Fair lending compliance sometimes can be a challenge but having a better understanding of the risks puts you in a good position in your business. You should always remember that fair lending applies in all stages of crediting procedures, including marketing and servicing. On the other hand, fair lending also covers all types of loans and not only the HDMA loans as many people think. Even if you are yet to comply officially with the lending regulations, your institution should be responsible for pursuing and supporting the fair lending regulations. So long as you are involved in the lending business, you must ensure you adhere to the fair lending laws.
What then are the fair lending risks that you should use to evaluate your company?
For you to know if your company is on the right track when it comes to fair lending laws compliance, you should focus on the fair lending risks. Some of the fair lending risks you should be aware of are as follows;
Compliant management program risk (CMP)
Commonly referred to as compliance management system describes the method you use in mitigating and managing all your fair lending risks — for instance, the software that we offer which enable you to monitor and analyze all your transactions data as well as making it easy to store your data for a very long time. In case your current CMP is not robust and capable enough kindly call us today, and we will be ready to provide you with reliable compliance software.
Are you aware that CFPB has listed redlining as their number one fair lending priority from 2017 going forward? Do your research to understand how the new regulation works but it deals with how banks should distribute their loans equally in both minority and non-minority areas. Our system analyses the data and shows you how you have been lending loans to your clients.
The primary goal for fair lending is to ensure that a lending company treats all customers equally. The regulation covers even your company’s marketing strategy, which means you should give all the customers similar treatment and services as they do marketing for their products. When assessing the marketing risk, look at the applications if they are consistent the market demographics. We will help do a proper fair lending analysis once you call or visit our offices.
This is a fair lending risk that can be realized if after analysis you notice that some customers are enjoying fewer prices than other clients applying for the same loan. All loan applicants should be charged similar amounts or interests. In case the authorities find out that your pricing is not fair, you might be forced to refund the extra money which creates a bad image for your company.
Although it’s normal for customers to raise complaints during servicing, constant complaints can attract the attention of the industry regulator. Always make sure that your service delivery is similar and consistent to all customers. Sometimes you might notice this risk until you hire our company to do a professional, fair lending risk analysis. We have experts that will analyze all the risks surrounding your business and the give you the feedback and the solutions. Call us today for more details.
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