the order, including implementing a
comprehensive fair lending compliance management system. Throughout
2018, the Bureau worked to implement and oversee compliance with the
pending public enforcement orders that were entered by federal courts
or issued by the Bureau's Director in prior years.
6.1.1 Settlement Administration
Bancorp South Bank
On June 25, 2018 participation materials were mailed to potentially
eligible African-American borrowers identified as harmed by Bancorp
South's alleged redlining discrimination in mortgage lending between
2011 and 2015 notifying them how to participate in the settlement,
resulting from a 2016 enforcement action brought by the Bureau and
Justice Department against Bancorp South for alleged redlining and
pricing discrimination in mortgage lending.\41\
---------------------------------------------------------------------------
\41\ Consent Order, United States of America and Consumer
Financial Protection Bureau v. Bancorp South Bank, CFPB No.
1:16cv118 (July 25, 2016) https://www.consumerfinance.gov/documents/519/201606_cfpb_bancorpSouth-consent-order.pdf.
---------------------------------------------------------------------------
Fifth Third Bank
On December 17, 2018, participating African-American and Hispanic
borrowers, whom Fifth Third overcharged for their auto loans, were
mailed checks totaling $12 million, plus accrued interest, resulting
from a 2015 enforcement action brought by the Bureau and the Justice
Department against Fifth Third for alleged discrimination in auto
lending.\42\
---------------------------------------------------------------------------
\42\ Consent Order, In re Fifth Third Bank, CFPB No. 2015-CFPB-
0024 (Sept. 28, 2015), https://www.consumerfinance.gov/about-us/newsroom/cfpb-takes-action-against-fifth-third-bank-for-auto-lending-discrimination-and-illegal-credit-card-practices/.
---------------------------------------------------------------------------
Honda Finance
In 2018 the Bureau conducted activity following the 2015
enforcement action against Honda Finance. By way of background, on July
14, 2015, working in close coordination with the DOJ, the Bureau
ordered American Honda Finance Corporation (Honda Finance) to pay $24
million in damages to harmed African-American, Hispanic, and Asian or
Pacific Islander borrowers. On October 2, 2017, participating African-
American, Hispanic, and Asian and/or Pacific Islander borrowers, whom
Honda Finance overcharged for their auto loans were mailed checks
compensating them for their harm. During 2018, the administration of
the settlement consisted largely of monitoring consumer responses,
check cashing rates and following up with respect to uncashed checks to
determine better ways to contact eligible consumers and encourage check
cashing.
Provident Funding Associates
In 2018 the Bureau completed its work implementing the consumer
redress provisions of the consent order in the Provident Funding
Associates (Provident) matter. Working jointly with DOJ, the agencies
filed a complaint on May 28, 2015 alleging that Provident unlawfully
discriminated against African-American and Hispanic borrowers by
overcharging them on their mortgage loans. The consent order required
that Provident pay $9 million in restitution. On November 2, 2017,
participating African-American and Hispanic borrowers who were
unlawfully overcharged on their mortgage loans were mailed checks. On
November 6, 2018, the Bureau completed the process for the mailing of
remuneration checks, totaling $9 million, plus accrued interest, to
eligible borrowers.\43\
---------------------------------------------------------------------------
\43\ Patrice Alexander Ficklin, African-American and Hispanic
borrowers harmed by Provident will receive $9 million in
compensation, Consumer Financial Protection Bureau (Nov. 2, 2017),
https://www.consumerfinance.gov/about-us/blog/african-american-and-hispanic-borrowers-harmed-provident-will-receive-9-million-compensation/.
---------------------------------------------------------------------------
6.1.2 ECOA Referrals to the Department of Justice
The Bureau must refer to the Justice Department (DOJ) a matter when
it has
[[Page 32427]]
reason to believe that a creditor has engaged in a pattern or practice
of lending discrimination in violation of ECOA.\44\ The Bureau also may
refer other potential ECOA violations to the DOJ.\45\ In 2018, the
Bureau did not refer any ECOA violations to the Justice Department.
