Fair Lending Report of the Bureau of Consumer Financial Protection, April 2021
| Citation | 86 FR 22177 |
| Record Number | 2021-08716 |
| Published date | 27 April 2021 |
| Section | Notices |
| Court | Consumer Financial Protection Bureau |
Federal Register, Volume 86 Issue 79 (Tuesday, April 27, 2021)
[Federal Register Volume 86, Number 79 (Tuesday, April 27, 2021)]
[Notices]
[Pages 22177-22192]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-08716]
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BUREAU OF CONSUMER FINANCIAL PROTECTION
Fair Lending Report of the Bureau of Consumer Financial
Protection, April 2021
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 ninth Fair Lending Report of the Bureau of Consumer
Financial Protection (Fair Lending Report) to Congress. The Bureau is
committed to ensuring fair, equitable, and nondiscriminatory access to
credit for both individuals and communities. This report describes our
fair lending activities in supervision and enforcement; guidance and
rulemaking; interagency coordination; and outreach and education for
calendar year 2020.
DATES: The Bureau released the 2020 Fair Lending Report on its website
on April 14, 2021.
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,
April 2021
Message From the Acting Director
The Bureau recognizes April as fair lending and fair housing
month--a time to specifically highlight the importance of equity in our
financial markets. As
[[Page 22178]]
such, I am pleased to present the Fair Lending Annual Report to
Congress, describing the Consumer Financial Protection Bureau's fair
lending work in 2020.
I want to express how incredibly proud I am of the Bureau, the
Office of Fair Lending and Equal Opportunity (Office of Fair Lending)
and the work they have been able to accomplish in the past year--a
challenging year for all of us on so many different levels.
As I have made clear before, as Acting Director, my top priorities
for this agency are to take bold and swift action to address issues of
pervasive racial injustice and the long-term economic impacts of the
COVID-19 pandemic on consumers. Although the true severity of the
economic impacts of COVID-19 are just starting to be understood, it is
clear that the pandemic is exacerbating racial inequality in all
markets, including rising housing insecurity among the most vulnerable
consumers. This, combined with the lingering impacts of over 400 years
of chattel slavery and Jim Crow laws that sought to limit racial
equality through institutionalized discrimination, deepens our nation's
longstanding racial inequities. To fully understand and address these
issues, it is crucial that the Bureau apply a racial equity lens and to
find practical ways to make freedom from racial prejudice and pursuit
of racial equity a priority in the full breadth of the Bureau's work.
The Office of Fair Lending will play an integral part in achieving this
mission.
The Dodd-Frank Wall Street Reform and Consumer Protection Act
(Dodd-Frank Act) established the Bureau's Office of Fair Lending to
provide ``oversight and enforcement of Federal laws intended to ensure
the fair, equitable, and nondiscriminatory access to credit for both
individuals and communities.''
During my tenure, the Bureau will continue to use all the tools
Congress gave it, including enforcement, supervision, rulemaking,
guidance, research, and education to ensure fair, equitable and
nondiscriminatory access to credit. The Bureau will identify and act on
opportunities to focus on consumers in underserved communities, while
vigorously pursuing racial and economic justice. This includes, but is
in no way limited to, robust enforcement of fair lending laws under the
Bureau's jurisdiction.
As we are in the midst of a national emergency the likes of which
have not been seen in a lifetime, the time for bold action is now. The
hard work has already begun. I am eager for all that the Bureau, and
the Office of Fair Lending, will accomplish on behalf of all consumers.
Sincerely,
David K. Uejio.
Message From the Fair Lending Director
The events of 2020 challenged our nation in many ways. The COVID-19
pandemic has caused great physical, emotional, and economic suffering.
Millions of Americans face economic uncertainty and financial
insecurity, are underemployed or unemployed, are at the brink of
eviction or foreclosure, and are desperate for help.
Of those struggling, people and communities of color have been
disproportionately affected. Women- and minority-owned small businesses
are more likely to face more severe economic consequences than their
white counterparts. Black and Hispanic homeowners are also less likely
to access mortgage relief and forbearance, a troubling trend that the
Bureau will continue to address.
Further, I would be remiss to not say the names of Black men,
women, and children like George Floyd, Breonna Taylor, Tamir Rice and
Ahmaud Arbury, sadly among the many who were assaulted and murdered
last year. These incidents highlight racial and economic inequities and
their impacts on the country. As such, the Bureau's fair lending work
is more important now than perhaps ever.
I am proud of what we have been able to accomplish in the past
year. After hearing questions from financial institutions and consumer
and civil rights groups about ways to support financial inclusion, the
Bureau issued guidance on special purpose credit programs, which are
innovative ways to expand access to credit to traditionally underserved
communities, including minority and other underserved consumers. The
Bureau also continued to examine and investigate institutions for
compliance with the Home Mortgage Disclosure (HMDA) and Equal Credit
Opportunity (ECOA) Acts. Last year, the Bureau filed a lawsuit against
Townstone Financial, Inc., a nonbank retail-mortgage creditor that
alleged, among other things, that Townstone illegally discouraged
prospective African-American applicants and prospective applicants
living in African-American neighborhoods in the Chicago MSA from
applying to Townstone for mortgage loans. We also embraced responsible
innovation, hosting our first ever Tech Sprint, where participants
creatively leveraged technology to develop innovative proposals on ways
that lenders could better educate consumers by providing more useful
explanations of adverse actions on their credit applications, and what
those consumers can do to strengthen their next application for credit.
Additionally, in 2020, Bureau staff participated in more than 90
outreach events with our external stakeholders, allowing the Bureau to
hear perspectives on emerging issues and topics to better inform policy
decisions.
Last year (2020) tested us, but 2021 will prove to be consequential
for consumers as the Bureau vigorously works to ensure an equitable
recovery from the economic fallout of the COVID-19 pandemic. As the
Bureau enters its tenth year of existence in 2021, I am reminded of the
crisis in which this agency was conceived, the Great Recession. I am
also reminded of the difference the Bureau has made in the lives of
consumers over that decade. Most of all, the Bureau is still here, and
much work remains to be done. Looking toward the future of the Bureau,
and the Office of Fair Lending, we remain committed to fulfilling our
statutory mandate to ensure fair, equitable, and nondiscriminatory
access to credit for all consumers.
Sincerely,
Patrice Alexander Ficklin.
1. From the Great Recession to a National Emergency: Marking the 10th
Year of the Consumer Financial Protection Act During a Pandemic
The year 2020 marked the 10th anniversary of the passage of the
Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank
Act), from which the Consumer Financial Protection Bureau (CFPB or
Bureau) was born. At that time, the nation found itself at a
crossroads, reeling from the Great Recession--what was thought to have
been a ``once in a lifetime'' economic crisis that devastated
communities and families across the country. At its inception, the
Bureau's statutory lodestar was to make consumer financial markets work
better for consumers, families, small businesses, and communities, for
responsible lenders and financial institutions, and for the American
economy as a whole. The agency was built on the understanding that when
the rules are fair and are applied as such, we have a chance to build
stronger families and a stronger nation. A key component to this has
been the Bureau's fair lending work to ensure the fair, equitable, and
nondiscriminatory access to credit for both individuals and their
communities.
This year, the nation once again finds itself at a crossroads,
facing the fallout of the devastating COVID-19 pandemic
[[Page 22179]]
which, at the time of this publication, has resulted in the deaths of
more than 550,000 of American lives, as well as the destruction of
millions of livelihoods. The events of 2020 caused the Bureau to
quickly pivot from planned activities to respond to the consumer
protection issues of the day. Enactment of the Coronavirus Aid, Relief,
and Economic Security Act (CARES Act) and the creation of the Small
Business Administration's (SBA) Paycheck Protection Program (PPP)
required new guidance and interpretation, detailed in section 4.2.3 of
this report. Additionally, in 2020, prioritized supervisory assessments
were executed to identify risks to consumers, further explained in
section 2 of this report. The Bureau also launched a hub of web-based
COVID-19 content for consumers and other stakeholders, with resources
available in multiple languages.\1\
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\1\ https://www.consumerfinance.gov/coronavirus/.
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In the midst of the COVID-19 pandemic, racial injustice issues also
came to the forefront of America's public dialogue. These issues were
exposed by the inequitable burden communities and people of color bore
from higher infection and mortality rates and greater resulting
economic impacts, as well as high-profile deaths of Black and Brown
Americans at the hands of law enforcement. Confronting the devastating
impacts of the COVID-19 pandemic and resulting economic crisis, the
Bureau's fair lending work necessarily carried on.
The Bureau solicited feedback from the public in a Request for
Information (RFI) about how to enhance compliance with the Equal Credit
Opportunity Act (ECOA), a key civil rights law, and received over 140
comments, further described in section 6.2.2 of this report. The Bureau
also filed an enforcement action against an institution accused of
redlining and another for violating the Home Mortgage Disclosure Act
(HMDA) (see section 2.3.1 of this report) and provided guidance on
special purpose credit programs to enable creditors to expand credit to
traditionally underserved consumers and communities (see section 4.2.1
of this report).
The Bureau recognizes that the economic fallout from the pandemic
is only beginning, and the pandemic's effects and impacts are not yet
fully known. What is certain, though, is that the Bureau's fair lending
work is and will continue to be a critical component of the Bureau and
the Federal government's response to the pandemic and the elimination
of racial injustice. In 2021, the Bureau's Fair Lending Office will be
front and center in the agency's efforts to advance racial and economic
equity.
