The Department of Justice Targets Fair Lending
Posted by Justin Smith on Wed, Apr 20, 2011 @ 04:00 PM
In early April, the Department of Justice (DOJ) submitted its annual report to Congress highlighting its efforts last year to enforce in the Equal Credit Opportunity Act. As expected, this will directly effect community bank's and their fair lending policies and monitoring procedures.
With an increased budget and staff for the Fair Lending unit of the Department of Justice the Equal Credit Opportunity Act and fair lending has become a top priority. This is made clear in the DOJ's recent blog http://blogs.usdoj.gov/blog/archives/1292 .
In 2010, the DOJ received more fair lending referrals than 2001- 2008 combined. Those numbers can be directly attributed to banking regulatory agencies and their increased scrutiny of fair lending compliance.
The DOJ’s Fair Lending Unit is closely working with regulators to focus on credit issues, such as red-lining, pricing, steering, and reverse red-lining.
Traditional mortgage products are not the only area of review; unsecured consumer lending, auto lending, and credit cards will receive close attention.
A breakout of each agencies referrals for 2010 follows:
• 33 referrals from the Federal Deposit Insurance Corporation (FDIC)
• 6 referrals from the Federal Reserve Board (FRB)
• 6 referrals from the Office of Thrift Supervision (OTS)
• 2 referrals from the Office of the Comptroller of the Currency (OCC)
• None from the National Credit Union Administration (NCUA)
• 2 referrals from HUD.
The above referrals to the DOJ are just the tip of the iceberg. There are hundreds of community banks dealing with the increased regulatory pressure. Expect more intrusive CRA and Fair Lending examinations . In short, lending compliance must now be a priority. Make sure that your fair lending policies are up to date, your CRA assessment area is properly defined, and you have an clear understanding of your lending activity by product line.