Federal Register, Volume 82 Issue 104 (Thursday, June 1, 2017)

[Federal Register Volume 82, Number 104 (Thursday, June 1, 2017)]
[Notices]
[Pages 25250-25266]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-11318]

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BUREAU OF CONSUMER FINANCIAL PROTECTION

Fair Lending Report of the Consumer Financial Protection Bureau,
April 2017

AGENCY: Bureau of Consumer Financial Protection.

[[Page 25251]]

ACTION: Fair Lending Report of the Consumer Financial Protection
Bureau.

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SUMMARY: The Bureau of Consumer Financial Protection (CFPB or Bureau)
is issuing its fifth Fair Lending Report of the Consumer Financial
Protection Bureau (Fair Lending Report) to Congress. We are committed
to ensuring fair access to credit and eliminating discriminatory
lending practices. This report describes our fair lending activities in
prioritization, supervision, enforcement, rulemaking, interagency
coordination, and outreach for calendar year 2016.

DATES: The Bureau released the April 2017 Fair Lending Report on its
Web site on April 14, 2017.

FOR FURTHER INFORMATION CONTACT: Anita Visser, Senior Policy Advisor to
the Director of Fair Lending, Office of Fair Lending and Equal
Opportunity, Consumer Financial Protection Bureau, 1-855-411-2372.

SUPPLEMENTARY INFORMATION:

1. Fair Lending Report of the Consumer Financial Protection Bureau,
April 2017

Message From Richard Cordray, Director of the CFPB

For over five years, the Consumer Financial Protection Bureau has
pursued its statutory mandate to provide ``oversight and enforcement''
of the fair lending laws under our jurisdiction. I am proud of all we
have accomplished in ensuring that creditworthy consumers are not
denied credit or charged more because of their race or ethnicity or any
other prohibited basis.
Our fair lending guidance, supervisory activity, and enforcement
actions have three goals: To strengthen industry compliance programs,
root out illegal activity, and ensure that harmed consumers are
remediated. Over these past five years, we have engaged in robust fair
lending dialogue with industry and this dialogue has served to
significantly strengthen industry compliance programs. Members of our
Fair Lending Office have logged over 300 outreach meetings and events,
not to mention preparing responses to the many calls and emails
received from compliance officials. We have invested significant
efforts toward strengthening industry compliance management systems
because they are critical first-line measures to protect consumers from
discriminatory lending policies and practices. As a result, our
examiners now often find that lenders have already implemented sound
policies and procedures to identify and address potential fair lending
violations, based on our prior guidance.
We also have achieved remarkable success in our fair lending
enforcement activities during this time period, reaching historic
resolution of the largest redlining, auto finance, and credit card fair
lending cases, and instituting relief that has halted illegal
practices. Our fair lending supervision and enforcement activities have
resulted in over $400 million in remediation to harmed consumers.
In the coming years, we will increase our focus on markets or
products where we see significant or emerging fair lending risk to
consumers, including redlining, mortgage loan servicing, student loan
servicing, and small business lending. Discrimination on prohibited
grounds in the financial marketplace, though squarely against the law,
is by no means a thing of the past. The Consumer Bureau will continue
to enforce existing fair lending laws at a steady and vigorous pace,
taking care to ensure broad-based industry engagement and consistent
oversight.
I am proud to present our 2016 Fair Lending Report.

Sincerely,

Richard Cordray

Message From Patrice Alexander Ficklin, Director, Office of Fair
Lending and Equal Opportunity

When I left private practice to join the CFPB in 2011, I carried
with me my experiences as industry counsel, advising bank and nonbank
clients on fair lending compliance. I knew from my work that many
lenders are interested in building and maintaining robust fair lending
self-monitoring systems that reflect best practices in consumer
protection. I advised my clients on their efforts to evaluate and
address fair lending risk not only in mortgage origination, but also in
mortgage servicing, credit cards, and other areas that had not been a
traditional fair lending focus. Together we enhanced the existing
methods of proxying for race and ethnicity; an essential step to allow
my clients to fully implement the mandate contained in the Equal Credit
Opportunity Act (ECOA), which prohibits discrimination in all manner of
consumer credit, not simply mortgages.
Shortly after arriving at the CFPB in 2011, I led a handful of
other public servants in founding the CFPB's Fair Lending Office, which
the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-
Frank Act) charged with ``oversight and enforcement'' of ECOA. We drew
from our experiences and dialogue with industry, the information
transferred to us from our sister prudential regulators, civil rights
and consumer advocate groups' perspectives, and the expertise of the
Bureau's markets teams to establish our first three fair lending
priorities: mortgage origination, auto finance, and credit cards. We
have accomplished much in these markets over these past five years, not
the least of which are the $400 million in remediation to harmed
consumers and the remarkable and robust dialogue we enjoy with many
financial services providers in support of their efforts to treat all
of their customers in a fair and responsible manner.
As outlined in my December 2016 blog post,\1\ my team has again
looked to our statutory mandate and relevant data to refresh the
Bureau's fair lending priorities. In 2017 we will increase our focus in
the areas of redlining and mortgage and student loan servicing to
ensure that creditworthy consumers have access to mortgage loans and to
the full array of appropriate options when they have trouble paying
their mortgages or student loans, regardless of their race or
ethnicity. In addition, we will focus more fully on pursuing our
statutory mandate to promote fair credit access for minority- and
women-owned businesses. We know that these businesses play an important
role in job creation for communities of color, while also strengthening
our economy.
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\1\ Patrice Ficklin, Fair Lending priorities in the new year,
Consumer Financial Protection Bureau (Dec. 16, 2016),
http:www.consumerfinance.gov/about-us/blog/fair-lending-priorities-new-year/.
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The Dodd-Frank Act mandated the creation of the CFPB's Office of
Fair Lending and Equal Opportunity and charged it with ensuring fair,
equitable, and nondiscriminatory access to credit to consumers;
coordinating our fair lending efforts with Federal and State agencies
and regulators; working with private industry, fair lending, civil
rights, consumer and community advocates to promote fair lending
compliance and education; and annually reporting to Congress on our
efforts.
I am proud to say that the Office continues to fulfill our Dodd-
Frank mandate and looks forward to continuing to work together with all
stakeholders in protecting America's consumers. To that end, I am
excited to share our progress in this, our fifth, Fair Lending
Report.\2\
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\2\ See Dodd-Frank Act section 1013(c)(2)(D), Public Law 111-
203, 124 Stat. 1376 (2010) (codified at 12 U.S.C. 5493(c)(2)(D)).

[[Page 25252]]

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Sincerely,

Patrice Alexander Ficklin

Executive Summary

The Dodd-Frank Wall Street Reform and Consumer Protection Act
(Dodd-Frank or Dodd-Frank Act) \3\ established the Bureau as the
Nation's first Federal agency with a mission focused solely on consumer
financial protection and making consumer financial markets work for all
Americans. Dodd-Frank established the Office of Fair Lending and Equal
Opportunity (the Office of Fair Lending) within the CFPB, and charged
it with ``providing oversight and enforcement of Federal laws intended
to ensure the fair, equitable, and nondiscriminatory access to credit
for both individuals and communities.'' \4\
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\3\ Public Law 111-203, 124 Stat. 1376 (2010).
\4\ Dodd-Frank Act section 1013(c)(2)(A) (codified at 12 U.S.C.
5493(c)(2)(A)).
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Prioritization. The Bureau's risk-based prioritization
process allows the Office of Fair Lending to focus our supervisory and
enforcement efforts on the markets, products, and institutions that
represent the greatest fair lending risk for consumers. Based on the
risks we identified, our market-level focus for the past five years has
been on ensuring that consumers are not excluded from or made to pay
more for mortgages, indirect auto loans, and credit cards because of
their race, ethnicity, sex, or age.
Going forward, because of emerging fair lending risks in other
areas, we are increasing our focus on redlining, mortgage and student
loan servicing, and small business lending. We remain committed to
assessing and evaluating fair lending risk in all credit markets under
the Bureau's jurisdiction. See Section 1 for more information.
Supervision and enforcement activity. In 2016, our fair
lending supervisory and public enforcement actions resulted in
approximately $46 million in remediation to harmed consumers.\5\
Mortgage lending continues to be a key priority for the Office of Fair
Lending for both supervision and enforcement. We have focused in
particular on redlining risk, evaluating whether lenders have
intentionally discouraged prospective applicants in minority
neighborhoods from applying for credit. Although statistics play an
important role in this work, we never look at numbers alone or in a
vacuum, but rather consider multiple factors, including potentially
nondiscriminatory explanations for differential lending patterns. See
Sections 2.1.6 and 3.1.1 for more information. Through 2016, our
mortgage origination work has covered institutions responsible for
close to half of the transactions reported pursuant to the Home
Mortgage Disclosure Act (HMDA), and more than 60% of the transactions
reported by institutions subject to the CFPB's supervision and
enforcement authority.\6\
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\5\ Figures represent estimates of monetary relief for consumers
ordered or required by the Bureau or a court as a result of
supervisory or enforcement actions on fair lending matters in 2016,
as well as other monetary payments such as loan subsidies, increased
consumer financial education, and civil money penalties.
\6\ CFPB analysis of HMDA data for 2015.
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In 2016, the Bureau continued its work in overseeing and enforcing
compliance with ECOA in indirect auto lending through both supervisory
and enforcement activity, including monitoring compliance with our
previous supervisory and enforcement actions. Our indirect auto lending
work has covered institutions responsible for approximately 60% of the
auto loan market share by volume.\7\
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\7\ CFPB analysis of 2015 AutoCount data from Experian
Automotive.
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The Bureau also continued fair lending supervisory and enforcement
work in the credit card market. We have focused in particular on the
quality of fair lending compliance management systems (CMS) and on fair
lending risks in underwriting, line assignment, and servicing. Our work
in this highly-concentrated market has covered institutions responsible
for more than 85% of outstanding credit card balances in the United
States.\8\
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\8\ CFPB analysis of 3Q 2016 call reports.
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The Bureau has conducted supervision and enforcement work in other
markets as well. For example, this year we continued targeted ECOA
reviews of small-business lending, focusing in particular on the
quality of fair lending compliance management systems and on fair
lending risks in underwriting, pricing, and redlining. Our supervisory
work to date in small business lending has covered institutions
responsible for approximately 10% of the non-agricultural small
business market share. See Sections 2 and 3 for more information.
Rulemaking. In January 2016, in response to ongoing
conversations with industry about compliance with Regulation C, HMDA's
implementing Regulation, the Bureau issued a Request for Information
(RFI) on the Bureau's HMDA data resubmission guidelines, and is
considering whether to adjust its existing HMDA resubmission guidelines
and if so, how.\9\ On September 23, 2016, the Bureau published a Bureau
Official Approval pursuant to section 706(e) of the ECOA concerning the
new Uniform Residential Loan Application and the collection of expanded
HMDA information about ethnicity and race in 2017. On March 24, 2017,
the Bureau published a proposed rule concerning amendments to
Regulation B's ethnicity and race information collection
provisions.\10\ See Section 4 for more information.
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\9\ Consumer Financial Protection Bureau, Request for
Information Regarding Home Mortgage Disclosure Act Resubmission
Guidelines 2015-0058 (Jan. 7, 2016), http://files.consumerfinance.gov/f/201601_cfpb_request-for-information-regarding-home-mortgage-disclosure-act-resubmission.pdf.
\10\ Consumer Financial Protection Bureau, Amendments to Equal
Credit Opportunity Act (Regulation B) Ethnicity and Race Information
Collection 2017-0009 (March 24, 2017), http://files.consumerfinance.gov/f/documents/201703_cfpb_NPRM-to-amend-Regulation-B.pdf.
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Interagency coordination and collaboration. The Bureau
continues to coordinate with the Federal Financial Institutions
Examination Council (FFIEC) agencies,\11\ as well as the Department of
Justice (DOJ), the Federal Trade Commission (FTC), and the Department
of Housing and Urban Development (HUD), as we each play a role in
ensuring compliance with and enforcing our nation's fair lending laws
and regulations. See Section 5 for more information on our interagency
coordination and collaboration in 2016.
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\11\ The FFIEC member agencies are the Board of Governors of the
Federal Reserve System (FRB), the Federal Deposit Insurance
Corporation (FDIC), the National Credit Union Administration (NCUA),
the Office of the Comptroller of the Currency (OCC), and the
Consumer Financial Protection Bureau (CFPB). The State Liaison
Committee was added to FFIEC in 2006 as a voting member.
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Outreach to industry, advocates, consumers, and other
stakeholders. The Bureau continues to initiate and encourage industry
and consumer engagement opportunities to discuss fair lending
compliance and access to credit issues, including through speeches,
presentations, blog posts, webinars, rulemaking, and public comments.
See Section 6 for more information on our outreach activities in 2016.
This report generally covers the Bureau's fair lending work during
calendar year 2016.

