What I Wish Everyone Knew About FFIEC Fair Lending Risk Factors and Software Evaluation

by | Nov 27, 2018 | blog | 0 comments

Did you factor the Interagency Fair Lending Examination Procedures’ risk factors (listed beginning on page 6 of this file) into your decision to acquire your current fair lending software solution?

Whether you have fair lending software or want to find a new vendor, I’d encourage you to look at the risk factors in detail to determine if your current tool helps evaluate them, or does it fall short and leave you needing to find another software provider that hits the mark?

FFIEC Risk Factors: Underwriting, Pricing, Redlining, Marketing, etc.

As you think about how you will conduct your HMDA, CRA and fair lending self-assessments and ongoing monitoring, I challenge you to evaluate prospective vendors using the risk factors as your guide. As you may be aware, there are 36 risk factors which cover underwriting, pricing, redlining, marketing, and more.  That’s an overwhelming amount of information for your compliance team to assess without an automated tool.

Lending compliance staff will want to consider what the regulators are doing and mirror that. In so doing, you will be well-prepared for an exam because you will have thoroughly analyzed each of the risk factors and be able to explain the nuances of all the issues.

ComplianceTech offers two web-based software solutions, LendingPatterns™ and Fair Lending Magic™, that effectively cover over 90% of the risk factors identified. The only risk factors that the software doesn’t analyze involve policy review, study of branch hours and discussions with staff at the company.

However, all the risk factors that point to data are covered by our tools, including some obscure and hard to handle reviews, such as: marketing mailing list reviews, analysis of branch placement relative to demographic areas and analysis of pricing exceptions by individual loan officers.  Some risk factors can be reviewed in a matter of minutes with reports in LendingPatterns™ and/or Fair Lending Magic™.

Please feel free to contact the team at ComplianceTech for a no-obligation demonstration, to learn how our tools offer a comprehensive fair lending solution that is trusted by federal and state regulators, financial institutions and housing non-profits. In the context of that demonstration, we can gladly discuss how our tools can be used to assess your risk under each risk factor.