2. Fair Lending Supervision and Enforcement
2.1 Risk-Based Prioritization
Because Congress charged the Bureau with the responsibility of
overseeing many lenders and products, the Bureau has long-used a risk-
based approach to prioritizing supervisory examinations and enforcement
activity. This approach helps ensure that the Bureau focuses on areas
that present substantial risk of credit discrimination for
consumers.\2\
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\2\ For additional information regarding the Bureau's risk-based
approach in prioritizing supervisory examinations, see section
2.2.3, Risk-Based Approach to Examinations, Supervisory Highlights
Summer 2013, available at https://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 field and market intelligence identifies fair lending
risks in a particular market, that information is used to determine the
type and extent of attention required to address those risks.
The prioritization process incorporates a number of additional
factors, 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 data. As a result of its annual risk-based prioritization process
for 2020, the Bureau focused its fair lending supervision efforts on
mortgage origination, small business lending, and student loan
origination.
As in previous years, the Bureau's 2020 mortgage origination work
continued to focus on redlining (and whether lenders intentionally
discouraged prospective applicants living or seeking credit in minority
neighborhoods from applying for credit); assessing whether there is
discrimination in underwriting and pricing processes such as steering;
and HMDA data integrity and validation reviews (both as standalone
exams and in preparation for ECOA exams that will follow).
The Bureau's small business lending work focused on assessing
whether (1) there is discrimination in the application, underwriting,
and pricing processes, (2) creditors are redlining, and (3) there are
weaknesses in fair lending related compliance management systems (CMS).
The Bureau's student loan origination work focused on whether there
is discrimination in policies and practices governing underwriting and
pricing.
In May 2020, in response to the COVID-19 pandemic, the Bureau
rescheduled about half of its planned examination work and instead
conducted Prioritized Assessments. Prioritized Assessments were
designed to cover a greater number of institutions than the typical
examination schedule allows, gain a greater understanding of industry
responses to pandemic-related challenges, and help ensure that entities
were attentive to practices that may result in consumer harm. The
Bureau's Supervision program evaluated fair lending risks through
Prioritized Assessments in the small business lending and mortgage
servicing, automobile loan servicing, and credit card markets.
2.2 Fair Lending Supervision
The Bureau's Fair Lending Supervision program assesses compliance
with Federal fair lending consumer financial laws and regulations at
banks and nonbanks over which the Bureau has supervisory authority. As
a result of the Bureau's efforts to fulfill its fair lending mission
during 2020, the Bureau initiated 13 fair lending examinations/targeted
reviews. The Bureau also initiated a significant number of Prioritized
Assessments that included important fair lending components.
In 2020, the Bureau issued several fair lending-related Matters
Requiring Attention, directing entities to take corrective actions that
will be monitored by the Bureau through follow-up supervisory events.
The Bureau also issued Supervisory Recommendations in 2020 relating to
weak or nonexistent fair lending policies and procedures, risk
assessments, and fair lending training.\3\
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\3\ Consumer Fin. Prot. Bureau, BCFP Bulletin 2018-01: Changes
to types of supervisory communications (Sept. 25, 2018), https://files.consumerfinance.gov/f/documents/bcfp_bulletin-2018-01_changes-to-supervisory-communications.pdf. Additional activity has occurred
with this matter since the end of this reporting period. On March
31, 2021, the Bureau issued CFPB Bulletin 2021-01: Changes to Types
of Supervisory Communications, which announces changes to how
examiners articulate supervisory expectations to supervised entities
in connection with supervisory events, https://files.consumerfinance.gov/f/documents/cfpb_bulletin_2021-01_changes-to-types-of-supervisory-communications_2021-03.pdf (Mar. 31, 2021).
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2.3 Fair lending enforcement
The Bureau has the statutory authority to bring actions to enforce
the requirements of ECOA and HMDA. The
[[Page 22180]]
Bureau has the authority to engage in research, conduct investigations,
file administrative complaints, hold hearings, and adjudicate claims
through the Bureau's administrative enforcement process regarding ECOA
and HMDA. The Bureau also has independent litigation authority and can
file cases in federal court alleging violations of fair lending laws
under the Bureau's jurisdiction. Like other Federal regulators, the
Bureau is required to refer matters to the Department of Justice (DOJ)
when it has reason to believe that a creditor has engaged in a pattern
or practice of lending discrimination.\4\
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\4\ See 15 U.S.C. 1691e(h).
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2.3.1 Public Enforcement Actions
In 2020, the Bureau announced two public fair lending enforcement
actions: Townstone Financial Inc., and Washington Federal Bank, N.A.
Townstone Financial Inc.
On July 15, 2020, the Bureau filed a lawsuit in federal district
court in the Northern District of Illinois against Townstone Financial,
Inc. (Townstone), a nonbank retail-mortgage creditor based in Chicago.
On November 25, 2020, the Bureau amended the complaint.\5\ The Bureau
alleges that Townstone violated ECOA and Regulation B. As alleged in
the complaint, from 2014 through 2017, Townstone drew almost no
applications for mortgages on properties in African American
neighborhoods located in the Chicago-Naperville-Elgin Metropolitan
Statistical Area (Chicago MSA) and few applications from African
Americans throughout the Chicago MSA. The Bureau alleges that Townstone
engaged in acts or practices, including making statements during its
weekly radio shows and podcasts through which it marketed its services,
that illegally discouraged African American prospective applicants from
applying for mortgage loans and engaged in illegal redlining by
engaging in acts or practices that discouraged prospective applicants
living or seeking credit in African American neighborhoods in the
Chicago MSA from applying for mortgage loans. The Bureau's complaint
seeks an injunction against Townstone, as well as damages, redress to
consumers, and the imposition of a civil money penalty. Litigation is
ongoing.
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\5\ Consumer Fin. Prot. Bureau, Townstone Financial, Inc. (July
15, 2020), https://www.consumerfinance.gov/enforcement/actions/townstone-financial-inc-and-barry-sturner/.
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Washington Federal Bank, N.A.
On October 27, 2020, the Bureau settled with Washington Federal
Bank, N.A. (Washington Federal), a federally-insured national bank, to
address the Bureau's finding that it reported inaccurate HMDA data
about its mortgage transactions for 2016 and 2017.\6\ Inaccurate HMDA
data can make it difficult for the public and regulators to discover
and stop discrimination in home mortgage lending or for public
officials and lenders to tell whether a community's credit needs are
being met. The settlement requires Washington Federal to pay a $200,000
civil money penalty and develop and implement an effective compliance-
management system to prevent future violations.
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\6\ Consent Order, In re Washington Federal Bank, N.A., CFPB No.
2020-BCFP-0019 (Oct. 24, 2020), https://files.consumerfinance.gov/f/documents/cfpb_washington-federal-na_consent-order_2020-10.pdf.
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Washington Federal reported HMDA data for over 7,000 mortgage
applications in both 2016 and 2017. The Bureau found that these data
included significant errors, with some samples having error rates as
high as 40%. The Bureau found that the errors in Washington Federal's
2016 HMDA data were caused by a lack of appropriate staffing,
insufficient staff training, and ineffective quality control. The
errors in its 2017 HMDA data were directly related to weaknesses in
Washington Federal's compliance-management system. The Bureau found
weaknesses in the areas of board and management oversight, monitoring,
and policies and procedures. The significant errors in reported
mortgage-application data violated HMDA and Regulation C. These
violations also constituted violations of the Consumer Financial
Protection Act.
2.3.2 ECOA Referrals to the Department of Justice
The Bureau must refer to DOJ a matter when it has reason to believe
that a creditor has engaged in a pattern or practice of lending
discrimination in violation of ECOA.\7\ The Bureau may refer other
potential ECOA violations to DOJ.\8\ In 2020, the Bureau referred four
matters to DOJ about discrimination pursuant to section 706(g) of ECOA.
Two referrals involved redlining in mortgage origination based on race
and national origin. One referral involved discrimination based on
receipt of public assistance income in mortgage origination and one
referral involved pricing discrimination in mortgage origination based
on race and sex.
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\7\ 15 U.S.C. 1691e(g).
\8\ Id.
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2.3.3 Implementing Enforcement Orders
When an enforcement action is resolved through a public enforcement
order, the Bureau (together with DOJ, when relevant) takes steps to
ensure that the respondent or defendant complies with the requirements
of the order. Depending on 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.
In January 2020, DOJ and the Bureau, together with BancorpSouth
Bank (BancorpSouth), submitted a joint motion for early termination of
the Consent Order in the BancorpSouth case, which was granted by the
court.\9\
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\9\ Order, United States v. BancorpSouth Bank, No. 1:16-cv-
00118-MPM-DAS (N.D. Miss. Jan. 27, 2020), ECF No. 8, https://files.consumerfinance.gov/f/documents/cfpb_bancorpsouth_order-terminating-consent-order.pdf.
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More information about our enforcement activity, past and present,
is available at www.consumerfinance.gov/enforcement/actions/.
2.3.4 Pending Fair Lending Investigations
In 2020, the Bureau had a number of ongoing and newly opened fair
lending investigations of institutions. The Bureau investigated
potential discrimination in several markets, including student lending,
payday lending, credit cards, and mortgage lending, including the
unlawful practice of redlining. These matters are ongoing.
3. Interagency Reporting on ECOA and HMDA
The Bureau is statutorily required 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.\10\ In addition, the Bureau's annual HMDA reporting
requirement calls for the Bureau, in consultation with the Department
of Housing and Urban Development (HUD), to report annually on the
utility of HMDA's requirement that covered lenders itemize certain
mortgage loan data.\11\
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\10\ 15 U.S.C. 1691f.