1. Fair Lending Prioritization

1.1 Risk-Based Prioritization: A Data-Driven Approach to Prioritizing
Areas of Potential Fair Lending Harm to Consumers
To use the CFPB's fair lending resources most effectively, the
Office of Fair Lending, working with other offices in the Bureau, has
developed and

[[Page 25253]]

refined a risk-based prioritization approach that determines how best
to address areas of potential fair-lending-related consumer harm in the
entities, products, and markets under our jurisdiction.
One critical piece of information that we consider in the fair
lending prioritization process is the quality of an institution's
compliance management system, which the Bureau typically ascertains
through its supervisory work. The Bureau has previously identified
common features of a well-developed fair lending compliance management
system,\12\ though we recognize that the appropriate scope of an
institution's fair lending compliance management system will vary based
on its size, complexity, and risk profile. In our experience, the
higher the quality of an institution's fair lending compliance
management system, the lower the institution's fair lending risk to
consumers, other things being equal.
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\12\ See Consumer Financial Protection Bureau, Fair Lending
Report of the Consumer Financial Protection Bureau at 13-14 (Apr.
2014), http://files.consumerfinance.gov/f/201404_cfpb_report_fair-lending.pdf.
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As part of the prioritization process the Office of Fair Lending
also works closely with the Bureau's special population offices,
including the Office for Students and Young Consumers, the Office of
Older Americans, and the Bureau's Markets offices, which identify
emerging developments and trends by monitoring key consumer financial
markets. If this market intelligence identifies fair lending risks in a
particular market that require further attention, we incorporate that
information into our prioritization process to determine the type and
extent of attention required to address those risks. For instance, Fair
Lending's work with the Office of Consumer Lending, Reporting, and
Collections Markets and the Office for Students and Young Consumers
highlighted potential steering risks in student loan servicing, which
resulted in the prioritization of this market in our supervisory work.
The fair lending prioritization process incorporates a number of
additional factors as well, including; consumer complaints; tips and
leads from advocacy groups, whistleblowers, and government agencies;
supervisory and enforcement history; and results from analysis of HMDA
and other data.
Once the Bureau has evaluated these inputs to prioritize
institutions, products, and markets based on an assessment of fair
lending risk posed to consumers, the Office of Fair Lending considers
how best to address those risks as part of its strategic planning
process. For example, we can schedule an institution for a supervisory
review or, where appropriate, open an enforcement investigation. We can
also commit to further research, policy development, and/or outreach,
especially for new issues or risks. Once this strategic planning
process is complete, we regularly coordinate with other regulators so
we can inform each other's work, complement each other's efforts, and
reduce any burden on subject institutions.
Risk-based prioritization is an ongoing process, and we continue to
receive and evaluate relevant information even after priorities are
identified. At an institution level, such information may include new
tips and leads, consumer complaints, additional risks identified in
current supervisory and enforcement activities, and compliance issues
identified and brought to our attention by institutions themselves. In
determining how best to address this additional information, the Office
of Fair Lending considers several factors, including (1) the nature and
extent of the fair lending risk, (2) the degree of consumer harm, and
(3) whether the risk was self-identified and/or self-reported to the
Bureau. Fair Lending takes account of responsible conduct as set forth
in CFPB Bulletin 2013-06, Responsible Business Conduct: Self-Policing,
Self-Reporting, Remediation, and Cooperation.\13\
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\13\ Consumer Financial Protection Bureau, Responsible Business
Conduct: Self-Policing, Self-Reporting, Remediation, and
Cooperation, CFPB Bulletin 2013-06 (June 25, 2013), http://files.consumerfinance.gov/f/201306_cfpb_bulletin_responsible-conduct.pdf.
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1.2 Fair Lending Priorities
Because the CFPB is responsible for overseeing so many products and
so many lenders, we re-prioritize our work from time to time to make
sure that we are focused on the areas of greatest risk to consumers. In
the coming year, we will increase our focus on the markets or products
listed below, which present substantial risk of credit discrimination
for consumers.
Redlining. We will continue to evaluate whether lenders have
intentionally discouraged prospective applicants in minority
neighborhoods from applying for credit.
Mortgage and Student Loan Servicing. We will evaluate whether some
borrowers who are behind on their mortgage or student loan payments may
have more difficulty working out a new solution with the servicer
because of their race, ethnicity, sex, or age.
Small Business Lending. Congress expressed concern that women-owned
and minority-owned businesses may experience discrimination when they
apply for credit, and has required the CFPB to take steps to ensure
their fair access to credit. Small business lending supervisory
activity will also help expand and enhance the Bureau's knowledge in
this area, including the credit process; existing data collection
processes; and the nature, extent, and management of fair lending risk.
The Bureau remains committed to ensuring that consumers are protected
from discrimination in all credit markets under its authority.

2. Fair Lending Supervision

The CFPB's Fair Lending Supervision program assesses compliance
with ECOA and HMDA at banks and nonbanks over which the Bureau has
supervisory authority. Supervision activities range from assessments of
institutions' fair lending compliance management systems to in-depth
reviews of products or activities that may pose heightened fair lending
risks to consumers. As part of its Fair Lending Supervision program,
the Bureau continues to conduct three types of fair lending reviews at
Bureau-supervised institutions: ECOA baseline reviews, ECOA targeted
reviews, and HMDA data integrity reviews.
When the CFPB identifies situations in which fair lending
compliance is inadequate, it directs institutions to establish fair
lending compliance programs commensurate with the size and complexity
of the institution and its lines of business. When fair lending
violations are identified, the CFPB may direct institutions to provide
remediation and restitution to consumers, and may pursue other
appropriate relief. The CFPB also refers a matter to the Justice
Department when it has reason to believe that a creditor has engaged in
a pattern or practice of lending discrimination in violation of
ECOA.\14\ The CFPB may also refer other potential ECOA violations to
the Justice Department.
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\14\ 15 U.S.C. 1691e(g).
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2.1 Fair Lending Supervisory Observations
Although the Bureau's supervisory process is confidential, the
Bureau publishes regular reports called Supervisory Highlights, which
provide information on supervisory trends the Bureau observes without
identifying specific entities. The Bureau may also draw on its
supervisory experience to publish compliance bulletins in order to
remind the institutions that we supervise of their legal obligations.