---------------------------------------------------------------------------
\44\ 15 U.S.C. 1691e(g).
\45\ Id.
---------------------------------------------------------------------------
6.1.3 Pending Fair Lending Investigations
In 2018, the Bureau had a number of ongoing fair lending
investigations of institutions involving a variety of consumer
financial products. One key area on which the Bureau focused its fair
lending enforcement efforts was addressing potential discrimination in
mortgage lending, including the unlawful practice of redlining. At the
end of 2018, the Bureau had a number of pending investigations in this
and other areas.
7.0 Interagency Coordination
7.1 Interagency Coordination and Engagement
In 2018, the Office of Fair Lending coordinated the Bureau's fair
lending regulatory, supervisory, and enforcement activities with those
of other federal agencies and state regulators to promote consistent,
efficient, and effective enforcement of federal fair lending laws.\46\
This interagency engagement seeks to address current and emerging fair
lending risks.
---------------------------------------------------------------------------
\46\ Dodd-Frank Act section 1013(c)(2)(B) (codified at 12 U.S.C.
5493(c)(2)(B)).
---------------------------------------------------------------------------
The Bureau, along with the Federal Trade Commission (FTC),
Department of Housing and Urban Development (HUD), Federal Deposit
Insurance Corporation (FDIC), Federal Reserve Board (FRB), National
Credit Union Administration (NCUA), Office of the Comptroller of the
Currency (OCC), Department of Justice (DOJ), and the Federal Housing
Finance Agency (FHFA), comprise the Interagency Task Force on Fair
Lending.\47\ The Task Force meets regularly to discuss fair lending
enforcement efforts, share current methods of conducting supervisory
and enforcement fair lending activities, and coordinate fair lending
policies.
---------------------------------------------------------------------------
\47\ In early 2019, the Bureau assumed the role of chairing the
Task Force.
---------------------------------------------------------------------------
The Bureau also belongs to a standing working group of federal
agencies--with the DOJ, HUD, and FTC--that meets regularly to discuss
issues relating to fair lending enforcement. These agencies constitute
the Interagency Working Group on Fair Lending Enforcement. The agencies
use these meetings to discuss fair lending developments and trends,
methodologies for evaluating fair lending risks and violations, and
coordination of fair lending enforcement efforts. In addition to these
interagency working groups, we meet periodically and on an ad hoc basis
with the Justice Department and prudential regulators to coordinate the
Bureau's fair lending work.
In 2018, the Bureau chaired the FFIEC HMDA/Community Reinvestment
Act Data Collection Subcommittee, a subcommittee of the FFIEC Task
Force on Consumer Compliance (Task Force), that oversees FFIEC projects
and programs involving HMDA data collection and dissemination, the
preparation of the annual FFIEC budget for processing services, and the
development and implementation of other related HMDA processing
projects as directed by the Task Force.
8. Interagency Reporting on ECOA and HMDA
The law requires the Bureau to file a report to Congress annually
describing the administration of its functions under ECOA, summarizing
public enforcement actions taken by other agencies with administrative
enforcement responsibilities under ECOA, and providing an assessment of
the extent to which compliance with ECOA has been achieved.\48\ In
addition, the Bureau's annual HMDA reporting requirement calls for the
Bureau, in consultation with HUD, to report annually on the utility of
HMDA's requirement that covered lenders itemize certain mortgage loan
data.\49\
---------------------------------------------------------------------------
\48\ 15 U.S.C. 1691f.
\49\ 12 U.S.C. 2807.
---------------------------------------------------------------------------
8.1 Reporting on ECOA Enforcement
The enforcement efforts and compliance assessments made by all the
agencies assigned enforcement authority under Section 704 of ECOA are
discussed in this section.
