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Tag Archives: ECOA

Machine Underwriting: The CFPB Issues Blog Post on Use of Artificial Intelligence in Credit Underwriting

Posted in CFPB, Regulatory Developments

On July 7, 2020, the Consumer Financial Protection Bureau (CFPB or Bureau) published a blog post on the use of artificial intelligence (AI), especially machine learning (ML), in credit underwriting. The blog post addresses industry concerns about how AI and ML models interact with the existing regulatory framework, specifically the adverse action notice requirements in the Equal Credit… Read More

CFPB Relies on “Mystery Shoppers” in BancorpSouth Mortgage Discrimination Settlement

Posted in CFPB, Disparate Impact, Enforcement Actions, Fair Lending, Mortgage

CFPB “mystery shoppers,” along with secret recordings, were part of the CFPB’s factual allegations in a recent mortgage discrimination settlement. The DOJ and CFPB announced a settlement with BancorpSouth Bank to resolve alleged violations of the Fair Housing Act and Equal Credit Opportunity Act (ECOA). The complaint alleges that from at least 2011 to 2013,… Read More

Supreme Court Affirmation of Hawkins Case Raises More Questions Than It Answers

Posted in Fair Lending

On March 22, 2016, the Supreme Court of the United States issued an order in Hawkins v. Community Bank of Raymore. An evenly divided Court affirmed without issuing an opinion, thereby resolving the Hawkins case but leaving open the proper interpretation of the Equal Credit Opportunity Act (ECOA), failing to resolve a circuit split between… Read More

Big Data, Big Deal

Posted in Disparate Impact, Enforcement Actions, Privacy

The FTC rang in the New Year with a report, Big Data: A Tool for Inclusion or Exclusion? Understanding the Issues. The report wrestles with the implications of using big data analytics to target and make decisions about customers. Some of the FTC’s observations are common sense, but others require more careful analysis. For example,… Read More

House Votes to Nix Indirect Auto Bulletin and Expand QM

Posted in CFPB, Fair Lending, Indirect Auto Lending, Mortgage

The U.S. House of Representatives passed legislation on November 18, 2015, that would revoke the CFPB’s guidance on indirect auto lending and expand the qualified mortgage rule’s safe harbor. The Reforming CFPB Indirect Auto Financing Guidance Act, H.R. 1737, “[d]eclares without force or effect” the CFPB’s Bulletin 2013-02 (Indirect Auto Lending and Compliance with the… Read More

CFPB Brings Long-Anticipated First Redlining Enforcement Action – New Approach to Redlining Analysis Is Put into Action

Posted in CFPB, Enforcement Actions, Fair Lending, Mortgage

On September 24, 2015, the CFPB and DOJ announced a joint action against Hudson City Savings Bank for allegedly discriminatory redlining practices from 2009 through 2013 in certain neighborhoods in New York, New Jersey, Connecticut, and Pennsylvania in violation of the Equal Credit Opportunity Act and the Fair Housing Act. Over the past few months,… Read More

Talk with the Fed About Compliance Hot Topics

Posted in Events, Mortgage, UDAAP

On Wednesday, July 29, 2015, the Fed is hosting a free webinar on “Common Violations and Hot Topics.”  Senior staff will cover areas of common and/or substantive concern—including HMDA, ECOA (with a focus on spousal signatures), UDAAP, and the Flood Disaster Protection Act—and conduct a Q&A with participants.  Registration is required.

CFPB Brings First ECOA Disparate Impact Action Post-Inclusive Communities

Posted in Auto Lending, CFPB, Disparate Impact, Enforcement Actions

Just over 18 months after bringing a disparate impact-based ECOA case against Ally Financial (“Ally”) for discriminatory auto loan pricing, the CFPB has struck again—this time taking action against American Honda Finance Corporation (“Honda”). Like Ally, Honda stands accused of discriminatory auto loan pricing stemming from the company’s discretionary pricing and dealer compensation practices, i.e.,… Read More

Supervisory Haiku-lights, Summer 2015

Posted in CFPB, Credit Reports, Fair Lending, Mortgage, Supervisory Highlights

Break out the short shorts everybody: it’s summer! We know you could use a palate cleanser between the 50 Shades novels and Game of Thrones wikis you’re reading on the beach. Supervisory Haiku-lights to the rescue! The Summer 2015 issue of Supervisory Highlights includes supervisory observations on consumer reporting, debt collection, student loan servicing, mortgage… Read More

Disparate Whatever

Posted in Disparate Impact, Fair Lending

The House has approved an amendment aimed at barring the Department of Justice (DOJ) from enforcing the U.S. Department of Housing & Urban Development’s (HUD) fair lending disparate impact rule. The amendment is to H.R. 2578, the Fiscal Year 2016 Commerce, Justice, Science, and Related Agencies Appropriations Act. It would prohibit the DOJ from using… Read More

CFPB Enforcement Actions Take on LO Comp and Fair Lending

Posted in CFPB, Fair Lending, Mortgage

Over the past couple of weeks, the CFPB has kept itself busy in the mortgage origination enforcement arena. In one complaint, the CFPB ordered a residential mortgage lender and its CEO to each pay a $1 million civil penalty for compensating loan originators in a way that allegedly steered borrowers into mortgage loans with higher… Read More

Supreme Court to Determine Whether ECOA Allows Spousal Guarantors to Challenge Liability

Posted in Fair Lending

On March 2, 2015, the Supreme Court of the United States granted certiorari in Hawkins v. Cmty. Bank of Raymore, 761 F.3d 937 (8th Cir. 2014), cert. granted, No. 14-520, 2015 U.S. LEXIS 1635 (U.S. Mar. 2, 2015)—on appeal from the Eighth Circuit—to decide whether certain guarantors are excluded from the definition of “applicant” under… Read More

Supreme Court Allows Agencies to Reinterpret the Law at Their Discretion

Posted in CFPB

In a decision published on March 9, 2015, the Supreme Court ended the D.C. Circuit Court’s Paralyzed Veterans doctrine, which required administrative agencies to utilize the Administrative Procedure Act’s (APA) notice-and-comment process in order to substantially alter an interpretation. See Perez v. Mortgage Bankers Assoc., 575 U.S. ___, No. 13-1041, slip op. (March 9, 2015)…. Read More

The CFPB 2015 Forecast: Continued Cloudiness, Thunderstorms Likely

Posted in CFPB, Regulatory Developments, UDAAP

This will be a busy year at the Consumer Financial Protection Bureau (CFPB), and that certainly means it will be a busy year for financial institutions as well. In addition to exercising its supervisory and enforcement authorities, the CFPB is poised to issue a number of proposed rules and finalize several other rules it proposed… Read More

CFPB White Paper on Methodology for Evaluating Alleged Racial Disparities in Lending

Posted in CFPB, Disparate Impact, Fair Lending

The Equal Credit Opportunity Act (ECOA) forbids discrimination by a creditor on the basis of race, color, religion, national origin, sex, marital status or age. As the Consumer Financial Protection Bureau (CFPB) has acknowledged, particularly in the non-mortgage context, lenders are generally not permitted to collect demographic information about borrowers. But, regulators, including the CFPB,… Read More

This Time’s the Charm? Supreme Court Takes Up Third Disparate Impact Case

Posted in Disparate Impact, Fair Lending

On October 2, 2014, the Supreme Court granted certiorari in Inclusive Communities Project, Inc. v. Texas Department of Housing and Community Affairs, No. 13-1371, to decide whether disparate impact claims are cognizable under the Fair Housing Act (FHA). Of interest, the Court declined to grant cert. on the question of the appropriate standard for evaluating… Read More