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Industry participants can use this information to inform and assist in
complying with ECOA and HMDA.
2.1.1 Evaluating Mortgage Servicing Compliance Programs
Our supervisory work has included use of the ECOA Baseline Modules,
which are part of the CFPB Supervision and Examination Manual.
Examination teams use these modules to conduct ECOA Baseline Reviews,
which evaluate how well institutions' compliance management systems
identify and manage fair lending risks. The Mortgage Servicing Special
Edition of Supervisory Highlights,\15\ published in June 2016, reminded
institutions that Module 4 of the ECOA baseline review modules, ``Fair
Lending Risks Related to Servicing,'' is used by Bureau examiners to
evaluate compliance management systems under ECOA. Among other things,
Module 4 contains questions regarding fair lending training of
servicing staff, fair lending monitoring of servicing, and servicing of
consumers with limited English proficiency.
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\15\ Consumer Financial Protection Bureau, Supervisory
Highlights Mortgage Servicing Special Edition 2016 at 5 (June 22,
2016), http://files.consumerfinance.gov/f/documents/Mortgage_Servicing_Supervisory_Highlights_11_Final_web_.pdf.
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2.1.2 Reporting Actions Taken for Conditionally-Approved Applications
With Unmet Underwriting Conditions
The Summer 2016 edition of Supervisory Highlights,\16\ published in
June 2016, highlighted findings from examinations where institutions
improperly coded actions taken in reported HMDA data. Among other
things, Regulation C requires covered depository and non-depository
institutions to submit to the appropriate Federal agency data they
collect and record pursuant to Regulation C, including the type of
action taken on reportable transactions.\17\ As reported in Supervisory
Highlights, examiners found that after issuing a conditional approval
subject to underwriting conditions, the institutions did not accurately
report the action taken on the loans or applications. As a result,
Supervision directed one or more institutions to enhance their policies
and procedures regarding their HMDA reporting of the actions taken on
loans and applications and, where necessary, provide adverse action
notices. Supervision also required one or more institutions to resubmit
their HMDA Loan Application Register (LAR) where the number of errors
exceeded the CFPB's HMDA resubmission thresholds.
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\16\ Consumer Financial Protection Bureau, Supervisory
Highlights Summer 2016 at 13-16 (June 30, 2016), http://files.consumerfinance.gov/f/documents/Supervisory_Highlights_Issue_12.pdf.
\17\ 12 CFR 1003.4(a), (a)(8); 12 CFR 1003.5(a)(1).
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2.1.3 Expanding Credit Through the Use of Special Purpose Credit
Programs
The Summer 2016 edition of Supervisory Highlights \18\
discussed supervisory observations of special purpose credit programs,
which are established and administered to extend credit to a class of
persons who otherwise probably would not receive such credit or would
receive it on less favorable terms. ECOA \19\ and Regulation B \20\
permit a creditor to extend special purpose credit to applicants who
meet eligibility requirements for certain types of credit programs.\21\
Regulation B specifically confers special purpose credit program status
upon:
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\18\ Consumer Financial Protection Bureau, Supervisory
Highlights Summer 2016 at 16-18 (June 30, 2016), http://files.consumerfinance.gov/f/documents/Supervisory_Highlights_Issue_12.pdf.
\19\ 15 U.S.C. 1691 et seq.
\20\ 12 CFR part 1002.
\21\ 15 U.S.C. 1691(c)(3) (providing that ECOA's prohibitions
against discrimination are not violated when a creditor refuses to
extend credit offered pursuant to certain special purpose credit
programs satisfying Regulation B-prescribed standards); 12 CFR
1002.8 (special purpose credit program standards).
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Any special purpose credit program offered by a for-profit
organization, or in which such an organization participates to meet
special social needs, if:
(i) The program is established and administered pursuant to a
written plan that identifies the class of persons that the program is
designed to benefit and sets forth the procedures and standards for
extending credit pursuant to the program; and
(ii) The program is established and administered to extend credit
to a class of persons who, under the organization's customary standards
of creditworthiness, probably would not receive such credit or would
receive it on less favorable terms than are ordinarily available to
other applicants applying to the organization for a similar type and
amount of credit.\22\
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\22\ 12 CFR 1002.8(a)(3).
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The commentary to Regulation B clarifies that, in order to satisfy
these requirements, ``a for-profit organization must determine that the
program will benefit a class of people who would otherwise be denied
credit or would receive it on less favorable terms. This determination
can be based on a broad analysis using the organization's own research
or data from outside sources, including governmental reports and
studies.'' \23\
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\23\ 12 CFR part 1002, Suppl. I, 1002.8, comment 8(a) at 5.
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As Supervisory Highlights noted, during the course of the Bureau's
supervisory activity, examination teams have observed credit decisions
made pursuant to the terms of programs that for-profit institutions
have described as special purpose credit programs. Examination teams
have reviewed the terms of the programs, including the written plan
required by Regulation B, and the institution's determination that the
program would benefit a class of people who would otherwise be denied
credit or would receive it on less favorable terms.
In every case, special purpose credit program status depends upon
adherence to the ECOA and Regulation B requirements for special purpose
credit programs. A program, for example, offering more favorable
pricing or products exclusively to a particular class of persons
without evidence that such individuals would otherwise be denied credit
or would receive it on less favorable terms would not satisfy the ECOA
and Regulation B requirements for a special purpose credit program.
With that in mind, however, the Bureau generally takes a favorable view
of conscientious efforts that institutions may undertake to develop
special purpose credit programs to promote extensions of credit to any
class of persons who would otherwise be denied credit or would receive
it on less favorable terms.
2.1.4 Offering Language Services to Limited English Proficient (LEP)
Consumers
The Fall 2016 edition of Supervisory Highlights,\24\ published in
October 2016, discussed supervisory observations about the provision of
language services to consumers with limited English proficiency (LEP).
The Dodd-Frank Act, ECOA,\25\ and Regulation B \26\ mandate that the
Office of Fair Lending ``ensure the fair, equitable, and
nondiscriminatory access to credit'' \27\ and ``promote the
availability of credit.'' \28\ Consistent with that mandate, the CFPB,
including through its Office of Fair Lending, continues to encourage
lenders to provide assistance to LEP consumers.\29\ Financial
institutions may

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provide access to credit in languages other than English in a manner
that is beneficial to consumers as well as the institution, while
taking steps to ensure their actions are compliant with ECOA and other
applicable laws.
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\24\ Consumer Financial Protection Bureau, Supervisory
Highlights Fall 2016 at 20 (Oct. 31, 2016), http://files.consumerfinance.gov/f/documents/Supervisory_Highlights_Issue_13__Final_10.31.16.pdf.
\25\ 12 U.S.C. 1691 et seq.
\26\ 12 CFR part 1002 et seq.
\27\ 12 U.S.C. 5493(c)(2)(A).
\28\ 12 CFR 1002.1(b).
\29\ According to recent American Community Survey estimates,
there are approximately 25 million people in the United States who
speak English less than ``very well.'' U.S. Census Bureau, Language
Spoken at Home, 2011-2015 American Community Survey 5-Year
Estimates, https://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ACS_15_5YR_S1601&prodType=table.
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As reported in Supervisory Highlights, in the course of conducting
supervisory activity, examiners have observed one or more financial
institutions providing services in languages other than English,
including to consumers with limited English proficiency,\30\ in a
manner that did not result in any adverse supervisory or enforcement
action under the facts and circumstances of the reviews. Specifically,
examiners observed:
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\30\ The Bureau recently updated its ECOA baseline review
modules. See Consumer Financial Protection Bureau, Supervisory
Highlights: Winter 2016 at 28-29 (Mar. 8, 2016), http://files.consumerfinance.gov/f/201603_cfpb_supervisory-highlights.pdf.
Among other updates, the modules include new questions related to
the provision of language services, including to LEP consumers, in
the context of origination and servicing. See Consumer Financial
Protection Bureau, CFPB Examination Procedures, ECOA Baseline Review
Modules 13, 21-22 (Oct. 2015), http://files.consumerfinance.gov/f/201510_cfpb_ecoa-baseline-review-modules.pdf. These modules are used
by examiners during ECOA baseline reviews to identify and analyze
risks of ECOA violations, to facilitate the identification of
certain types of ECOA and Regulation B violations, and to inform
fair lending prioritization decisions for future CFPB reviews. Id.
at 1.
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Marketing and servicing of loans in languages other than
English;
Collection of customer language information to facilitate
communication with LEP consumers in a language other than English;
Translation of certain financial institution documents
sent to borrowers, including monthly statements and payment assistance
forms, into languages other than English;
Use of bilingual and/or multilingual customer service
agents, including single points of contact,\31\ and other forms of oral
customer assistance in languages other than English; and
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\31\ See 12 CFR 1024.40(a)(1) & (2) (requiring mortgage
servicers to assign personnel to a delinquent borrower within a
certain time after delinquency and make assigned personnel available
by phone in order to respond to borrower inquiries and assist with
loss mitigation options, as applicable).
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Quality assurance testing and monitoring of customer
assistance provided in languages other than English.
Examiners have observed a number of factors that financial
institutions consider in determining whether to provide services in
languages other than English and the extent of those services, some of
which include: Census Bureau data on the demographics or prevalence of
non-English languages within the financial institution's footprint;
communications and activities that most significantly impact consumers
(e.g., loss mitigation and/or default servicing); and compliance with
Federal, State, and other regulatory provisions that address
obligations pertaining to languages other than English.\32\ Factors
relevant in the compliance context may vary depending on the
institution and circumstances.
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\32\ See, e.g., 12 CFR 1005.31(g)(1)(i) (requiring disclosures
in languages other than English in certain circumstances involving
remittance transfers); 12 CFR 1026.24(i)(7) (addressing obligations
relating to advertising and disclosures in languages other than
English for closed-end credit); 12 CFR 1002.4(e) (providing that
disclosures made in languages other than English must be available
in English upon request); Cal. Civ. Code Sec.1632(b) (requiring that
certain agreements ``primarily'' negotiated in Spanish, Chinese,
Tagalog, Vietnamese, or Korean must be translated to the language of
the negotiation under certain circumstances); Or. Rev. Stat. Sec.
86A.198 (requiring a mortgage banker, broker, or originator to
provide translations of certain notices related to the mortgage
transaction if the banker, broker, or originator advertises and
negotiates in a language other than English under certain
circumstances); Tex. Fin. Code Ann. Sec. 341.502(a-1) (providing
that for certain loan contracts negotiated in Spanish, a summary of
the loan terms must be made available to the debtor in Spanish in a
form identical to required TILA disclosures for closed-end credit).
---------------------------------------------------------------------------