\11\ 12 U.S.C. 2807.
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[[Page 22181]]
3.1 Reporting on ECOA Enforcement
The enforcement efforts and compliance assessments made by the
eleven agencies assigned enforcement authority under section 704 of
ECOA are discussed in this section. Each of the agencies reported
information describing their efforts to achieve general compliance.
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\12\ 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 (Bureau) comprise the Federal Financial
Institutions Examination Council (FFIEC). The State Liaison
Committee was added to FFIEC in 2006 as a voting member. Federal
Financial Institutions Examination Council, http://www.ffiec.gov
(last visited Mar. 30, 2021).
\13\ 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
comes from the Packers and Stockyards Division, Fair Trade Practices
Program, AMS.
\14\ 15 U.S.C. 1691c.
BILLING CODE 4810-AM-P
[GRAPHIC] [TIFF OMITTED] TN27AP21.000
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BILLING CODE 4810-AM-C
3.1.1 Public Enforcement Actions
In 2020, two of the eleven Federal agencies with ECOA enforcement
authority brought public enforcement actions for violations of ECOA.
The FTC brought an enforcement action in federal court against New York
City car dealer Bronx Honda and its general manager, Carlo Fittanto,
alleging that defendants violated ECOA and Regulation B by
discriminating against African American and Hispanic consumers who
financed vehicle purchases. According to the FTC's complaint, among
other things, defendants charged African American and Hispanic
customers higher markups and fees for financing than similarly situated
non-Hispanic white consumers. In May 2020, the defendants agreed to pay
$1.5 million to settle the charges. In addition, along with relief for
other illegal practices alleged by the complaint, defendants are also
required to establish a fair lending program that will, among other
requirements, cap the amount of any additional interest markup they
charge consumers. The FTC issued refunds totaling nearly $1.5 million
to individuals affected by the allegedly unlawful financing and sales
practices of defendants, with refunds averaging about $371 each to
3,977 victims of Bronx Honda's practices.
As described in section 2.3, in July 2020, the Bureau brought a
public enforcement action in federal district court in the Northern
District of Illinois against Townstone Financial, Inc., a nonbank
retail-mortgage creditor based in Chicago, alleging discouragement of
prospective applicants, redlining, and other violations of ECOA and
Regulation B.
Below is an overview of the number of ECOA enforcement actions by
all Federal agencies since 2012:
[GRAPHIC] [TIFF OMITTED] TN27AP21.001
3.1.2 Number of Institutions Cited for ECOA/Reg B Violations
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\15\ Table 3 identifies public enforcement actions by the year
they were initiated (when filed and announced publicly).
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In 2020, the Federal Banking Agencies and the CFPB reported citing
81 institutions with violations of ECOA and/or Regulation B.\16\
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\16\ For these purposes, the Federal Banking Agencies refer to
the FDIC, FRB, and OCC. In addition to the number of institutions
cited by the Federal Banking Agencies and the CFPB, the NCUA
reported citing 116 credit unions for ECOA and/or Regulation B
violations in 2020.
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Below is an overview of the number of institutions cited with ECOA
and Regulation B violations by the Federal Banking Agencies and the
CFPB since 2014:
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[GRAPHIC] [TIFF OMITTED] TN27AP21.002
3.1.3 Violations Cited During ECOA Examinations
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\17\ Table 4 reflects data provided only by the Federal Banking
Agencies and the CFPB. NCUA data is not included in the table
because the relevant data are unavailable for years 2014-2019. The
NCUA reported citing 116 credit unions for ECOA and/or Regulation B
violations in 2020.
\18\ 12 CFR 1002.4(a).
\19\ 12 CFR 1002.7(d)(1).
\20\ 12 CFR 1002.7(d)(1).
\21\ 12 CFR 1002.4(a) and 1002.4(b).
\22\ 12 CFR 1002.9(a)(2), 1002.9(b)(2).
\23\ 12 CFR 1002.9(a)(1), 1002.9(a)(2), 1002.9(b)(2).
\24\ 12 CFR 1002.9(a)(1)(i), 1002.9(a)(1)(ii), 1002.9(a)(2).
\25\ 12 CFR 1002.9 (a)(2), 1002.9(b)(2).
\26\ 12 CFR 1002.9(a)(1); 1002.9(a)(2); 1002.9(b)(2).
\27\12 CFR 1002.14(a)(1), 1002.14(a)(2).
\28\12 CFR 1002.14(a)(1), 1002.14(a)(2), ID02.14(a)(3),
1002.14(a)(4).
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Among institutions examined for compliance with ECOA and Regulation
B, the FFIEC agencies reported that the most frequently cited
violations were as follows: Table 5--Regulation B Violations Cited by FFIEC Agencies, 2020
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Regulation B violations: 2020 FFIEC agencies reporting
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12 CFR 1002.4(a), 1002.4(b), 1002.7(d)(1): NCUA,\18\ OCC,\19\ FRB,\20\ CFPB.\21\
Discrimination: Discrimination on a prohibited basis
in a credit transaction; discouragement of prospective
applicants on a prohibited basis; a creditor shall not
inquire about the race, color, religion, national
origin, or sex of an applicant or any other person in
connection with a credit transaction; improperly
considering receipt of public assistance in a system
of evaluating applicant creditworthiness; improperly
requiring the signature of the applicant's spouse or
other person.
12 CFR 1002.9(a)(1), (a)(1)(i)-(ii), (a)(2), (b)(2): FDIC,\22\ NCUA,\23\ OCC,\24\ FRB,\25\ CFPB.\26\
Adverse Action: 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 1002.12(b)(1): Record Retention: Failure to CFPB.
preserve application records.
12 CFR 1002.14 (a)(1), (a)(2), (a)(3), (a)(4): OCC,\27\ FDIC.\28\
Appraisals and Valuations: Failure to provide
appraisals and other valuations.
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Among institutions examined for compliance with ECOA and Regulation
B, the Non-FFIEC agencies reported that the most frequently cited
violations were as follows:
[[Page 22184]]
Table 6--Regulation B Violations Cited by Non-FFIEC Agencies Enforcing ECOA, 2020
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Regulation B violations: 2020 Non-FFIEC agencies reporting
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12 CFR 1002.9(a)(1)(i): Adverse Action: Failure to FCA.
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.
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The AMS, SEC, and the SBA reported that they received no complaints
based on ECOA or Regulation B in 2020. In 2020, the DOT Office of
Aviation Enforcement and Proceedings reported that it ``may have
received a relatively small number of consumer inquiries or complaints
concerning credit matters possibly covered by ECOA,'' which it
``processed informally.''
3.1.4 Additional Efforts To Ensure Compliance With ECOA and Regulation
B
The agencies with administrative enforcement responsibilities under
ECOA engage in other activities to ensure compliance with ECOA and
Regulation B. Below is a sample of activities that agencies reported
for 2020:
Hosting or participating in meetings, conferences, and
trainings with consumer advocates, industry representatives, and
interagency groups on fair lending and consumer protection issues.
Releasing publications focused on consumer compliance.
Hosting or participating in interagency webinars on fair
lending supervision.
Providing technical assistance and outreach to educate
community banks regarding the requirements of the regulation.
Providing comments in response to the Bureau's Request for
Information on ECOA and Regulation B.
Providing training and workshops for military consumers on
protections provided by ECOA and Regulation B.
Issuing blog posts for consumers and businesses regarding
ECOA and Regulation B on important topics, such as artificial
intelligence.
3.1.5 Referrals to the Department of Justice
The agencies assigned enforcement authority under section 704 of
ECOA must refer a matter to DOJ when there is reason to believe that a
creditor has engaged in a pattern or practice of lending discrimination
in violation of ECOA.\29\ They also may refer other potential ECOA
violations to DOJ.\30\ In 2020, four agencies (CFPB, FDIC, FRB, and
NCUA) made twelve such referrals to DOJ involving discrimination in
violation of ECOA. A brief description of those matters follows.
---------------------------------------------------------------------------
\29\ 15 U.S.C. 1691e(g).
\30\ Id.
---------------------------------------------------------------------------
As reported in section 2.3.2, in 2020, the Bureau referred four
matters to DOJ. Two referrals involved redlining in mortgage
origination based on race and national origin. One referral involved
discrimination based on receipt of public assistance income in the
mortgage servicing context and one referral involved pricing
discrimination in mortgage origination based on race and sex.
In 2020, FDIC referred three matters to DOJ. The first referral
involved discrimination in the underwriting of unsecured consumer loans
on the basis of age and receipt of public assistance income. The second
referral involved discrimination in the pricing of unsecured consumer
loans on the basis of marital status. The third referral involved
discrimination in underwriting and the pricing of unsecured consumer
loans on the bases of age, sex, and receipt of public assistance
income.
The NCUA referred three matters to DOJ in 2020. One referral was
for discrimination on the prohibited basis of age and two referrals
were for discrimination on the basis of marital status.
In 2020, FRB referred two matters to DOJ. One matter involved
discrimination based on marital status in requiring spousal guarantees
on loans. The second matter involved a pattern or practice of redlining
in mortgage lending based on race or national origin.
Below is an overview of the number of ECOA referrals to DOJ by all
Federal agencies since 2012:
[[Page 22185]]
[GRAPHIC] [TIFF OMITTED] TN27AP21.003
3.2 Reporting on HMDA
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.\31\ The
Bureau, in consultation with HUD, finds that itemization and tabulation
of these data furthers the purposes of HMDA.