8.2 Public Enforcement Actions
The agencies charged with administrative enforcement of ECOA under
Section 704 are as follows:
1. CFPB;
2. Federal Deposit Insurance Corporation (FDIC);
3. Federal Reserve Board (FRB);
4. National Credit Union Administration (NCUA);
5. Office of the Comptroller of the Currency (OCC); \50\
---------------------------------------------------------------------------
\50\ Collectively, the Board of Governors of the Federal Reserve
System (FRB), the Federal Deposit Insurance Corporation (FDIC), the
National Credit Union Administration (NCUA), the Office of the
Comptroller of the Currency (OCC), and the Bureau of Consumer
Financial Protection (the Bureau) comprise the FFIEC. The FFIEC is a
``formal interagency body empowered to prescribe uniform principles,
standards, and report forms for the federal examination of financial
institutions'' by the member agencies listed above and the State
Liaison Committee ``and to make recommendations to promote
uniformity in the supervision of financial institutions.'' Federal
Financial Institutions Examination Council, http://www.ffiec.gov
(last visited April 5, 2018). The State Liaison Committee was added
to FFIEC in 2006 as a voting member.
---------------------------------------------------------------------------
6. Agricultural Marketing Service (AMS) of the U.S. Department of
Agriculture (USDA),\51\
---------------------------------------------------------------------------
\51\ The Grain Inspection, Packers and Stockyards Administration
(GIPSA) was eliminated as a stand-alone agency within USDA in 2017.
The functions previously performed by GIPSA have been incorporated
into the Agricultural Marketing Service (AMS), and ECOA reporting
now comes from the Packers and Stockyards Division, Fair Trade
Practices Program, AMS.
---------------------------------------------------------------------------
7. Department of Transportation (DOT);
8. Farm Credit Administration (FCA);
9. Federal Trade Commission (FTC);
10. Securities and Exchange Commission (SEC); and
11. Small Business Administration (SBA).\52\
---------------------------------------------------------------------------
\52\ 15 U.S.C. 1691c.
---------------------------------------------------------------------------
In 2018, none of the eleven ECOA enforcement agencies brought
public enforcement actions for violations of ECOA.
Below is an overview of the year-to-year ECOA enforcement actions
since 2012:
------------------------------------------------------------------------
Total
Reporting year enforcement
matters
------------------------------------------------------------------------
2012.................................................... 1
2013.................................................... 26
2014.................................................... 2
2015.................................................... 5
2016.................................................... 3
2017.................................................... 1
2018.................................................... 0
------------------------------------------------------------------------
8.1.2 Violations Cited During ECOA Examinations
Among institutions examined for compliance with ECOA and Regulation
B, the FFIEC agencies reported that the most frequently-cited
violations were as follows:
[[Page 32428]]
Table 1--Regulation B Violations Cited by FFIEC Agencies: 2018
------------------------------------------------------------------------
Regulation B
FFIEC agencies reporting violations: 2018
------------------------------------------------------------------------
The Bureau, FDIC, FRB, NCUA, OCC.................. 12 CFR 1002.4(a):
Discrimination on a
prohibited basis in
a credit
transaction.
12 CFR 1002.9(a)(1),
(a)(2), (b)(2),
(c): Failure to
provide notice to
the applicant 30
days after
receiving a
completed
application
concerning the
creditor's approval
of, counteroffer or
adverse action on
the application;
failure to provide
appropriate notice
to the applicant 30
days after taking
adverse action on
an incomplete
application;
failure to provide
sufficient
information in an
adverse action
notification,
including the
specific reasons
for the action
taken.
12 CFR
1002.14(a)(2):
Failure to
routinely provide
an applicant with a
copy of all
appraisals and
other written
valuations
developed in
connection with an
application for
credit that is to
be secured by a
first lien on a
dwelling.
------------------------------------------------------------------------
Table 2--Regulation B Violations Cited by Other ECOA Agencies: 2017
------------------------------------------------------------------------
Regulation B
Other ECOA agencies violations: 2018
------------------------------------------------------------------------
FCA............................................... 12 CFR
1002.9(a)(1)(i),
(a)(2)(i), (b)(1):
Failure to provide
notice to the
applicant 30 days
after receiving a
completed
application
concerning the
creditor's approval
of, counteroffer or
adverse action on
the application;
failure to provide
sufficient
information in an
adverse action
notification,
including the
specific reasons
for the action
taken; failure to
provide ECOA
notice.