Examiners also have observed situations in which financial
institutions' treatment of LEP and non-English-speaking consumers posed
fair lending risk. For example, examiners observed one or more
institutions marketing only some of their available credit card
products to Spanish-speaking consumers, while marketing several
additional credit card products to English-speaking consumers. One or
more such institutions also lacked documentation describing how they
decided to exclude those products from Spanish language marketing,
raising questions about the adequacy of their compliance management
systems related to fair lending. To mitigate any compliance risks
related to these practices, one or more financial institutions revised
their marketing materials to notify consumers in Spanish of the
availability of other credit card products and included clear and
timely disclosures to prospective consumers describing the extent and
limits of any language services provided throughout the product
lifecycle. Institutions were not required to provide Spanish language
services to address this risk beyond the Spanish language services they
were already providing.
As reported in Supervisory Highlights, the Bureau's supervisory
activity resulted in public enforcement actions related to the
treatment of LEP and non-English-speaking consumers, including actions
against Synchrony Bank and American Express Centurion Bank. The Fall
2016 edition of Supervisory Highlights also discussed common features
of a well-developed compliance management system that can mitigate fair
lending and other risks associated with providing services to LEP and
non-English-speaking consumers.
2.1.5 HMDA Data Collection and Reporting Reminders for 2017
The Fall 2016 edition of Supervisory Highlights \33\ noted HMDA
data collection and reporting reminders for 2017. Please see Section
4.1.4 for detail on changes to HMDA data collection and reporting in
2017 and later years.
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\33\ Consumer Financial Protection Bureau, Supervisory
Highlights Fall 2016 at 25-26 (Oct. 31, 2016), http://files.consumerfinance.gov/f/documents/Supervisory_Highlights_Issue_13__Final_10.31.16.pdf.
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2.1.6 Assessing Redlining Risks
The Fall 2016 edition of Supervisory Highlights \34\ noted that the
Office of Fair Lending has identified redlining as a priority area in
the Bureau's fair lending work. Redlining is a form of unlawful lending
discrimination under ECOA. Historically, actual red lines were drawn on
maps around neighborhoods to which credit would not be provided, giving
this practice its name. The Federal prudential banking regulators have
collectively defined redlining as ``a form of illegal disparate
treatment in which a lender provides unequal access to credit, or
unequal terms of credit, because of the race, color, national origin,
or other prohibited characteristic(s) of the residents of the area in
which the credit seeker resides or will reside or in which the
residential property to be mortgaged is located.'' \35\
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\34\ Consumer Financial Protection Bureau, Supervisory
Highlights Fall 2016 at 27 (Oct. 31, 2016), http://files.consumerfinance.gov/f/documents/Supervisory_Highlights_Issue_13__Final_10.31.16.pdf.
\35\ FFIEC Interagency Fair Lending Examination Procedures
Manual (Aug. 2009), https://www.ffiec.gov/pdf/fairlend.pdf. CFPB
Supervision and Examination Manual (Oct. 2012), http://files.consumerfinance.gov/f/201210_cfpb_supervision-and-examination-manual-v2.pdf.
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The Bureau considers various factors, as appropriate, in assessing
redlining risk in its supervisory activity. These factors, and the
scoping process, are described in detail in the Interagency Fair
Lending Examination Procedures. These factors generally include (but
are not limited to):

[[Page 25256]]

Strength of an institution's CMS, including underwriting
guidelines and policies;
Unique attributes of relevant geographic areas (population
demographics, credit profiles, housing market);
Lending patterns (applications and originations, with and
without purchased loans);
Peer and market comparisons;
Physical presence (full service branches, ATM-only
branches, brokers, correspondents, loan production offices), including
consideration of services offered;
Marketing;
Mapping;
Community Reinvestment Act (CRA) assessment area and
market area more generally;
An institution's lending policies and procedures record;
Additional evidence (whistleblower tips, loan officer
diversity, testing evidence, comparative file reviews); and
An institution's explanations for apparent differences in
treatment.
The Bureau has observed that institutions with strong compliance
programs examine lending patterns regularly, look for any
statistically-significant disparities, evaluate physical presence,
monitor marketing campaigns and programs, and assess CRA assessment
areas and market areas more generally. Our supervisory experience
reveals that institutions may reduce fair lending risk by documenting
risks they identify and by taking appropriate steps in response to
identified risks, as components of their fair lending compliance
management programs.
Examination teams typically assess redlining risk, at the initial
phase, at the Metropolitan Statistical Area (MSA) level for each
supervised entity, and consider the unique characteristics of each MSA
(population demographics, etc.).
To conduct the initial analysis, examination teams use HMDA data
and Census data \36\ to assess the lending patterns at institutions
subject to the Bureau's supervisory authority. To date, examination
teams have used these publicly available data to conduct this initial
risk assessment. These initial analyses typically compare a given
institution's lending patterns to other lenders in the same MSA to
determine whether the institution received significantly fewer
applications from minority \37\ areas \38\ relative to other lenders in
the MSA. Examination teams may consider the difference between the
subject institution and other lenders in the percentage of their
applications or originations that come from minority areas, both in
absolute terms (for example, 10% vs. 20%) and relative terms (for
example, the subject institution is half as likely to have applications
or originations in minority areas as other lenders).\39\
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\36\ The Bureau uses the most current United States national
census data that apply to the HMDA data--for example, to date it has
used 2010 census data for HMDA data 2011 and later. Specifically,
the ``Demographic Profiles'' are used.
\37\ For these purposes, the term ``minority'' ordinarily refers
to anyone who identifies with any combination of race or ethnicity
other than non-Hispanic White. Examination teams have also focused
on African-American and Hispanic consumers, and could foreseeably
focus on other more specific minority communities such as Asian,
Native Hawaiian, or Native Alaskan populations, if appropriate for
the specific geography. In one examination that escalated to an
enforcement matter, the statistical evidence presented focused on
African-American and Hispanic census tracts, rather than all
minority consumers, because the harmed consumers were primarily
African-American and Hispanic.
\38\ Examination teams typically look at majority minority areas
(>50% minority) and high minority areas (>80% minority), although
sometimes one metric is more appropriate than another, and sometimes
other metrics need to be used to account for the population
demographics of the specific MSA.
\39\ This relative analysis may be expressed as an odds ratio:
The given lender's odds of receiving an application or originating a
loan in a minority area divided by other lenders' comparable odds.
An odds ratio greater than one means that the institution is more
likely to receive applications or originate loans in minority areas
than other lenders; an odds ratio lower than one means that the
institution is less likely do so. Odds ratios show greater risk as
they approach zero.
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Examination teams may also compare an institution to other more
refined groups of peer institutions. Refined peers can be defined in a
number of ways, and past Bureau redlining examinations and enforcement
matters have relied on multiple peer comparisons. The examination team
often starts by compiling a refined set of peer institutions to find
lenders of a similar size--for example, lenders that received a similar
number of applications or originated a similar number of loans in the
MSA. The examination team may also consider an institution's mix of
lending products. For example, if an institution participates in the
Federal Housing Administration (FHA) loan program, it may be compared
to other institutions that also originate FHA loans; if not, it may be
compared to other lenders that do not offer FHA loans. Additional
refinements may incorporate loan purpose (for example, focusing only on
home purchase loans) or action taken (for example, incorporating
purchased loans into the analysis). Examination teams have also taken
suggestions, as appropriate, from institutions about appropriate peers
in specific markets.
In considering lending patterns, examination teams generally
consider marketing activities and physical presence, including
locations of branches, loan production offices, ATMs, brokers, or
correspondents. As noted in Supervisory Highlights, in one or more
supervisory matters, the institutions concentrated marketing in
majority-White suburban counties of a Metropolitan Statistical Area
(MSA) and avoided a more urban county with the greatest minority
population in the MSA. In one or more other exams, examiners observed
that, although there were disparities in branch locations, the location
of branches did not affect access to credit in that case because, among
other things, the branches did not accept ``walk-in'' traffic and all
applications were submitted online. The results of the examinations
were also dependent on other factors that showed equitable access to
credit, and there could be cases in which branch locations in
combination with other risk-based factors escalate redlining risk.
For redlining analyses, examination teams generally map
information, including data on lending patterns (applications and
originations), marketing, and physical presence, against census data to
see if there are differences based on the predominant race/ethnicity of
the census tract, county, or other geographic designation.
Additionally, examination teams will consider any other available
evidence about the nature of the lender's business that might help
explain the observed lending patterns.
Examination teams have considered numerous factors in each
redlining examination, and have invited institutions to identify
explanations for any apparent differences in treatment.
Although redlining examinations are generally scheduled at
institutions where the Bureau has identified statistical disparities,
statistics are never considered in a vacuum. The Bureau will always
work with institutions to understand their markets, business models,
and other information that could provide nondiscriminatory explanations
for lending patterns that would otherwise raise a fair lending risk of
redlining.
2.1.7 Enforcement Actions Arising From Supervisory Activity
In addition to providing information on supervisory trends,
Supervisory Highlights also provides information on enforcement actions
that resulted from supervisory activity. See Section 3.3.1

[[Page 25257]]

for more information on such public enforcement actions.