---------------------------------------------------------------------------
\31\ 12 U.S.C. 2807.
---------------------------------------------------------------------------
4. Guidance and Rulemaking
4.1 ECOA and Regulation B Rulemaking
4.1.1 Small Business Lending and Data Collection
In the Dodd-Frank Act, Congress directed the Bureau to adopt
regulations governing the collection of small business lending data.
Section 1071 of the Dodd-Frank Act (section 1071) amended ECOA to
require financial institutions to compile, maintain, and submit to the
Bureau certain data on applications for credit for women-owned,
minority-owned, and small businesses.
Congress enacted section 1071 for the purpose of facilitating
enforcement of fair lending laws and enabling communities, governmental
entities, and creditors to identify business and community development
needs and opportunities for women-owned, minority-owned, and small
businesses.
Under the process established by Congress in the Small Business
Regulatory Enforcement Fairness Act of 1996 (SBREFA), the Bureau is
required to consult with representatives of small entities likely to be
directly affected by the regulations the Bureau is considering
proposing and to obtain feedback on the likely impacts the rules under
consideration would have on small entities.
In September 2020, the Bureau released its Outline of Proposals
Under Consideration and Alternatives Considered for Section 1071 of the
Dodd-Frank Act governing small business lending data collection and
reporting, which described proposals under consideration to implement
section 1071 along with the relevant law, the regulatory process, and
an economic analysis of the potential impacts of the proposals on
directly affected small entities.\32\
---------------------------------------------------------------------------
\32\ Consumer Fin. Prot. Bureau, Small Business Advisory Review
Panel For Consumer Financial Protection Bureau Small Business
Lending Data Collection Rulemaking (Sept. 15, 2020), https://files.consumerfinance.gov/f/documents/cfpb_1071-sbrefa_outline-of-proposals-under-consideration_2020-09.pdf.
---------------------------------------------------------------------------
The Bureau also convened a Small Business Advocacy Review panel in
October 2020. The panel was comprised of a representative from the
Bureau, the Chief Counsel for Advocacy of the SBA, and a representative
from the Office of Information and Regulatory Affairs in the Office of
Management and Budget. The panel collected comments and recommendations
from representatives of small entities that are likely to be subject to
the regulation that the Bureau is considering proposing.
In December 2020, the Bureau released the Final Report of the Small
Business Review Panel on the CFPB's Proposals Under Consideration for
the Small Business Lending Data Collection Rulemaking.\33\ This report
includes a summary of the feedback received from small entity
representatives (SERs) during the panel process, and findings and
recommendations made by the panel.
---------------------------------------------------------------------------
\33\ Consumer Fin. Prot. Bureau, Final Report of the Small
Business Review Panel on the CFPB's Proposals Under Consideration
for the Small Business Lending Data Collection Rulemaking (Dec. 14,
2020), https://files.consumerfinance.gov/f/documents/cfpb_1071-sbrefa-report.pdf.
---------------------------------------------------------------------------
In their feedback, SERs were generally supportive of the Bureau's
statutory mission to enact rules under section 1071 and several SERs
stated that a 1071 rulemaking is necessary to better understand the
small business lending market. Further, SERs requested, and the panel
agreed that, among other things, the Bureau should issue implementation
and guidance materials specifically to assist small financial
institutions in complying with an eventual section 1071 rule, and to
consider providing sample disclosure language.
The feedback from small entity representatives and the panel's
findings and recommendations will be used by the Bureau as it prepares
a notice of
[[Page 22186]]
proposed rulemaking to implement section 1071.
4.2 ECOA and Regulation B Guidance
4.2.1 Special Purpose Credit Program Interpretive Rule
In December 2020, the Bureau issued an interpretive rule, styled as
an Advisory Opinion, related to special purpose credit programs,
clarifying the regulations and promoting equitable access to credit for
historically economically disadvantaged groups and communities.\34\
This interpretive rule followed the Bureau's issuance of an RFI on ECOA
and Regulation B (see section 6.2.2), where the Bureau sought public
opinion on, among other things, special purpose credit programs.
Through extensive stakeholder feedback and comments received in
response to the RFI, the Bureau learned that stakeholders were
interested in additional guidance to help them develop compliant
special purpose credit programs.
---------------------------------------------------------------------------
\34\ Consumer Fin. Prot. Bureau, Consumer Financial Protection
Bureau Issues Advisory Opinion to Help Expand Fair, Equitable, and
Nondiscriminatory Access to Credit (Dec. 21, 2020), https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-issues-advisory-opinion-to-help-expand-fair-equitable-and-nondiscriminatory-access-to-credit.
---------------------------------------------------------------------------
As detailed in the interpretive rule, ECOA and Regulation B
prohibit discrimination on certain prohibited bases in any aspect of a
credit transaction, but the statute and regulation clarify that it is
not discrimination for for-profit organizations to provide special
purpose credit programs designed to meet special social needs. The
Bureau does not determine whether individual programs qualify for
special purpose credit status. Instead, the creditor offering the
special purpose credit program must determine the status of its
program. Regulation B provides creditors with general guidance for
developing special purpose credit programs that are compliant with
ECOA.
To guide this determination and to address regulatory uncertainty,
the Bureau issued this interpretive rule with the hope that more
creditors will offer special purpose credit programs and increase
access to credit to underserved groups. Specifically, the Bureau
clarified the content that a for-profit organization must include in a
written plan that establishes and administers a special purpose credit
program under Regulation B. The interpretive rule also clarified the
type of research and data that may be appropriate to inform a for-
profit organization's determination that a special purpose credit
program would benefit a certain class of people.
This, and other interpretive rules issued by the Bureau, are
available at www.consumerfinance.gov/compliance/advisory-opinion-program/.
4.2.2 ECOA Valuations Rule Fact Sheets
Regulation B requires creditors to provide applicants free copies
of all appraisals and other written valuations developed in connection
with an application for a loan to be secured by a first lien on a
dwelling. Known as the ECOA Valuations Rule, the rule also requires
creditors to notify applicants in writing that copies of appraisals
will be provided to them promptly upon completion or no later than
three business days before consummation or account opening, whichever
is earlier. In April 2020, the Bureau released two factsheets on the
ECOA Valuations Rule. The factsheets provide information on transaction
coverage \35\ under the Valuations Rule and delivery method and timing
requirements for appraisals and other written valuations.\36\ The
Bureau also published a frequently asked questions sheet (FAQ) related
to the ECOA Valuations Rule in light of the COVID-19 pandemic.\37\
---------------------------------------------------------------------------
\35\ Consumer Fin. Prot. Bureau, Factsheet: Transaction coverage
under the ECOA Valuations Rule (May 14, 2020), https://www.consumerfinance.gov/documents/8736/cfpb_ecoa-valuation_transaction-coverage-factsheet.pdf.
\36\ Consumer Fin. Prot. Bureau, Factsheet: Delivery of
appraisals (June 5, 2020), https://www.consumerfinance.gov/documents/8737/cfpb_ecoa-valuation_delivery-of-appraisals-factsheet.pdf.
\37\ Consumer Fin. Prot. Bureau, The Bureau's Mortgage
Origination Rules FAQs related to the COVID-19 Emergency (Apr. 29,
2020), https://files.consumerfinance.gov/f/documents/cfpb_mortgage-origination-rules_faqs-covid-19.pdf.
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4.2.3 Paycheck Protection Program FAQs
On March 27, 2020, Congress passed the Coronavirus Aid, Relief, and
Economic Security Act (the CARES Act),\38\ which included a temporary
small business lending program known as the Paycheck Protection Program
(PPP). Under this program, small businesses could receive loans from
private lenders to cover eligible payroll, costs, business mortgage
payments and interest, rent, and utilities for either an 8- or 24-week
period after disbursement. Each loan is fully guaranteed by the SBA,
which administers the PPP; small business borrowers do not have to make
any payments during the first six months of the loan term and may
receive a deferral up to one year; and small businesses may receive
complete or partial forgiveness of their loans if they use their loans
to cover certain expenses and meet other requirements. A wide range of
financial institutions were eligible to participate as lenders in the
PPP, including institutions that normally do not participate in the
SBA's 7(a) lending program.\39\ This includes federally insured
depository institutions, credit unions, and nonbanks.\40\
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\38\ Coronavirus Aid, Relief, and Economic Security Act, Public
Law 116-136, 134 Stat. 281 (Mar. 27, 2020).
\39\ The 7(a) loan program is the SBA's primary program for
providing financial assistance to small businesses. The program's
name comes from section 7(a) of the Small Business Act, 15 U.S.C.
636(a). The SBA offers several different types of loans through the
program.
\40\ Institutions that were not SBA-certified did have to apply
to the SBA and receive delegated authority to process PPP loan
applications.
---------------------------------------------------------------------------
In May 2020, the Bureau issued clarifying FAQs to support small
businesses that applied for a loan under the PPP.\41\ Creditors are
generally required under ECOA and Regulation B to notify applicants
within 30 days of receiving a ``completed application'' of the
creditor's approval, counteroffer, denial or other adverse notice
regarding the application. Regulation B notifications of action taken
are designed to help consumers and businesses by providing transparency
to the credit underwriting process in a timely manner. Information that
is generally included in a complete application includes any approvals
or reports by governmental agencies or others who can guarantee,
insure, or provide security for the credit or collateral. In its FAQs,
the Bureau clarified that a PPP application is only a ``completed
application'' once the creditor has received a loan number from the SBA
or a response about the availability of funds. This ensures that the
time awaiting this information from the SBA does not count toward the
30-day notice requirement, and that applications will therefore not
``time out'' during the process.
