What the 2018 CFPB Fair Lending Report Means for Your Business
Every year, thousands of financial institutions across the United States gather their HMDA data and submit it to the Consumer Financial Protection Bureau (CFPB) for its use to monitor community housing needs; to compile lending statistics; and to identify predatory lending practices. This means that the CFPB is constantly analyzing new trends in the financial sector, which they then release every year in a document detailing all of their efforts and accomplishments for that year. The report discusses both HMDA-reportable and non-HMDA reportable lending.
Here is a quick rundown on what the CFPB aimed for and accomplished in 2018.
New Focus Areas for Compliance
As part of their focus on protecting Americans from predatory banking practices, the CFPB announced that they would be investigating the student loan and debt industries for instances of noncompliance and discrimination.
The CFPB also announced that they would look into models used by institutions for automatic servicing of credit card debt and whether these models used discriminatory information when predicting recovery or loss outcomes for clients.
New HMDA Reporting Platform
The CFPB started off 2018 in a big way by launching a brand new digital platform where financial institutions could submit their HMDA data. The CFPB understood that the system was new and that there would be growing pains, so with this in mind, it was announced that no resubmissions (unless errors were material) would be required. Also, the CFPB said it did not “intend” to penalize lenders for data collection errors from 2018.
The previous reporting platform, HMDA Explorer, was simply not powerful enough to handle all of the new data points introduced in 2015 and with this, the CFPB has done its best to consult with organizations and institutions on how the system can be improved.
Investigation Decisions and Settlements
The 2018 year was a large year for compliance violation judgments. Over the course of 2018, the CFPB and other government bodies handed out more than $45 million in restitution to clients who were racially discriminated against in the context of loan pricing. However, the CFPB did not refer any violations of the Equal Credit Opportunity Act to the Department of Justice in 2018.
Compliance is a complex subject that is evolving every year, but ComplianceTech is always happy to update our clients on all of the developments in the financial field. Give our HMDA and fair lending compliance experts a call today at (202) 842-3800, or visit us online. Start preparing and getting organized for 2019 reporting today.