3. Fair Lending Enforcement

The Bureau conducts investigations of potential violations of HMDA
and ECOA, and if it believes a violation has occurred, can file a
complaint either through its administrative enforcement process or in
Federal court. Like the other Federal bank regulators, the Bureau
refers matters to the DOJ when it has reason to believe that a creditor
has engaged in a pattern or practice of lending discrimination.\40\
However, when the Bureau makes a referral to the DOJ, the Bureau can
still take its own independent action to address a violation. In 2016,
the Bureau announced two fair lending enforcement actions in mortgage
origination and indirect auto lending. The Bureau also has a number of
ongoing fair lending investigations and has authority to settle or sue
in a number of matters. In addition, the Bureau issued warning letters
to mortgage lenders and mortgage brokers that may be in violation of
HMDA requirements to report on housing-related lending activity.
---------------------------------------------------------------------------

\40\ 15 U.S.C. 1691e(g).
---------------------------------------------------------------------------

3.1 Fair Lending Public Enforcement Actions
3.1.1 Mortgage
BancorpSouth Bank
On June 29, 2016, the CFPB and the DOJ announced a joint action
against BancorpSouth Bank (BancorpSouth) for discriminatory mortgage
lending practices that harmed African Americans and other minorities.
The complaint filed by the CFPB and DOJ \41\ alleged that BancorpSouth
engaged in numerous discriminatory practices, including illegal
redlining in Memphis; denying certain African Americans mortgage loans
more often than similarly situated non-Hispanic White applicants;
charging African-American borrowers more for certain mortgage loans
than non-Hispanic White borrowers with similar loan qualifications; and
implementing an explicitly discriminatory loan denial policy. The
consent order, which was entered by the court on July 25, 2016,
requires BancorpSouth to pay $4 million in direct loan subsidies in
minority neighborhoods \42\ in Memphis, at least $800,000 for community
programs, advertising, outreach, and credit repair, $2.78 million to
African-American consumers who were unlawfully denied or overcharged
for loans, and a $3 million penalty.\43\
---------------------------------------------------------------------------

\41\ Complaint, United States v. BancorpSouth Bank, No. 1:16-cv-
00118-GHD-DAS (N.D. Miss. June 29, 2016), ECF No. 1, http://files.consumerfinance.gov/f/documents/201606_cfpb_bancorpsouth-joint-complaint.pdf.
\42\ Majority-minority neighborhoods or minority neighborhoods
refers to census tracts with a minority population greater than 50%.
\43\ Consent Order, United States v. BancorpSouth Bank, No.
1:16-cv-00118-GHD-DAS (N.D. Miss. July 25, 2016), ECF No. 8, http://files.consumerfinance.gov/f/documents/201606_cfpb_bancorpSouth-consent-order.pdf.
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BancorpSouth is a regional depository institution headquartered in
Tupelo, Mississippi that operates branches in eight States: Alabama,
Arkansas, Florida, Louisiana, Mississippi, Missouri, Tennessee, and
Texas. In the complaint, CFPB and DOJ alleged that BancorpSouth:
Illegally redlined in Memphis: The agencies alleged that,
at least from 2011 to 2013, BancorpSouth illegally redlined in the
Memphis area--the market from which the bank received the most
applications--by structuring its business to avoid and discourage
consumers in minority neighborhoods from accessing mortgages.
Specifically, the agencies alleged that the bank placed its branches
outside of minority neighborhoods, excluded nearly all minority
neighborhoods from the area it chose to serve under the Community
Reinvestment Act, and directed nearly all of its marketing away from
minority neighborhoods. As a result, BancorpSouth generated relatively
few applications from minority neighborhoods as compared to its peers.
Discriminated in underwriting certain mortgages: The
agencies also alleged that one of BancorpSouth's lending units
discriminated against African-American applicants by denying them
mortgage loans--including loans with consumer as well as business
purposes--more often than similarly situated non-Hispanic White
applicants. Specifically, the agencies alleged that BancorpSouth
granted its employees wide discretion to make credit decisions on
mortgage loans. This discretion resulted in African-American applicants
being denied certain mortgages at rates more than two times higher than
expected if they had been non-Hispanic White.
Discriminated in pricing certain mortgage loans: The
agencies also alleged that one of BancorpSouth's lending units
discriminated against African-American borrowers that it did approve by
charging them higher annual percentage rates than non-Hispanic White
borrowers with similar loan qualifications. Specifically, the agencies
alleged that BancorpSouth granted its employees wide discretion to set
the prices of mortgage loans. This discretion resulted in African-
American borrowers paying significantly higher annual percentage rates
than similarly situated non-Hispanic White borrowers, costing African-
American consumers hundreds of dollars more each year they held the
loan.
Implemented an explicitly discriminatory denial policy:
The complaint alleged that BancorpSouth required its employees to deny
applications from minorities and other ``protected class'' applicants
more quickly than those from other applicants and not to provide credit
assistance to ``borderline'' applicants, which may have improved their
chances of getting a loan. The bank generally permitted loan officers
to assist marginal applicants, but the explicitly race-based denial
policy departed from that practice. An audio recording of a 2012
internal meeting at BancorpSouth clearly articulates this
discriminatory policy, as well as negative and stereotyped perceptions
of African Americans.
The consent order requires BancorpSouth to take a number of
remedial measures, including paying $4 million into a loan subsidy
program to increase access to affordable credit, by offering qualified
applicants in majority-minority neighborhoods in Memphis mortgage loans
on a more affordable basis than otherwise available from BancorpSouth.
The loan subsidies can include interest rate reductions, closing cost
assistance, and down payment assistance. In addition, the consent order
requires BancorpSouth to spend $500,000 to partner with community-based
or governmental organizations that provide education, credit repair,
and other assistance in minority neighborhoods in Memphis, and to spend
at least $300,000 on a targeted advertising and outreach campaign to
generate applications for mortgage loans from qualified consumers in
majority-minority neighborhoods in Memphis. The consent order also
requires BancorpSouth to pay $2.78 million to African-American
consumers who were improperly denied mortgage loans or overcharged for
their loans because of BancorpSouth's allegedly discriminatory pricing
and underwriting policies. Finally, BancorpSouth paid a $3 million
penalty to the CFPB's Civil Penalty Fund.
In addition to the monetary requirements, the court decree orders
BancorpSouth to expand its physical presence by opening one new branch
or loan production office in a high-minority neighborhood (a census
tract with a minority population greater than 80%) in Memphis. The bank
is also

[[Page 25258]]

required to offer African-American consumers who were denied mortgage
loans while BancorpSouth's allegedly discriminatory underwriting policy
was in place the opportunity to apply for a new loan at a subsidized
interest rate. Among other revisions to its policies, BancorpSouth is
also required by the consent order to implement policies that require
its employees to provide equal levels of information and assistance to
individuals who inquire about mortgage loans, regardless of race or any
other prohibited characteristic.
When investigating identified redlining risks, the Bureau's
approach is consistent with that of other Federal agencies, including
other Federal law enforcement agencies and bank regulators. For
example, the Bureau looks to risk indicators described in the
Interagency Fair Lending Examination Procedures, which were initially
issued by the prudential regulators and later adopted by the
Bureau.\44\ The Bureau also looks to the types of evidence that DOJ has
cited in support of its complaints alleging redlining. These sources
identify multiple factors that the Bureau considers during a redlining
investigation, detailed above in Section 2.1.6 on Redlining.
---------------------------------------------------------------------------

\44\ See CFPB Supervision and Examination Manual (Oct. 2012),
http://files.consumerfinance.gov/f/201210_cfpb_supervision-and-examination-manual-v2.pdf (CFPB Examination Procedures, Equal Credit
Opportunity Act Baseline Review Modules).
---------------------------------------------------------------------------

As part of its investigation, the CFPB also sent testers to several
BancorpSouth branches to inquire about mortgages, and the results of
that testing support the CFPB and DOJ allegations. The agencies alleged
that, in several instances, a BancorpSouth loan officer treated the
African-American tester less favorably than a non-Hispanic White
counterpart. Specifically, the complaint alleged that BancorpSouth
employees treated African-American testers who sought information about
mortgage loans worse than non-Hispanic White testers with similar
credit qualifications. For example, BancorpSouth employees provided
information that would restrict African-American consumers to smaller
loans than non-Hispanic White testers. This investigation was the
CFPB's first use of testing to support an allegation of discrimination.
Testing is a tool the Bureau employs in its enforcement investigative
activity. Other government agencies, including the DOJ and HUD, as well
as private fair housing organizations and State and local agencies,
have used testers for decades as a method of identifying
discrimination. Courts have long recognized testing as a reliable
investigative tool.
3.1.2 Auto Finance
Toyota Motor Credit Corporation
On February 2, 2016, the CFPB resolved an action with Toyota Motor
Credit Corporation (Toyota Motor Credit) \45\ that requires Toyota
Motor Credit to change its pricing and compensation system by
substantially reducing or eliminating discretionary markups to minimize
the risks of discrimination. On that same date, the DOJ also filed a
complaint and proposed consent order in the U.S. District Court for the
Central District of California addressing the same conduct. That
consent order was entered by the court on February 11, 2016. Toyota
Motor Credit's past practices resulted in thousands of African-American
and Asian and Pacific Islander borrowers paying higher interest rates
than similarly-situated non-Hispanic White borrowers for their auto
loans. The consent order requires Toyota Motor Credit to pay up to
$21.9 million in restitution to affected borrowers.
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\45\ Consent Order, In re Toyota Motor Credit Corp., CFPB No.
2016-CFPB-0002 (Feb. 2, 2016), http://files.consumerfinance.gov/f/201602_cfpb_consent-order-toyota-motor-credit-corporation.pdf.
---------------------------------------------------------------------------