---------------------------------------------------------------------------
\41\ Consumer Fin. Prot. Bureau, Consumer Financial Protection
Bureau Issues Clarifications to Support Small Business Applying for
PPP Loans (May 6, 2020), https://www.consumerfinance.gov/about-us/newsroom/cfpb-issues-clarifications-support-small-business-applying-ppp-loans/.
---------------------------------------------------------------------------
The FAQs also made clear that if the creditor denies an application
without ever sending the application to the SBA, the creditor must give
notice of this adverse action within 30 days. The FAQs further
clarified that a creditor cannot deny a loan application based on
incompleteness, where an application is incomplete regarding matters
the applicant cannot provide, such as a loan number or response about
the availability of funds from the SBA.
[[Page 22187]]
4.2.4 Supervisory Highlights Issue 22, Summer 2020
The Bureau periodically publishes Supervisory Highlights to
communicate about the Bureau's supervisory activity and to share key
examination findings. These reports also communicate operational
changes to our supervision program and provide a convenient and easily
accessible resource for information on our recent guidance documents.
In September 2020, the Bureau published Issue 22 of Supervisory
Highlights.\42\ In this edition, the Bureau noted that one or more
lenders violated ECOA and Regulation B by intentionally redlining
majority minority neighborhoods in two MSAs by engaging in acts or
practices directed at prospective applicants that may have discouraged
reasonable people from applying for credit.
---------------------------------------------------------------------------
\42\ Consumer Fin. Prot. Bureau, Supervisory Highlights, Summer
2020 (Sept. 2020), https://files.consumerfinance.gov/f/documents/cfpb_supervisory-highlights_issue-22_2020-09.pdf.
---------------------------------------------------------------------------
Additionally, Bureau examiners found that one or more lenders
violated ECOA and Regulation B by maintaining a policy and practice
that excluded certain forms of public assistance income, including
unemployment compensation and Supplemental Nutrition Assistance Program
(SNAP benefits)--commonly known as food stamps, from consideration in
determining a borrower's eligibility for mortgage modification
programs. ECOA and Regulation B prohibit lenders from discriminating in
any aspect of a credit transaction against an applicant ``because all
or part of the applicant's income derives from any public assistance
program.'' \43\
---------------------------------------------------------------------------
\43\ 15 U.S.C. 1691(a)(2); 12 CFR 1002.2(z).
---------------------------------------------------------------------------
All editions of Supervisory Highlights are available at
www.consumerfinance.gov/compliance/supervisory-highlights/.
4.2.5 Help Desk Program
To promote fair lending compliance, during 2020, the Bureau hosted
``Fair Lending Help Desks.'' The help desks, hosted at two external
stakeholder conferences, allowed conference participants to engage with
Bureau subject matter experts on regulatory compliance issues relating
to ECOA and Regulation B, as well as HMDA and Regulation C.
4.3 HMDA and Regulation C Rulemaking
4.3.1 Final Rule Raising Reporting Thresholds Under HMDA
In April 2020, the Bureau issued a final rule raising the loan-
volume coverage thresholds for financial institutions reporting data
under HMDA. The final rule, amending Regulation C, increased the
permanent threshold for collecting, recording, and reporting data about
closed-end mortgage loans from 25 to 100 loans, effective July 1, 2020.
The final rule will also amend Regulation C to increase the permanent
threshold for collecting, recording, and reporting data about open-end
lines of credit from 100 to 200, effective January 1, 2022, when the
current temporary threshold of 500 of open-end lines of credit expires.
4.3.2 HMDA Notices of Proposed Rulemaking
In the Fall 2020 Rulemaking Agenda, the Bureau announced that it
anticipated publishing two Notices of Proposed Rulemaking (NPRMs) in
early 2021 concerning possible revisions to the 2015 HMDA rule. One of
these indicated that it followed an Advance Notice of Proposed
Rulemaking in May 2019 concerning certain data points that are required
to be reported under the HMDA rule and coverage of certain business or
commercial purpose loans, addressing concerns about regulatory burden.
The second indicated it would address the public disclosure of HMDA
data in light of consumer privacy interests, so that stakeholders can
concurrently consider and comment on the collection and reporting of
data points and public disclosure of those data points. Concurrent with
the publication of the Fall 2020 Unified Agenda, the Bureau's Office of
Regulations issued a blog post on the Bureau's website stating that the
data points and disclosure rules may not be released by the anticipated
February target in the Unified Agenda.
4.4 HMDA and Regulation C Guidance
4.4.1 HMDA Data Point Articles With Observations of the 2019 HMDA Data
In 2020, the Bureau released two HMDA data point articles
presenting Bureau analysis of the 2019 HMDA data. The first was issued
in June 2020, which describes mortgage market activity over time based
on data reported under HMDA. It summarizes the historical data points
in the 2019 HMDA data, as well as recent trends in mortgage and housing
markets.
The second article was released in August 2020. The focus of the
article was on the data points newly added or revised by the 2015 HMDA
rule, specifically through cross-sectional analyses, i.e., using the
data contained in one year's loan application register (LAR) to explore
various patterns and relationships between different data fields to
provide some initial observations. To the extent some of those patterns
or relationships might have changed significantly over the last year,
the article highlighted such changes. Otherwise, the majority of the
analyses were limited to the data collected in 2019 and reported in
2020.
4.4.2 HMDA Reporting Notification Program
On occasion, the Bureau will send notification letters to advise
recipients that the Bureau has information that appears to show that
the recipients might be in violation of Federal consumer financial law.
The letters are not accusations of wrongdoing. Instead, they are
intended to help recipients review certain practices to ensure that
they comply with Federal law. One such letter pertains to compliance
with HMDA, through the Bureau's HMDA Reporting Notification Program
(HMDA RNP).
As part of the HMDA RNP, in September 2020, the Bureau issued
notification letters to 40 non-depository mortgage lenders regarding
potential non-compliance with certain reporting requirements of HMDA
and Regulation C. Specifically, the letters informed recipients that
they may be required to collect, record, and report data about their
mortgage-lending activity under HMDA and Regulation C, and that they
may be in violation of those requirements. The letters also provided
information about specific reporting requirements under HMDA and
Regulation C and provided links to educational resources for HMDA
reporters. The letters urged recipients to review their practices to
ensure compliance with all relevant laws. The recipients were
encouraged to respond to the Bureau to advise if they had taken, or
would take, steps to ensure compliance with the law. Recipients were
invited to tell the Bureau if they thought their activities did not
meet HMDA reporting thresholds.
The Bureau's HMDA RNP sought to increase HMDA compliance through
education and direct outreach to potential non-reporting mortgage
lenders, and to improve HMDA data quality and completeness through
accurate reporting. Since commencing the HMDA non-reporters project
pilot in 2016, more than 224,000 previously
[[Page 22188]]
unreported mortgage loan records have now been reported.
4.4.3 HMDA Data Browser Webinars
HMDA data are the most comprehensive source of publicly available
information on the U.S. mortgage market. Each year, thousands of
financial institutions are required to maintain, report, and publicly
disclose loan-level information about mortgages under HMDA. These data
serve multiple purposes: Helping to show whether lenders are serving
the housing needs of their communities, giving public officials
information that helps them make decisions and policies, and shedding
light on lending patterns that could be discriminatory. The public data
are modified to protect applicant and borrower privacy.
In 2019, the HMDA Data Browser was launched as a tool to access
HMDA data collections for the years 2018 and onward. While a single
year of HMDA data may contain tens of millions of records and require
special software to analyze, the HMDA Data Browser allows users to
filter and download more manageable and targeted HMDA datasets,
including by geographic area. Upon selection, users can download a
comma separated values (CSV) file, compatible with Excel, that includes
this geographic data, along with all 99 public data fields. If a user
would like to filter data further, they can select from up to two of 11
available variables. Users can then view an aggregated summary table of
the data requested and download a CSV file of the filtered data.
In 2020, the Bureau hosted five webinars on HMDA and the HMDA Data
Browser, which were presented to educate civil rights groups, consumer
advocates, industry, and other government agencies on the tool. These
skill-building webinars provided background information on HMDA,
including the types of mortgage transactions and the specific data
points reported under the law and a step-by-step demonstration on how
to use the HMDA Data Browser.
A recorded version of the live HMDA Data Browser webinar is
available at www.consumerfinance.gov/about-us/events/archive-past-events/hmda-data-browser/.
Access to the HMDA Data Browser is available at https://ffiec.cfpb.gov/data-browser/. For questions or suggestions about HMDA
or the HMDA Data Browser, contact [email protected].
4.4.4 Other HMDA Guidance and Resources
The Bureau maintains a suite of resources on its public website to
help facilitate compliance with HMDA and Regulation C, including an
Executive Summary of HMDA rule changes; Small Entity Compliance Guide;
Key Dates Timeline; Institutional and Transactional Coverage Charts;
Reportable HMDA Data Chart; sample data collection form; and FAQs, in
addition to downloadable webinars, which provide an overview of the
HMDA rule. The Bureau also provides on its website an Interactive
Bureau Regulations version of Regulation C.
The Bureau routinely updates its HMDA resources throughout the year
to ensure HMDA reporters have the most up-to-date information. For
example, in November 2020, the Bureau released the 2021 Filing
Instructions Guide (FIG) and the Supplemental Guide for Quarterly
Filers. Together with the FFIEC, in January 2020, the Bureau also
published the 2020 edition of the HMDA Getting it Right Guide. The
Bureau also works with the FFIEC to publish data submission resources
for HMDA filers and vendors on its Resources for HMDA Filers website,
https://ffiec.cfpb.gov.
