"The Bureau's Pursuit of Fair Lending"

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June 2014
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By now it is a known fact that one of the most important features of an examination conducted by the Consumer Financial Protection Bureau ("CFPB" or "Bureau") is a rigorous review of fair lending compliance. 
So, given its importance, it behooves us to learn about what the CFPB has found out about fair lending and what actions are needed to ensure its compliance. 
In this article, I provide an analysis of the CFPB's most recent findings in the mortgage space as well as practical actions to be taken that help to build a vibrant fair lending initiative, gleaned from both the Bureau's own issuances and actions, as well as my firm's experience in assisting institutions with their CFPB fair lending examinations.   
I hope you enjoy the article!
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We can derive certain salient observations about the Report's findings. 

In the first place, the Bureau has noted increasing efficiencies in fair lending activity. Thus, they have "created, refined, and implemented a risk-based fair lending prioritization process" to ensure that their supervisory procedures focus on the "areas presenting the greatest fair lending risk to consumers." The approach, dubbed "risk-based prioritization" by the Bureau, uses the collection of both quantitative and qualitative data to assess fair lending risk to consumers as well as assessments of risk in order to prioritize enforcement actions.
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The CFPB uses input from a variety of external and internal stakeholders to inform its fair lending prioritization process. Thus, it considers fair lending complaints received by its Office of Consumer Response or brought to the Office of Fair Lending's attention by advocacy groups, whistleblowers, and other government agencies (at the local, state, and federal levels). As part of the prioritization process, the Office of Fair Lending also considers public and private litigation.

Waiting for the CFPB - 04-23-2013 

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LENDERS COMPLIANCE GROUP is the first full-service, mortgage risk management firm in the United States specializing exclusively in outsourced mortgage compliance and offering a full suite of services in residential mortgage banking for banks and non-banks. We are pioneers in outsourcing solutions for residential mortgage compliance. We offer our clients real-world, practical solutions to mortgage compliance issues, with an emphasis focused on operational assessment and improvement, benchmarking methodologies, Best Practices, regulatory compliance, and mortgage risk management.
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