Toyota Motor Credit is the U.S. financing arm of Toyota Financial
Services, which is a subsidiary of Toyota Motor Corporation. As of the
second quarter of 2015, Toyota Motor Credit was the largest captive
auto lender \46\ in the United States and the fifth largest auto lender
overall. As an indirect auto lender, Toyota Motor Credit sets risk-
based interest rates, or ``buy rates,'' that it conveys to auto
dealers. Indirect auto lenders like Toyota Motor Credit then allow auto
dealers to charge a higher interest rate when they finalize the deal
with the consumer. This policy or practice is typically called
``discretionary markup.'' Markups can generate compensation for dealers
while giving them the discretion to charge similarly-situated consumers
different rates. Over the time period under review, Toyota Motor Credit
permitted dealers to mark up consumers' interest rates as much as 2.5%.
---------------------------------------------------------------------------

\46\ Captive auto lenders are indirect auto lenders that are
directly affiliated with a particular automobile manufacturer.
---------------------------------------------------------------------------

The enforcement action was the result of a joint CFPB and DOJ
investigation that began in April 2013. The agencies investigated
Toyota Motor Credit's indirect auto lending activities' compliance with
ECOA. The Bureau found that Toyota Motor Credit violated ECOA by
adopting policies that resulted in African-American and Asian and
Pacific Islander borrowers paying higher interest rates for their auto
loans than non-Hispanic White borrowers as a result of the dealer
markups that Toyota Motor Credit permitted and incentivized. Toyota
Motor Credit's pricing and compensation structure meant that for the
period covered in the order, thousands of African-American borrowers
were charged, on average, over $200 more for their auto loans, and
thousands of Asian and Pacific Islander borrowers were charged, on
average, over $100 more for their auto loans.
The CFPB's administrative action and DOJ's consent order require
Toyota Motor Credit to reduce dealer discretion to mark up the interest
rate to only 1.25% above the buy rate for auto loans with terms of five
years or less, and 1% for auto loans with longer terms, or to move to
non-discretionary dealer compensation. Toyota Motor Credit is also
required to pay $19.9 million in remediation to affected African-
American and Asian and Pacific Islander borrowers whose auto loans were
financed by Toyota Motor Credit between January 2011 and February 2,
2016. Toyota Motor Credit is required to pay up to an additional $2
million into the settlement fund to compensate any affected African-
American and Asian and Pacific Islander borrowers in the time period
between February 2, 2016, and when Toyota Motor Credit implements its
new pricing and compensation structure. The Bureau did not assess
penalties against Toyota Motor Credit because of its responsible
conduct, namely the proactive steps the institution is taking to
directly address the fair lending risk of discretionary pricing and
compensation systems by substantially reducing or eliminating that
discretion altogether. In addition, Toyota Motor Credit is required to
hire a settlement administrator who will contact consumers, distribute
the funds, and ensure that affected borrowers receive compensation.
3.2 HMDA Warning Letters--Potential Mortgage Lending Reporting Failures
On October 27, 2016, the CFPB issued warning letters to 44 mortgage
lenders and mortgage brokers. The Bureau had information that appeared
to show these financial institutions may be required to collect,
record, and report data about their housing-related lending activity,
and that they may be in violation of those requirements. The CFPB, in
sending these letters, made no determination that a legal violation
did, in fact, occur.
HMDA, which was originally enacted in 1975, requires many financial

[[Page 25259]]

institutions to collect data about their housing-related lending
activity, including home purchase loans, home improvement loans, and
refinancings that they originate or purchase, or for which they receive
applications. Annually, these financial institutions must report to the
appropriate Federal agencies and make the data available to the public.
The public and regulators can use the information to monitor whether
financial institutions are serving the housing needs of their
communities, to assist in distributing public-sector investment so as
to attract private investment to areas where it is needed, and to
identify possible discriminatory lending patterns.
Data transparency helps to ensure that financial institutions are
not engaging in discriminatory lending or failing to meet the credit
needs of the entire community, including low- and moderate-income
neighborhoods. Financial institutions that avoid their responsibility
to collect and report mortgage loan data hinder regulatory efforts to
enforce fair lending laws.
The CFPB identified the 44 companies by reviewing available bank
and nonbank mortgage data. The warning letters flag that entities that
meet certain requirements are required to collect, record, and report
mortgage lending data. The letters say that recipients should review
their practices to ensure they comply with all relevant laws. The
companies are encouraged to respond to the Bureau to advise if they
have taken, or will take, steps to ensure compliance with the law. They
can also tell the Bureau if they think the law does not apply to
them.\47\
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\47\ More information on HMDA reporting requirements and a
sample warning letter are available at http://www.consumerfinance.gov/about-us/newsroom/cfpb-warns-financial-institutions-about-potential-mortgage-lending-reporting-failures/.
---------------------------------------------------------------------------

3.3 Implementing Enforcement Orders
When an enforcement action is resolved through a public enforcement
order, the Bureau (and the DOJ, when relevant) takes steps to ensure
that the respondent or defendant complies with the requirements of the
order. As appropriate to the specific requirements of individual public
enforcement orders, the Bureau may take steps to ensure that borrowers
who are eligible for compensation receive remuneration and that the
defendant has implemented a comprehensive fair lending compliance
management system. Throughout 2016, the Office of Fair Lending worked
to implement and oversee compliance with the pending public enforcement
orders that were entered by Federal courts or entered by the Bureau's
Director in prior years.
3.3.1 Settlement Administration
Ally Financial Inc. and Ally Bank
On December 19, 2013, working in close coordination with the DOJ,
the CFPB ordered Ally Financial Inc. and Ally Bank (Ally) to pay $80
million in damages to harmed African-American, Hispanic, and Asian and/
or Pacific Islander borrowers. The DOJ simultaneously filed a consent
order in the United States District Court for the Eastern District of
Michigan, which was entered by the court on December 23, 2013. This
public enforcement action represented the Federal government's largest
auto loan discrimination settlement in history.\48\
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\48\ Consent Order, In re Ally Financial Inc., CFPB No. 2013-
CFPB-0010 (Dec. 20, 2013), http://files.consumerfinance.gov/f/201312_cfpb_consent-order_ally.pdf.
---------------------------------------------------------------------------

On January 29, 2016, approximately 301,000 harmed borrowers
participating in the settlement--representing approximately 235,000
loans--were mailed checks by the Ally settlement administrator,
totaling $80 million plus interest, which the Bureau announced in a
blog post in English and Spanish.^{49 50} In addition, and
pursuant to its continuing obligations under the terms of the orders,
Ally has also made ongoing payments to consumers affected after the
consent orders were entered. Specifically, Ally paid approximately
$38.9 million in September 2015 and an additional $51.5 million in May
2016, to consumers that Ally determined were both eligible and
overcharged on auto loans issued during 2014 and 2015, respectively.
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\49\ Patrice Ficklin, Harmed Ally Borrowers Have Been Sent $80
Million in Damages, Consumer Financial Protection Bureau (Jan. 29,
2016), http://www.consumerfinance.gov/blog/harmed-ally-borrowers-have-been-sent-80-million-in-damages/.
\50\ Patrice Ficklin, Prestatarios perjudicados por Ally reciben
$80 millones en da[ntilde]os, Consumer Financial Protection Bureau
(Feb. 4, 2016), http://www.consumerfinance.gov/about-us/blog/prestatarios-perjudicados-por-ally-reciben-80-millones-en-danos/.
---------------------------------------------------------------------------

Provident Funding Associates
As previously reported, on May 28, 2015, the CFPB and the DOJ filed
a joint complaint against Provident Funding Associations (Provident)
for discrimination in mortgage lending, along with a proposed order to
settle the complaint in the United States District Court for the
Northern District of California. The complaint alleged that from 2006
to 2011, Provident discriminated in violation of ECOA by charging over
14,000 African-American and Hispanic borrowers more in brokers' fees
than similarly situated non-Hispanic White borrowers on the basis of
race and national origin. The consent order, which the court entered on
June 18, 2015, requires Provident to pay $9 million in damages to
harmed borrowers, to hire a settlement administrator to distribute
funds to the harmed borrowers identified by the CFPB and DOJ, and not
to discriminate against borrowers in assessing total broker fees.\51\
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\51\ Consent Order, United States v. Provident Funding Assocs.,
L.P., No. 3:15-cv-023-73 (N.D. Cal. May 28, 2015), ECF No. 2, http://files.consumerfinance.gov/f/201505_cfpb_consent-order-provident-funding-associates.pdf.
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In Fall 2016, the Bureau published a blog post in English and
Spanish announcing the selection of the settlement administrator and
its mailing of participation packets to eligible
consumers.^{52 53} The blog post also provided information to
consumers on how to contact the administrator, participate in the
settlement, and submit settlement forms.
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\52\ Patrice Ficklin, Provident Settlement Administrator to
Contact Eligible Borrowers Soon, Consumer Financial Protection
Bureau (Sept. 28, 2016), http://www.consumerfinance.gov/about-us/blog/provident-settlement-administrator-contact-eligible-borrowers-soon/.
\53\ Patrice Ficklin, Administrador del Acuerdo de Provident
planea ponerse en contacto con prestatarios elegibles
pr[oacute]ximamente, Consumer Financial Protection Bureau (Oct. 6,
2016), http://www.consumerfinance.gov/about-us/blog/administrador-del-acuerdo-de-provident-planea-ponerse-en-contacto-con-prestatarios-elegibles-proximamente/.
---------------------------------------------------------------------------

American Honda Finance Corporation
As previously reported, on July 14, 2015, the CFPB and the DOJ
resolved an action with American Honda Finance Corporation (Honda) to
put new measures in place to address discretionary auto loan pricing
and compensation practices. Honda's past practices resulted in
thousands of African-American, Hispanic, and Asian and Pacific Islander
borrowers paying higher interest rates than non-Hispanic White
borrowers for their auto loans between January 1, 2011, and July 14,
2015, without regard to their creditworthiness. The consent order
requires Honda to change its pricing and compensation system to
substantially reduce dealer discretion and minimize the risks of
discrimination, and pay $24 million in restitution to affected
borrowers.\54\
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\54\ Consent Order, In re American Honda Finance Corp., CFPB No.
2015-CFPB-0014 (July 14, 2015), http://files.consumerfinance.gov/f/201507_cfpb_consent-order_honda.pdf.
---------------------------------------------------------------------------