In addition, HMDA reporters can ask technical questions about HMDA
and Regulation C, including how to submit HMDA data, by emailing the
Bureau's HMDA Help at [email protected]. The Bureau also offers
financial institutions, service providers, and others, informal staff
guidance on specific questions about the statutes and rules the Bureau
implements, including ECOA and Regulation B and HMDA and Regulation C,
through its Regulation Inquiries platform at
www.reginquiries.consumerfinance.gov. Additionally, questions about
HMDA may be asked at the Bureau's Fair Lending Help Desks as referenced
in section 4.2.5.
5. Tech Sprints: Using Innovative Technology To Address Fair Lending
Compliance
The Bureau's Tech Sprint Program gathers regulators, technologists,
academics, financial institutions, vendors, and subject matter experts
from key stakeholders for several days to work together to develop
innovative solutions to specific challenges at the intersection of
emerging technology and Federal consumer protection laws. Inspired by a
similar program successfully launched by the Financial Conduct
Authority in the United Kingdom, the Tech Sprint program aims to (1)
develop actionable technology-focused solutions to a variety of
regulatory and consumer protection challenges; (2) harness technology
to reduce burden, improve results, and create greater efficiencies
across financial markets; and (3) explore how technology can reshape
compliance and speed effective interaction between regulators and
financial institutions.
During a Tech Sprint, participants work together in small teams.
The teams include participants from both the regulator and a diversity
of entities to ensure the inclusion of regulatory, consumer advocate,
industry, academic, and technologist perspectives. The regulator
assigns a specific regulatory compliance or market problem to each team
and challenges the teams to solve or mitigate the problem using modern
technologies and approaches. The teams then work for several days to
produce actionable ideas, write computer code, and present their
solutions. On the final day, each team presents their solutions to an
independent panel of evaluators that selects the outstanding teams in
several categories. The most promising ideas can then be further
developed either in collaboration with the regulator or by external
parties.
In June 2020, the Bureau announced its first Tech Sprint which was
held October 5-9, 2020, virtually, due to the pandemic. This Tech
Sprint focused on electronically delivered adverse action notices that
that serve statutory purposes under ECOA and the Fair Credit Reporting
Act (FCRA).\44\ The event challenged participants to develop innovative
approaches to electronically-delivered ways to notify consumers of, and
inform them about, adverse credit actions. Teams were asked to show how
their solution could improve on current adverse action notices to
better realize three core goals:
---------------------------------------------------------------------------
\44\ Consumer Fin. Prot. Bureau, CFPB Announces Tech Sprints To
Empower Consumers, Reduce Regulatory Burden (June 29, 2020), https://www.consumerfinance.gov/about-us/newsroom/tech-sprints. Additional
activity has occurred with this matter since the end of the
reporting period. The second Tech Sprint occurred from March 22-26,
2021. During this week, 17 teams, with over 100 total members
participated in the Tech Sprint. Teams presented their solutions to
a panel of evaluators on the last day, which included many novel and
innovative solutions to the problem statement.
---------------------------------------------------------------------------
Accuracy--using accurate information to take adverse
action;
Anti-discrimination--preventing illegal discrimination in
credit decisions; and
Education--helping consumers fare better in future credit
applications.
Participants were informed that innovations could include any
aspect, or potential aspect, of adverse action communication. The Tech
Sprint attracted numerous expressions of interest, and more than 80
participants formed into 13 ``sprint teams.'' Participants represented
a wide variety
[[Page 22189]]
of stakeholders including large financial institutions, community and
consumer organizations, FinTechs, research organizations, and academia.
On the final day of the Tech Sprint, the teams presented their
solutions to a panel of evaluators. The solutions developed by the
sprint teams were creative and varied. Some of the solutions included
providing more detailed information on what role each denial reason
played in the credit decision; identifying how the denied applicant
might obtain a credit approval in the future by, for example, raising
the credit score to a certain level, decreasing credit inquiries to a
certain number, or requesting a different loan term or amount;
delivering additional information or educational content with the
electronic notice to the consumer to assist them in making more
informed financial decisions; and proposing methodologies for
identifying principal reasons for adverse action when algorithms--
including, potentially, algorithms that make use of artificial
intelligence--are used in the credit decision.
Following the conclusion of the Tech Sprint, some of the
participants informed the Bureau that they would work to incorporate
their innovations into their delivery of adverse action notices or
would consider working with the Bureau to further develop their ideas.
The creative solutions presented will also help better inform the
Bureau's policy making.
The Bureau also announced its second Tech Sprint, focused on
improvements to submitting and publishing HMDA data, to be held between
March 22-26, 2021.\45\ Participants in this Tech Sprint were invited to
help create additional tools for users on the HMDA Platform and to
develop and document HMDA Platform Applicant Programming Interfaces
(APIs). Alternatively, participants may develop additional enhancements
to HMDA data products and services, or new ways to interact with
existing products, data analysis capabilities, or interfaces to other
datasets. Details about the HMDA Tech Sprint will be published in the
2022 Annual Report.
---------------------------------------------------------------------------
\45\ Id.
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6. Outreach: Promoting Fair Lending Compliance and Education
Pursuant to the Dodd-Frank Act, the Bureau regularly engages in
outreach with 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 its
policy decisions.\46\
---------------------------------------------------------------------------
\46\ Consumer Fin. Prot. Bureau, Fiscal Year 2020: Annual
Performance Plan and Report, and Budget Overview, Performance goal
2.1.1, at 69 (Feb. 2021), https://files.consumerfinance.gov/f/documents/cfpb_performance-plan-and-report_fy20.pdf.
---------------------------------------------------------------------------
In coordinating fair lending efforts Bureau-wide, throughout 2020,
the Office of Fair Lending worked closely with other Bureau offices to
execute the Bureau's fair lending outreach and education efforts.
6.1 Educating Stakeholders About Fair Lending Compliance and Access to
Credit Issues
6.1.1 Bureau Blog Posts, Statements, Reports, and Press Releases
The Bureau regularly uses blog posts, statements, reports, and
press releases as tools to timely and effectively communicate with
consumers, small business owners, financial institutions, and other
stakeholders about fair lending issues, emerging areas of concern,
Bureau initiatives, and more. In 2020, the Bureau published seven blog
posts related to fair lending topics including the announcement of the
2019 Fair Lending Annual Report to Congress; \47\ the importance of
fair and equitable access to credit for minority and women-owned
businesses, including businesses applying for PPP relief; \48\
providing adverse action notices when using artificial intelligence and
machine learning models; \49\ announcing an RFI related to ECOA; \50\
expanding access to credit to underserved communities through the
special purpose credit programs provisions of ECOA and Regulation B;
\51\ the availability of Bureau resources for consumers in multiple
languages; \52\ a request for public comments to inform Bureau guidance
on serving LEP consumers; \53 54\ and the Bureau's first tech sprint on
improving electronically-delivered adverse action notices to
consumers.\55\ The Bureau's blog posts, including those related to fair
lending, may be accessed at www.consumerfinance.gov/blog.
---------------------------------------------------------------------------
\47\ Patrice Alexander Ficklin and J. Frank Vespa-Papaleo,
Consumer Fin. Prot. Bureau, Protecting consumers and encouraging
innovation: 2019 Fair Lending Report to Congress (Apr. 30, 2020),
https://www.consumerfinance.gov/about-us/blog/protecting-consumers-and-encouraging-innovation-2019-fair-lending-report-congress/.
\48\ Patrice Alexander Ficklin, Grady Hedgespeth, and Lora
McCray, Consumer Fin. Prot. Bureau, The importance of fair and
equitable access to credit for minority and women-owned businesses
(Apr. 27, 2020), https://www.consumerfinance.gov/about-us/blog/fair-equitable-access-credit-minority-women-owned-businesses/.
\49\ Patrice Alexander Ficklin, Tom Pahl, and Paul Watkins,
Consumer Fin. Prot. Bureau, Innovation spotlight: Providing adverse
action notices when using AI/ML models (July 7, 2020), https://www.consumerfinance.gov/about-us/blog/innovation-spotlight-providing-adverse-action-notices-when-using-ai-ml-models/.
\50\ Kathleen L. Kraninger, Consumer Fin. Prot. Bureau, The
Bureau is taking action to build a more inclusive financial system
(July 28, 2020), https://www.consumerfinance.gov/about-us/blog/bureau-taking-action-build-more-inclusive-financial-system/.
\51\ Susan M. Bernard and Patrice Alexander Ficklin, Consumer
Fin. Prot. Bureau, Expanding access to credit to underserved
communities (July 31, 2020), https://www.consumerfinance.gov/about-us/blog/expanding-access-credit-underserved-communities/.
\52\ Desmond Brown, Keo Chea, and Frank Vespa-Papaleo, Consumer
Fin. Prot. Bureau, More CFPB resources available in multiple
languages (Aug. 26, 2020), https://content.consumerfinance.gov/about-us/blog/cfpb-multilingual-resources-webinar/.
\53\ Elena Babinecz and Frank Vespa-Papaleo, Consumer Fin. Prot.
Bureau, Bureau seeks formal comments to inform forthcoming guidance
on serving LEP consumers (Nov. 16, 2020), https://www.consumerfinance.gov/about-us/blog/bureau-seeks-formal-comments-to-inform-forthcoming-guidance-serving-lep-consumers/.
