Fair Lending

Report
JUNE 2012
THE CONSUMER FINANCIAL
PROTECTION BUREAU:
FAIR LENDING AT WORK
Tim Lambert
Senior Counsel, Office of Fair Lending and Equal Opportunity
Consumer Financial Protection Bureau
Note: This document was used in support of a live discussion. As such, it does not
necessarily express the entirety of that discussion nor the relative emphasis of topics.
FAIR LENDING AT WORK
1
THE DODD–FRANK ACT CREATED THE OFFICE OF
FAIR LENDING AND EQUAL OPPORTUNITY
Dodd-Frank defines “Fair Lending” as:
• “fair, equitable, and nondiscriminatory access to credit
for consumers.” DFA § 1002(13).
Dodd-Frank mandates the creation of an Office of Fair
Lending and Equal Opportunity with the following
specified functions:
• Provide oversight and enforcement of fair lending laws
enforced by the Bureau
• Coordinate efforts with Federal agencies and State
regulators
• Work with the industry, fair lending, civil rights,
consumer and community advocates to promote fair
lending compliance and education
• Report to Congress on the efforts of CFPB to fulfill its
fair lending mandate. DFA § 1013(c).
FAIR LENDING AT WORK
2
CFPB’S KEY FAIR LENDING LAWS
EQUAL CREDIT
OPPORTUNITY
ACT
HOME
MORTGAGE
DISCLOSURE
ACT
• The ECOA prohibits creditors from
discriminating in any aspect of a credit
transaction against any applicant on the
basis of race, color, religion, national origin,
sex, marital status, age, receipt of income
from any public assistance program, or
exercising in good faith a right under the
Consumer Credit Protection Act.
• HMDA requires lenders to report individual
mortgage loan data, including data on
race, ethnicity, and sex.
FAIR LENDING AT WORK
3
CFPB ADOPTS THE DISPARATE IMPACT
DOCTRINE
WAYS TO PROVE DISCRIMINATION UNDER ECOA
OVERT
DISCRIMINATION
DISPARATE
TREATMENT
FAIR LE NDING AT WORK
DISPARATE
IMPACT
4
OFFICE OF FAIR LENDING FUNCTIONS
HORIZONTALLY WITHIN CFPB
Consumer
Response
Consumer
Education &
Engagement
Discrimination
Complaint
Processing
Procedures
Consumer
Education
Research,
Markets &
Regulations
Rulemaking
Supervision
Enforcement
External
Affairs
Fair Lending
Scoping
Fair Lending
Investigations
Industry
Outreach
Fair Lending
Litigation
Civil Rights,
Consumer, and
Community
Group
Outreach
The Markets
Teams
Discrimination
Complaint
Analysis
Special
Populations
Work
Research
Fair Lending
Exams
OFFICE OF FAIR LENDING AND EQUAL OPPORTUNITY
FAIR LENDING AT WORK
5
CONSUMER RESPONSE –
DISCRIMINATION COMPLAINTS
CFPB is receiving complaints regarding these products:
Visit www.consumerfinance.gov/complaint/ to submit a complaint
Or call 1-855-411-CFPB
FAIR LENDING AT WORK
6
CONSUMER EDUCATION AND
ENGAGEMENT
Financial Education
• Provide targeted
educational content
• Example: “Credit
Discrimination is Illegal”
Brochure
Financial Empowerment
• Enhance access to and
knowledge of financial
products and services
among lower-income
consumers
Engaging consumers and empowering them to take control of
their financial lives are top priorities for the CFPB.
The Bureau aims to provide consumers with the information
they need when they need it, so that they can achieve their
own financial goals.
OLDER AMERICANS
SERVICEMEMBERS
FAIR LENDING AT WORK
STUDENTS
7
KNOW BEFORE YOU OWE
FAIR LENDING AT WORK
8
FAIR LENDING RESEARCH
RESEARCH
TEAM
MARKETS TEAMS
•MORTGAGE & HOME EQUITY
MARKETS
• Create methodologies and
provide analytical support
for supervisory exams and
enforcement actions
• Provide research support
for studies such as the
§1077 Student Lending
Report
•CARD AND PAYMENTS MARKETS
•INSTALLMENT & LIQUIDITY
LENDING
•DEPOSITS, COLLECTIONS &
CREDIT INFORMATION
FAIR LENDING AT WORK
9
FAIR LENDING REGULATIONS
Amend ECOA – Reg B
Amend HMDA – Reg C
• Small Business Data
Collection
• Revisions to Reg C
Amend TILA – Reg Z
• abusive or unfair lending practices that
promote disparities among consumers of
equal credit worthiness but of different
race, ethnicity, gender, or age
FAIR LENDING AT WORK
10
FAIR LENDING SUPERVISION
CONSUMER FINANCE MARKET
Payday,
mortgage and
private
student loans
Banks
Thrifts
Credit
Unions
Covered
persons
that pose
risks to
consumers
BANK
“Larger
Participants”
in nonbank
markets
NONBANK
FAIR LENDING AT WORK
11
FAIR LENDING RISK FACTORS
Incentives
Reliance on
Third Parties
Discretion
Unusual
Criteria
Risk
FAIR LENDING AT WORK
Weak
Compliance
Management
System
12
KEY AREAS FOR FAIR LENDING
EXAMINATIONS
Auto Loans
Student
Loans
Mortgage
Servicing
Mortgage
Origination
Credit Cards
Fair Lending
Supervision &
Enforcement
FAIR LENDING AT WORK
Small
Business
Loans
13
FAIR LENDING ENFORCEMENT
Independent litigation authority and referral
obligation under ECOA
Coordination with the other federal enforcement
agencies and state regulators
• DOJ, FTC, HUD and State AGs
Civil Investigative Demands and Administrative
Hearing Authority
FAIR LENDING AT WORK
14
FAIR LENDING OUTREACH
PROMOTING FAIR LENDING COMPLIANCE AND
EDUCATION AMONG:
FAIR LENDING
GROUPS
CIVIL RIGHTS
GROUPS
COMMUNITY
ADVOCATES
CONSUMER
ADVOCATES
PRIVATE
INDUSTRY
FAIR LENDING AT WORK
15
CFPB AND THE OFFICE OF FAIR LENDING
Tell your
Story
WORKING FOR
YOU
WORKING WITH
YOU
Submit a
complaint
Blog
www.consumerfinance.gov
Notice and
Comment
Ask CFPB
WE WANT TO HEAR FROM YOU!
FAIR LENDING AT WORK
16

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