In October 2016, the Bureau published a blog post in English and
Spanish announcing that the settlement administrator was mailing
participation

[[Page 25260]]

packets to potentially eligible consumers, and providing information to
consumers on how to contact the administrator, participate in the
settlement, and submit settlement forms.^{55 56}
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\55\ Patrice Ficklin, What you need to know to get money from
the settlement with Honda Finance for overcharging minorities,
Consumer Financial Protection Bureau (Oct. 3, 2016), http://www.consumerfinance.gov/about-us/blog/what-you-need-know-get-money-settlement-honda-finance-overcharging-minorities/.
\56\ Patrice Ficklin, Lo que necesita saber para recibir dinero
del acuerdo de compensaci[oacute]n con Honda Finance por cobrarles
de m[aacute]s a las minor[iacute]as, Consumer Financial Protection
Bureau (Oct. 11, 2016), https://www.consumerfinance.gov/about-us/blog/lo-que-necesita-saber-para-recibir-dinero-del-acuerdo-de-compensacion-con-honda-finance-por-cobrarles-de-mas-las-minorias/.
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3.4 Equal Credit Opportunity Act Referrals to the Department of Justice
The CFPB must refer to the DOJ a matter when it has reason to
believe that a creditor has engaged in a pattern or practice of lending
discrimination in violation of ECOA.\57\ The CFPB also may refer other
potential ECOA violations to the DOJ. In 2016, the CFPB referred eight
matters to the DOJ. In four of the eight matters, the DOJ declined to
open an independent investigation and deferred to the Bureau's handling
of the matter. The CFPB's referrals to the DOJ in 2016 covered a
variety of practices, specifically discrimination in mortgage lending
on the bases of the age, marital status, receipt of public assistance
income, and sex; discrimination in indirect auto lending on the bases
of national origin, race, and receipt of public assistance income; and
discrimination in credit card account management on the bases of
national origin and race.
---------------------------------------------------------------------------

\57\ 15 U.S.C. 1691e(g).
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3.5 Pending Fair Lending Investigations
In 2016, the Bureau had a number of ongoing fair lending
investigations and authorized enforcement actions against a number of
institutions involving a variety of consumer financial products.
Consistent with the Bureau's priorities and the Office of Fair
Lending's risk-based prioritization, one key area on which the Bureau
focused its fair lending enforcement efforts was addressing potential
discrimination in mortgage lending, including the unlawful practice of
redlining. Redlining occurs when a lender provides unequal access to
credit, or unequal terms of credit, because of the racial or ethnic
composition of a neighborhood. At the end of 2016, the Bureau had a
number of pending investigations in this area. Additionally, at the end
of 2016, the Bureau had a number of pending investigations in other
areas.

4. Rulemaking and Related Guidance

4.1 Home Mortgage Disclosure Act and Regulation C
On October 2015, the Bureau issued and published in the Federal
Register a final rule to implement the Dodd-Frank amendments to
HMDA.\58\ The rule also finalizes certain amendments that the Bureau
believes are necessary to improve the utility of HMDA data, further the
purposes of HMDA, improve the quality of HMDA data, and create a more
transparent mortgage market.
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\58\ Home Mortgage Disclosure, 80 FR 66128 (Oct. 28, 2015)
(codified at 12 CFR pt. 1003), https://www.gpo.gov/fdsys/pkg/FR-2015-10-28/pdf/2015-26607.pdf.
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4.1.1 HMDA History
HMDA, as implemented by Regulation C, is intended to provide the
public with loan data that can be used to help determine whether
financial institutions are serving the housing needs of their
communities; to assist public officials in distributing public-sector
investment to attract private investment in communities where it is
needed; and to assist in identifying possible discriminatory lending
patterns and enforcing anti-discrimination statutes.\59\ HMDA data are
also used for a range of mortgage market monitoring purposes by
community groups, public officials, the financial industry, economists,
academics, social scientists, regulators, and the media. Bank
regulators and other agencies use HMDA to monitor compliance with and
enforcement of the CRA and Federal anti-discrimination laws, including
ECOA and the Fair Housing Act (FHA).
---------------------------------------------------------------------------

\59\ 12 U.S.C. 2801; 12 CFR 1003.1(b).
---------------------------------------------------------------------------

The Dodd-Frank Act transferred rulemaking authority for HMDA to the
Bureau, effective July 2011. It also amended HMDA to require financial
institutions to report new data points and authorized the Bureau to
require financial institutions to collect, record, and report
additional information.
4.1.2 Summary of Regulation C Changes
The HMDA Rule changes institutional coverage in two phases. First,
to reduce burden on industry, certain lower-volume depository
institutions will no longer be required to collect and report HMDA data
beginning in 2017. A bank, savings association, or credit union will
not be subject to Regulation C in 2017 unless it meets the asset-size,
location, federally related, and loan activity tests under current
Regulation C and it originates at least 25 home purchase loans,
including refinancings of home purchase loans, in both 2015 and 2016.
Second, effective January 1, 2018, the HMDA Rule adopts a uniform loan-
volume threshold for all institutions. Beginning in 2018, an
institution will be subject to Regulation C if it originated at least
25 covered closed-end mortgage loan originations in each of the two
preceding calendar years or at least 100 covered open-end lines of
credit in each of the two preceding calendar years. Other applicable
coverage requirements will apply, depending on the type of covered
entity.
The Rule also modifies the types of transactions covered under
Regulation C. In general, the HMDA Rule adopts a dwelling-secured
standard for transactional coverage. Beginning on January 1, 2018,
covered loans under the HMDA Rule generally will include closed-end
mortgage loans and open-end lines of credit secured by a dwelling and
will not include unsecured loans.
For HMDA data collected on or after January 1, 2018, covered
institutions will collect, record, and report additional information on
covered loans. New data points include those specifically identified in
Dodd-Frank as well as others the Bureau determined will assist in
carrying out HMDA's purposes. The HMDA Rule adds new data points for
applicant or borrower age, credit score, automated underwriting system
information, debt-to-income ratio, combined loan-to-value ratio, unique
loan identifier, property value, application channel, points and fees,
borrower-paid origination charges, discount points, lender credits,
loan term, prepayment penalty, non-amortizing loan features, interest
rate, and loan originator identifier as well as other data points. The
HMDA Rule also modifies several existing data points.
For data collected on or after January 1, 2018, the HMDA Rule
amends the requirements for collection and reporting of information
regarding an applicant's or borrower's ethnicity, race, and sex. First,
a covered institution will report whether or not it collected the
information on the basis of visual observation or surname. Second,
covered institutions must permit applicants to self-identify their
ethnicity and race using disaggregated ethnic and racial subcategories.
However, the HMDA Rule will not require or permit covered institutions
to use the disaggregated subcategories when identifying the applicant's
or borrower's ethnicity and race based on visual observation or
surname.

[[Page 25261]]

The Bureau is developing a new web-based submission tool for
reporting HMDA data, which covered institutions will use beginning in
2018. Regulation C's appendix A is amended effective January 1, 2018 to
include new transition requirements for data collected in 2017 and
reported in 2018. Covered institutions will be required to
electronically submit their loan application registers (LARs).
Beginning with data collected in 2018 and reported in 2019, covered
institutions will report the new dataset required by the HMDA Rule,
using revised procedures that will be available at
www.consumerfinance.gov/hmda.
Beginning in 2020, the HMDA Rule requires quarterly reporting for
covered institutions that reported a combined total of at least 60,000
applications and covered loans in the preceding calendar year. An
institution will not count covered loans that it purchased in the
preceding calendar year when determining whether it is required to
report on a quarterly basis. The first quarterly submission will be due
by May 30, 2020.
Beginning in 2018, covered institutions will no longer be required
to provide a disclosure statement or a modified LAR to the public upon
request. Instead, in response to a request, a covered institution will
provide a notice that its disclosure statement and modified LAR are
available on the Bureau's Web site. These revised disclosure
requirements will apply to data collected on or after January 1, 2017
and reported in or after 2018.
For data collected in or after 2018 and reported in or after 2019,
the Bureau will use a balancing test to determine whether and, if so,
how HMDA data should be modified prior to its disclosure in order to
protect applicant and borrower privacy while also fulfilling HMDA's
disclosure purposes. At a later date, the Bureau will provide a process
for the public to provide input regarding the application of this
balancing test to determine the HMDA data to be publicly disclosed.
4.1.3 Reducing Industry Burden
The Bureau took a number of steps to reduce industry burden while
ensuring HMDA data are useful and reflective of the current housing
finance market. A key part of this balancing is ensuring an adequate
implementation period. Most provisions of the HMDA Rule go into effect
on January 1, 2018--more than two years after publication of the Rule--
and apply to data collected in 2018 and reported in 2019 or later
years. At the same time, an institutional coverage change that will
reduce the number of depository institutions that need to report is
effective earlier: On January 1, 2017. Institutions subject to the new
quarterly reporting requirement will have additional time to prepare:
That requirement is effective on January 1, 2020, and the first
quarterly submission will be due by May 30, 2020.
As with all of its rules, the Bureau continues to look for ways to
help the mortgage industry implement the new mortgage lending data
reporting rules, and has created regulatory implementation resources
that are available online. These resources include an overview of the
final rule, a plain-language compliance guide, a timeline with various
effective dates, a decision tree to help institutions determine whether
they need to report mortgage lending data, a chart that provides a
summary of the reportable data, a chart that describes when to report
data as not applicable, a chart that describes what transactions are
reportable, a webinar on the HMDA Rule, and a Technology Preview for
the Bureau's new web-based submission tool. In addition, the Bureau has
published Filing Instruction Guides (FIG) for 2017 and 2018 that
include file specifications. The Bureau will monitor implementation
progress and will be publishing additional regulatory implementation
tools and resources on its Web site to support implementation
needs.\60\ Since the HMDA rule was issued on October 15, 2015, the
Bureau has focused on outreach by sharing information about the
regulatory changes, including webinars, responding to industry
inquiries, and issuing press releases and emails to stakeholder groups.
In addition, Bureau staff has spoken at numerous industry-focused
conferences and mortgage events. Since the HMDA rule has been released,
the Bureau's Web site has had over 50,000 visits to the HMDA
implementation page and over 18,000 downloads of our plain-language
HMDA compliance guide.
---------------------------------------------------------------------------