\54\ Additional activity has occurred with this issue since the
end of this reporting period. In January 2021, the Bureau issued a
statement to encourage financial institutions to better serve
consumers with limited English proficiency (LEP) and to provide
principles and guidelines to assist financial institutions in
complying with the Dodd-Frank Act, ECOA, and other applicable laws.
More information can be found here: https://www.consumerfinance.gov/rules-policy/notice-opportunities-comment/open-notices/statement-regarding-the-provision-of-financial-products-and-services-to-consumers-with-limited-english-proficiency/.
\55\ Albert Chang, Tim Lambert, and Jennifer Lassiter, Consumer
Fin. Prot. Bureau, CFPB's first tech sprint on October 5-9, 2020:
Help improve consumer adverse action notices (Sept. 1, 2020),
https://www.consumerfinance.gov/about-us/blog/cfpb-tech-sprint-october-2020-consumer-adverse-action-notices/.
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In 2020, the Bureau also issued ten press releases related to fair
lending topics including the flexibilities provided to financial
institutions during the COVID-19 pandemic relating to certain HMDA
reporting requirements; \56\ the release of the Bureau's Outline of
Proposals Under Consideration and Alternatives Considered regarding
section 1071 of the Dodd-Frank Act; \57\ the release of 2019 HMDA data
to the public; \58\ the Bureau's analysis of 2019 HMDA data
[[Page 22190]]
points; \59\ the issuance of a final HMDA rule raising data reporting
thresholds; \60\ the issuance of an RFI on ECOA \61\ and an extension
of its public comment period; \62\ the Bureau's announcements of public
enforcement actions against Townstone Financial, Inc.\63\ and
Washington Federal Bank \64\; and the issuance of an interpretive rule
pertaining to special purpose credit programs.\65\
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\56\ Consumer Fin. Prot. Bureau, CFPB Provides Flexibility
During COVID-19 Pandemic (March 26, 2020), https://www.consumerfinance.gov/about-us/newsroom/cfpb-provides-flexibility-during-covid-19-pandemic/.
\57\ Consumer Fin. Prot. Bureau, CFPB Releases Outline of
Proposals Under Consideration to Implement Small Business Lending
Data Collection Requirements (Sept. 15, 2020), https://www.consumerfinance.gov/about-us/newsroom/cfpb-releases-outline-proposals-implement-small-business-lending-data-collection-requirements/.
\58\ Consumer Fin. Prot. Bureau, FFIEC Announces Availability of
2019 Data on Mortgage Lending (June 24, 2020), https://www.consumerfinance.gov/about-us/newsroom/ffiec-announces-availability-2019-data-mortgage-lending/.
\59\ Consumer Fin. Prot. Bureau, CFPB Issues Analysis of HMDA
Data Points (Aug. 27, 2020), https://www.consumerfinance.gov/about-us/newsroom/cfpb-issues-analysis-hmda-data-points/.
\60\ Consumer Fin. Prot. Bureau, CFPB Issues Final Rule Raising
Data Reporting Thresholds Under the Home Mortgage Disclosure Act
(Apr. 16, 2020), https://www.consumerfinance.gov/about-us/newsroom/cfpb-issues-final-rule-raising-data-reporting-thresholds-under-hmda/.
\61\ Consumer Fin. Prot. Bureau, CFPB Requests Information on
Ways to Prevent Credit Discrimination and Build a More Inclusive
Financial System (July 28, 2020), https://www.consumerfinance.gov/about-us/newsroom/cfpb-rfi-prevent-credit-discrimination-build-more-inclusive-financial-system/.
\62\ Consumer Fin. Prot. Bureau, CFPB Extends Comment Period on
Request for Information on Ways to Prevent Credit Discrimination and
Build a More Inclusive Financial System (Aug. 19, 2020), https://www.consumerfinance.gov/about-us/newsroom/cfpb-extends-rfi-comment-period-ways-prevent-credit-discrimination-build-more-inclusive-financial-system/.
\63\ Consumer Fin. Prot. Bureau, CFPB Files Suit Against
Mortgage Creditor for Discriminatory Mortgage-Lending Practices
(July 15, 2020), https://www.consumerfinance.gov/about-us/newsroom/cfpb-files-suit-against-mortgage-creditor-discriminatory-mortgage-lending-practices/.
\64\ Consumer Fin. Prot. Bureau, CFPB Announces Settlement With
Washington Federal Bank, N.A. For Flawed Mortgage-Loan Data
Reporting (Oct. 27, 2020), https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-announces-settlement-washington-federal-bank-na-flawed-mortgage-loan-data-reporting/.
\65\ Consumer Fin. Prot. Bureau, Consumer Financial Protection
Bureau Issues Advisory Opinion to Help Expand Fair, Equitable, and
Nondiscriminatory Access to Credit (Dec. 21, 2020), https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-issues-advisory-opinion-to-help-expand-fair-equitable-and-nondiscriminatory-access-to-credit/.
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The Bureau's statements and press releases, including those related
to fair lending, may be accessed at www.consumerfinance.gov/about-us/newsroom.
6.1.2 Bureau Outreach Engagements With Stakeholders
Bureau staff participated in 93 outreach engagements throughout
2020 about fair lending compliance and access to credit issues. In many
of those engagements, Bureau personnel also received information and
feedback on the Bureau's policy decisions.
Specifically, in 2020, the Bureau communicated directly with
stakeholders through speeches, presentations, webinars, and smaller
discussions on issues pertaining to fair, equitable, and
nondiscriminatory access to credit. Some examples of the topics covered
in these engagements included the impacts of the COVID-19 pandemic on
the economy, and racial and economic justice issues; fair lending
supervision and enforcement priorities; innovations in lending; HMDA
and Regulation C; ECOA and Regulation B; small business lending; access
to credit for LEP consumers; providing adverse action notices when
using machine learning models; and the use of alternative data in
credit underwriting.
6.2 Listening to Stakeholders To Inform the Bureau's Policy Decisions
6.2.1 Bureau Outreach Engagements With Stakeholders
As described above in section 6.1, Bureau outreach engagements with
stakeholders inform the Bureau's policy decisions. In these events,
Bureau staff received feedback from stakeholders on issues pertaining
to fair, equitable, and nondiscriminatory access to credit.
For example, in July 2020, the Bureau hosted a roundtable
discussion on credit access issues faced by Limited English Proficient
(LEP) consumers and the challenges financial institutions face when
addressing language access needs. Throughout 2020, the Bureau engaged
in eight additional meetings with stakeholders to inform Bureau
guidance on serving LEP consumers.\66\
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\66\ Additional activity has occurred regarding this issue since
the end of this reporting period. On January 13, 2021, in response
to requests for additional guidance regarding providing products and
services to LEP consumers, the Bureau issued a statement to
encourage financial institutions to better serve consumers with
limited English proficiency and to provide principles and guidelines
to assist financial institutions in complying with the Dodd-Frank
Act, ECOA, and other applicable laws. More information can be found
here: https://www.consumerfinance.gov/rules-policy/notice-opportunities-comment/open-notices/statement-regarding-the-provision-of-financial-products-and-services-to-consumers-with-limited-english-proficiency/.
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The Bureau also engaged with stakeholders throughout the year on a
variety of other issues related to fair lending, including section 1071
governing small business lending data collection and reporting; HMDA;
agricultural and rural lending; student lending; alternative data;
artificial intelligence and machine learning methods; and credit
reporting.
6.2.2 Request for Information: Building a More Inclusive Financial
System
On July 28, 2020, the Bureau issued an RFI on the following topics
under ECOA and Regulation B:
Disparate impact.
Serving LEP consumers.\67\
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\67\ Id.
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Special Purpose Credit Programs.
Affirmative advertising to disadvantaged groups.
Small business lending.
Sexual orientation and gender identity discrimination.\68\
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\68\ Additional activity has occurred regarding this issue since
the end of this reporting period. On March 9, 2021, the Bureau
issued an interpretive rule clarifying that the prohibition against
sex discrimination under ECOA and Regulation B includes sexual
orientation discrimination and gender identity discrimination. This
prohibition also covers discrimination based on actual or perceived
nonconformity with traditional sex- or gender-based stereotypes, and
discrimination based on an applicant's social or other associations.
More information can be found here: https://www.consumerfinance.gov/about-us/newsroom/cfpb-clarifies-discrimination-by-lenders-on-basis-of-sexual-orientation-and-gender-identity-is-illegal/.
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Scope of federal preemption of state law.
Public assistance income.
Artificial intelligence and machine learning.
Adverse action notices under ECOA.
The Bureau received 144 comments from consumer and civil rights
advocates, industry, academics and researchers, government agencies and
entities, as well as individuals, attorneys, and law firms. The
information provided will help the Bureau continue to explore ways to
address regulatory compliance challenges while fulfilling the Bureau's
core mission to prevent unlawful discrimination.
For example, in response to many commenters' requests for
additional guidance regarding the special purpose credit programs
provisions of ECOA and Regulation B, in December 2020, the Bureau
issued an interpretive rule styled as an Advisory Opinion to address
regulatory uncertainty regarding Regulation B, as it applies to certain
aspects of special purpose credit programs. Additional information
regarding the interpretive rule on special purpose credit programs can
be found in section 4.2.1 of this report.
7. Amicus Program and Other Litigation
The Bureau files amicus, or ``friend-of-the-court,'' briefs in
significant court cases concerning Federal consumer financial
protection laws, including ECOA.
