The more that you know about fair lending and all of the laws, the easier it will be for you to go through your regular daily transactions with little or no worry. The fair lending laws came to be as a way to make sure that people of a variety of protected classes are able to access the credit that they need. One of the first lending laws that came to be was the Fair Housing Act, which was part of the Civil Rights act from 1968. This law initially worked to prohibit discrimination when it comes to color, sex, race, religion, or national origin.
In general, fair lending is made up of requirements and prohibitions that are contained in laws for civil rights regulations. A full listing of the fair lending elements is the Fair Housing Act, Equal Credit Opportunity Act, Home Mortgage Disclosure Act, and the Fair Credit Reporting Act. All of these laws herein are highly enforced, so it is important that your financial institution is able to keep up with all of the details within so that you can remain compliant.
If you are a financial institution and you are trying to make sure that you are in compliance with these laws, you should be collecting demographic data in regards to your borrowers. This is done to help make sure that no company is running afoul when it comes to the lending laws. Institutions may internally monitor all of the fair lending compliance by gathering consumer information.
This might come into play if you are a financial institution that is starting to look for ways that you can market and solicit consumers for your products or services. Many lending institutions will rely on direct marketing whenever there are special promotions. However, these activities for advertising must also be able to comply with all fair lending laws. A lender never wants the marketing to exclude consumers or discourage anyone from applying to receive credit.
Collections And Servicing
When it comes to servicing accounts, fair lending laws require that all of the scripts and the transcripts for telephone calls and other procedures are not going to vary in any way that may be prohibited. Proper training should be implemented as a way to make sure that all customer service representatives are not treating any customers different than one another based on any of the characteristics that are prohibited.
If you have a customer that has defaulted or simply has difficulty paying, the collection strategies and processes will also have to be reviewed to make sure that they are in line with fair lending compliance laws. Some of the many areas that now have to be analyzed will include loss mitigation, debt forgiveness, payment plans, penalties, fees, and collections.
If you are looking for help when it comes to fair lending laws and all of the compliance that this includes, ComplianceTech is there with the right software and data analyzation. Once you contact us for a consultation, we can go over your business processes and determine what some of the best ways are that we can help you from a fair lending law standpoint.
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