12 CFR 1002.13:
Failure to request
and collect
information for
monitoring
purposes.
------------------------------------------------------------------------
The AMS, SEC and the SBA reported that they received no complaints
based on ECOA or Regulation B in 2018. In 2018, the DOT reported that
it received a ``small number of consumer inquiries or complaints
concerning credit matters possibly covered by ECOA,'' which it
``processed informally.'' The FTC is an enforcement agency and does not
conduct compliance examinations.
8.2 Referrals to the Department of Justice
In 2018, one FFIEC agency, the NCUA, made a referral to the DOJ
involving discrimination in violation of ECOA. The NCUA made its
referral on the basis of marital status discrimination.
Below is a year-to-year overview of ECOA referrals to DOJ:
------------------------------------------------------------------------
Number of
Year referrals
------------------------------------------------------------------------
2012.................................................... 12
2013.................................................... 24
2014.................................................... 18
2015.................................................... 16
2016.................................................... 20
2017.................................................... 11
2018.................................................... 1
------------------------------------------------------------------------
8.3 Reporting on the Home Mortgage Disclosure Act
The Bureau's annual HMDA reporting requirement calls for the
Bureau, in consultation with HUD, to report annually on the utility of
HMDA's requirement that covered lenders itemize loan data in order to
disclose the number and dollar amount of certain mortgage loans and
applications, grouped according to various characteristics.\53\ The
Bureau, in consultation with HUD, finds that itemization and tabulation
of these data furthers the purposes of HMDA.
---------------------------------------------------------------------------
\53\ See 12 U.S.C. 2807.
Appendix A: Defined Terms
------------------------------------------------------------------------
Term Definition
------------------------------------------------------------------------
AMS............................................... Agricultural
Marketing Service
of the U.S.
Department of
Agriculture.
Bureau............................................ The Bureau of
Consumer Financial
Protection.
CMS............................................... Compliance
Management System.
Dodd-Frank Act.................................... The Dodd-Frank Wall
Street Reform and
Consumer Protection
Act.
DOJ............................................... The U.S. Department
of Justice.
DOT............................................... The U.S. Department
of Transportation.
ECOA.............................................. The Equal Credit
Opportunity Act.
EGRRCPA........................................... Economic Growth,
Regulatory Relief,
and Consumer
Protection Act.
FCA............................................... Farm Credit
Administration.
FDIC.............................................. Federal Deposit
Insurance
Corporation.
Federal Reserve Board or FRB...................... Board of Governors
of the Federal
Reserve System.
[[Page 32429]]
FFIEC............................................. Federal Financial
Institutions
Examination
Council--the FFIEC
member agencies are
the Board of
Governors of the
Federal Reserve
System (FRB), the
Federal Deposit
Insurance
Corporation (FDIC),
the National Credit
Union
Administration
(NCUA), the Office
of the Comptroller
of the Currency
(OCC), and the
Bureau of Consumer
Financial
Protection (The
Bureau). The State
Liaison Committee
was added to FFIEC
in 2006 as a voting
member.
FTC............................................... Federal Trade
Commission.
GIPSA............................................. Grain Inspection,
Packers and
Stockyards
Administration of
the U.S. Department
of Agriculture.
HMDA.............................................. The Home Mortgage
Disclosure Act.
HUD............................................... The U.S. Department
of Housing and
Urban Development.
NCUA.............................................. The National Credit
Union
Administration.
OCC............................................... Office of the
Comptroller of the
Currency.
SBA............................................... Small Business
Administration.
SEC............................................... Securities and
Exchange
Commission.
USDA.............................................. U.S. Department of
Agriculture.
------------------------------------------------------------------------
Kathleen L. Kraninger,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2019-14384 Filed 7-5-19; 8:45 am]
BILLING CODE 4810-AM-P