In 2020, the Bureau and the FTC jointly filed an amicus brief in
TeWinkle v. Capital One, N.A., explaining that the term ``applicant''
in ECOA and Regulation B includes both those who are currently seeking
credit and those currently receiving credit. This interpretation is the
best reading of the
[[Page 22191]]
statute itself, and any doubt whether the term ``applicant'' includes
current borrowers is put to rest by Regulation B, which for decades has
expressly defined the term to include current borrowers. Information
regarding the Bureau's amicus program, including a description of
previously filed amicus briefs, is available on the Bureau's website,
at www.consumerfinance.gov/policy-compliance/amicus/.
With regard to other litigation, in 2019, the Bureau was sued in
the U.S. District Court for the Northern District of California by the
California Reinvestment Coalition, et al., regarding the Bureau's
obligation to issue rules implementing section 1071. In February 2020,
the court approved a stipulated settlement agreement. As part of the
agreement, the Bureau agreed to a September 15, 2020, deadline for the
release of an outline of proposals under consideration and alternatives
considered, consistent with SBREFA. The settlement agreement also
provided a process for setting appropriate deadlines for the issuance
of a proposed and final rule implementing section 1071. The Bureau has
made significant progress with this rulemaking. For a comprehensive
update on 1071 activity, see section 4.1.1 of this report.
In August 2020, the Bureau was sued in the U.S. District Court for
the District of Columbia by the National Community Reinvestment
Coalition, et al., over the Bureau's final rule amending Regulation C
to raise the loan-volume coverage thresholds for financial institutions
reporting data under HMDA (the 2020 HMDA rule). The Plaintiffs argue
that the 2020 HMDA rule violates the Administrative Procedure Act. The
litigation is ongoing.
8. Interagency Coordination and Engagement
Throughout 2020, the Bureau coordinated 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. Interagency
engagement occurs in numerous ways, including through several
interagency organizations.
In 2020, the FFIEC was chaired by the Bureau's Director.\69\
Through the FFIEC, the Bureau has robust engagement with other partner
agencies that focus on fair lending issues. For example, in 2020, the
Bureau chaired the FFIEC HMDA/Community Reinvestment Act (CRA) Data
Collection Subcommittee of the FFIEC Task Force on Consumer Compliance.
This subcommittee 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 FFIEC Task
Force.
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\69\ Collectively, the FRB, FDIC, NCUA, OCC, and 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 Mar. 30, 2021). The
State Liaison Committee was added to FFIEC in 2006 as a voting
member. Additional activity has occurred on this issue since the end
of this reporting period. In April 2021, the NCUA's Chairman took
over as chair of the FFIEC.
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Additionally, 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 Association (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. In 2020, the Bureau chaired the Interagency Task Force,
which met regularly to discuss fair lending enforcement efforts, share
current methods of conducting supervisory and enforcement fair lending
activities, and coordinate fair lending policies.\70\
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\70\ Additional activity has occurred since the end of this
reporting period. In 2021, the FDIC took over as chair of the
Interagency Task Force on Fair Lending.
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Further, the Bureau also participated in the Interagency Working
Group on Fair Lending Enforcement, a standing working group of Federal
agencies--DOJ, HUD, and FTC--that met regularly to discuss issues
relating to fair lending enforcement. The agencies use these meetings
to also discuss fair lending developments and trends, methods for
evaluating fair lending risks
The Bureau is also a member of the FFIEC's Appraisal Subcommittee
(ASC) that provides federal oversight of state appraiser and appraisal
management company regulatory programs, and a monitoring framework for
the Appraisal Foundation and the Federal Financial Institutions
Regulatory Agencies in their roles to protect federal financial and
public policy interests in real estate appraisals utilized in federally
related transactions. The ASC is considering its authorities and
ability to promote fairness and equity, and prevent bias, in
appraisals.\71\
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\71\ The Appraisal Subcommittee includes the FFIEC agencies,
HUD, and the FHFA.
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Also, in October 2020, the Bureau signed a Memorandum of
Understanding (MOU) with the FTC, HUD, FDIC, FRB, NCUA, OCC, DOJ, and
FHFA--representing Federal agencies that, in addition to the Bureau,
conduct fair lending analyses. The MOU allows economists from the
agencies to voluntarily share confidential information with respect to
analytical methodologies used to understand and assess compliance with
fair lending laws.\72\
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\72\ For more information on the MOU, see Director Kraninger's
Remarks During ``Current Priorities in Consumer Financial Protection
Seminar'' At Harvard Kennedy School (Oct. 29, 2020), https://www.consumerfinance.gov/about-us/newsroom/director-kraningers-remarks-current-priorities-seminar-harvard-kennedy-school/.
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In addition to these established interagency organizations, Bureau
personnel meet regularly with the DOJ, HUD, state Attorneys General,
and the prudential regulators to coordinate the Bureau's fair lending
work.
9. Coordination With the Bureau's Innovation Programs
The Dodd-Frank Act established the Bureau's mission to include both
fair lending and innovation components. Specifically, the Bureau is
authorized to exercise its authorities under Federal consumer financial
law for the purposes of ensuring--with respect to consumer financial
products and services--that consumers are protected from unfair,
deceptive, or abusive acts and practices and from discrimination,\73\
and that markets for consumer financial products and services operate
transparently and efficiently to facilitate access and innovation.\74\
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\73\ Dodd-Frank Act sec. 1021(b)(2).
\74\ Dodd-Frank Act sec. 1021(b)(5).
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As part of its coordination function, the Office of Fair Lending
worked in 2020 with the Office of Innovation regarding applications to
the Bureau's innovation programs that involved fair lending and access
to credit matters.
Review of such applications included consideration of the potential
fair lending risks associated with the proposed product or service, as
well as its potential for expanding access to credit for underserved or
underbanked populations. In addition, after an application related to
fair lending or access to credit has been granted by the Bureau, the
two offices continue to collaborate, for example by reviewing any data
submitted by the recipient relating to fair lending and access issues
during the monitoring period.
[[Page 22192]]
In 2020, Upstart Network, Inc. (Upstart) was granted a No-Action
Letter (NAL). \75\ Upstart, a company that that uses alternative data
and machine learning in making credit underwriting and pricing
decisions, received a NAL pertaining to regulatory uncertainty under
ECOA and Regulation B.\76\
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\75\ Consumer Fin. Prot. Bureau, Upstart Network No-Action
Letter (Nov. 30, 2020), https://files.consumerfinance.gov/f/documents/cfpb_upstart-network-inc_no-action-letter_2020-11.pdf. In
addition to the Upstart NAL, in 2020, the Bureau granted a total of
three Approvals under the Compliance Assistance Sandbox policy and
six NAL or NAL Templates. These applications, however, do not
directly pertain to fair lending issues. All granted applications
can be found on the Bureau's website, at https://www.consumerfinance.gov/rules-policy/innovation/granted-applications.
\76\ On September 14, 2017, Upstart was granted a NAL for a term
of three years. This NAL expired on December 1, 2020.
Appendix A--Defined Terms
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Term Definition
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AMS.......................... Agricultural Marketing Service of the
U.S. Department of Agriculture.
APA.......................... Administrative Procedure Act.
API.......................... Application Programming Interface.
ASC.......................... FFIEC's Appraisal Subcommittee.
Bureau....................... Consumer Financial Protection Bureau/
Bureau of Consumer Financial Protection.
CARES Act.................... Coronavirus Aid, Relief, and Economic
Security Act.
CMS.......................... Compliance Management System.
COVID-19..................... Coronavirus Disease/Pandemic 2019.
Dodd-Frank Act............... Dodd-Frank Wall Street Reform and
Consumer Protection Act.
DOJ.......................... U.S. Department of Justice.
DOT.......................... U.S. Department of Transportation.
ECOA......................... Equal Credit Opportunity Act.
FCA.......................... Farm Credit Administration.
FCRA......................... Fair Credit Reporting Act.
FDIC......................... Federal Deposit Insurance Corporation.
FHFA......................... Federal Housing Finance Agency.
Federal Reserve Board or FRB. Board of Governors of the Federal Reserve
System.
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......................... Home Mortgage Disclosure Act.
HUD.......................... U.S. Department of Housing and Urban
Development.
LAR.......................... Loan Application Register (HMDA).
LEP.......................... Limited English Proficient.
MSA.......................... Metropolitan Statistical Area.
MOU.......................... Memorandum of Understanding.
NCUA......................... National Credit Union Administration.
NPRM......................... Notice of Proposed Rulemaking.
OCC.......................... Office of the Comptroller of the
Currency.
PPP.......................... Paycheck Protection Program (CARES Act).
RFI.......................... Request for Information.
SBA.......................... Small Business Administration.
SBREFA....................... Small Business Regulatory Enforcement
Fairness Act of 1996.
SEC.......................... Securities and Exchange Commission.
SER.......................... Small Entity Representatives.
SNAP......................... Supplemental Nutrition Assistance Program
(``Food Stamps'').
USDA......................... U.S. Department of Agriculture.
------------------------------------------------------------------------
Signing Authority
The Acting Director of the Bureau, David Uejio, having reviewed and
approved this document, is delegating the authority to electronically
sign this document to Laura Galban, a Bureau Federal Register Liaison,
for purposes of publication in the Federal Register.
Dated: April 22, 2021.
Laura Galban,
Federal Register Liaison, Bureau of Consumer Financial Protection.
[FR Doc. 2021-08716 Filed 4-26-21; 8:45 am]
BILLING CODE 4810-AM-P