\60\ These resources are available at Consumer Financial
Protection Bureau, Home Mortgage Disclosure Act rule implementation,
http://www.consumerfinance.gov/regulatory-implementation/hmda/.
---------------------------------------------------------------------------

4.1.4 Filing 2017 HMDA Data
Beginning with the HMDA data collected in 2017 and submitted in
2018, responsibility to receive and process HMDA data will transfer
from the Federal Reserve Board (FRB) to the CFPB. The HMDA agencies
have agreed that a covered institution filing HMDA data collected in or
after 2017 with the CFPB will be deemed to have submitted the HMDA data
to the appropriate Federal agency.\61\ The effective date of the change
in the Federal agency that receives and processes the HMDA data does
not coincide with the effective date for the new HMDA data to be
collected and reported under the Final Rule amending Regulation C
published in the Federal Register on October 28, 2015. The Final Rule's
new data requirements will apply to data collected beginning on January
1, 2018. The data fields for data collected in 2017 have not changed.
---------------------------------------------------------------------------

\61\ The HMDA agencies refer collectively to the CFPB, the
Office of the Comptroller of the Currency (OCC), the Federal Deposit
Insurance Corporation (FDIC), the FRB, the National Credit Union
Administration (NCUA), and the Department of Housing and Urban
Development (HUD).
---------------------------------------------------------------------------

Also beginning with data collected in 2017, filers will submit
their HMDA data using a web interface referred to as the ``HMDA
Platform.'' In addition, beginning with the data collected in 2017, as
part of the submission process, a HMDA reporter's authorized
representative with knowledge of the data submitted shall certify to
the accuracy and completeness of the data submitted. Additional
information about HMDA, the FIG, and other data submission resources is
located at the Bureau's Web site.\62\
---------------------------------------------------------------------------

\62\ See Consumer Financial Protection Bureau, Filing
instructions guide for HMDA data collected in 2017 (July 2016),
http://www.consumerfinance.gov/data-research/hmda/static/for-filers/2017/2017-HMDA-FIG.pdf.
---------------------------------------------------------------------------

4.1.5 HMDA Data Resubmission RFI
In response to dialogue with industry and other stakeholders, the
Bureau is considering modifications to its current HMDA resubmission
guidelines. In comments on the Bureau's proposed changes to Regulation
C, some stakeholders asked that the Bureau adjust its existing HMDA
resubmission guidelines to reflect the expanded data the Bureau will
collect under the HMDA Rule.
Accordingly, on January 7, 2016, the Bureau published on its Web
site a Request for Information (RFI) asking for public comment on the
Bureau's HMDA resubmission guidelines.\63\ Specifically, the Bureau
requested feedback on the Bureau's use of resubmission error
thresholds; how they should be calculated; whether they should vary
with the size of the HMDA submission or kind of data; and the
consequences for exceeding a threshold, among other

[[Page 25262]]

topics. Some examples of questions posed to the public include:
---------------------------------------------------------------------------

\63\ See Consumer Financial Protection Bureau, CFPB Seeks Public
Input on Mortgage Lending Information Resubmission Guidelines (Jan.
7, 2016), http://www.consumerfinance.gov/newsroom/cfpb-seeks-public-input-on-mortgage-lending-information-resubmission-guidelines/.
---------------------------------------------------------------------------

Should the Bureau continue to use error percentage
thresholds to determine the need for data resubmission? If not, how
else may the Bureau ensure data integrity and compliance with HMDA and
Regulation C?
If the Bureau retains error percentage thresholds, should
the thresholds be calculated differently than they are today? If so,
how and why?
If the Bureau retains error percentage thresholds, should
it continue to maintain separate error thresholds for the entire HMDA
LAR sample and individual data fields within the LAR sample? If not,
why?
The RFI was published in the Federal Register on January 12,
2016.\64\ The 60-day comment period ended on March 14, 2016. As of this
report's publication date, in light of feedback received, the Bureau
was considering whether to adjust its existing HMDA resubmission
guidelines and if so, how.
---------------------------------------------------------------------------

\64\ Request for Info. Regarding Home Mortgage Disclosure Act
Resubmission Guidelines, 81 F.R. 1405 (Jan. 12, 2016), https://www.gpo.gov/fdsys/pkg/FR-2016-01-12/pdf/2016-00442.pdf.
---------------------------------------------------------------------------

4.1.6 HMDA Rule Technical Corrections and Clarifying Amendments
Since issuing the 2015 HMDA Final Rule, the Bureau has identified
and received information about some areas of uncertainty about
requirements under the rule. This spring, the Bureau plans to seek
comment on a proposal to amend certain provisions of Regulation C to
make technical corrections and to clarify certain requirements under
Regulation C.
4.2 ECOA and Regulation B
In 2016, with regard to ECOA, the CFPB published a Bureau Official
Approval and was in the proposed rule stage to amend certain sections
of Regulation B.
4.2.1 Status of New Uniform Residential Loan Application and Collection
of Expanded Home Mortgage Disclosure Act Information About Ethnicity
and Race in 2017 Under Regulation B
On September 23, 2016, the Bureau published a Bureau Official
Approval pursuant to section 706(e) of the ECOA concerning the new
Uniform Residential Loan Application and the collection of expanded
HMDA information about ethnicity and race in 2017.\65\
---------------------------------------------------------------------------

\65\ Consumer Financial Protection Bureau, Status of New Uniform
Residential Loan Application and Collection of Expanded Home
Mortgage Disclosure Act Information about Ethnicity and Race in 2017
under Regulation B (Sept. 23, 2016), https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/092016_cfpb_HMDAEthinicityRace.pdf.
---------------------------------------------------------------------------

In accordance with the request by Federal Housing Finance Agency
and the Federal Home Loan Mortgage Corporation (Freddie Mac) and the
Federal National Mortgage Association (Fannie Mae), the Bureau reviewed
the revised and redesigned Uniform Residential Loan Application issued
on August 23, 2016 (2016 URLA). Under the terms provided in the
Bureau's notice, the Bureau determined that the relevant language in
the 2016 URLA is in compliance with the specified provisions of
Regulation B. A creditor's use of the 2016 URLA is not required under
Regulation B. However, the notice provides that, a creditor that uses
the 2016 URLA without any modification that would violate Sec.
1002.5(b) through (d) would act in compliance with Sec. 1002.5(b)
through (d).
The notice also addressed collection of information concerning the
ethnicity and race of applicants in conformity with Regulation B from
January 1, 2017, through December 31, 2017. The Bureau's official
approval provided that at any time from January 1, 2017, through
December 31, 2017, a creditor may, at its option, permit applicants to
self-identify using disaggregated ethnic and racial categories as
instructed in appendix B to Regulation C, as amended by the 2015 HMDA
final rule. The Bureau believes such authorization may provide
creditors time to begin to implement the regulatory changes and improve
their compliance processes before the new requirement becomes
effective, and therefore mandatory, on January 1, 2018. Allowing for
this increased implementation period will, in the Bureau's view, reduce
compliance burden and further the purposes of HMDA and Regulation C.
4.2.2 Amendments to the Equal Credit Opportunity Act (Regulation B)
Ethnicity and Race Information Collection
Regulation C currently requires financial institutions to collect
and report information about the ethnicity and race, as well as certain
other characteristics, of applicants and borrowers. Regulation C, as
amended by 2015 HMDA Final Rule, generally effective January 1, 2018,
will require financial institutions to permit applicants and borrowers
to self-identify using disaggregated ethnic and racial categories
beginning January 1, 2018. Regulation B also currently requires
creditors to request and retain information about the ethnicity and
race, as well as certain other characteristics, of applicants for
certain dwelling-secured loans, but uses only aggregate ethnic and
racial categories. On March 24, 2017, the Bureau issued a proposed rule
seeking comment on amendments to Regulation B to permit creditors
additional flexibility in complying with Regulation B in order to
facilitate compliance with Regulation C, to add certain model forms and
remove others from Regulation B, and to make various other amendments
to Regulation B and its commentary to facilitate the collection and
retention of information about the ethnicity, sex, and race of certain
mortgage applicants.\66\
---------------------------------------------------------------------------

\66\ Consumer Financial Protection Bureau, Amendments to Equal
Credit Opportunity Act (Regulation B) Ethnicity and Race Information
Collection 2017-0009 (March 24, 2017), http://files.consumerfinance.gov/f/documents/201703_cfpb_NPRM-to-amend-Regulation-B.pdf.
---------------------------------------------------------------------------

4.3 Small Business Data Collection
Section 1071 of the Dodd-Frank Act requires financial institutions
to compile, maintain, and submit to the Bureau certain data on credit
applications for women-owned, minority-owned, and small businesses.\67\
Congress enacted section 1071 for the purpose of facilitating
enforcement of fair lending laws and identifying business and community
development needs and opportunities for women-owned, minority-owned,
and small businesses. The amendments to ECOA made by the Dodd-Frank Act
require that certain data be collected and maintained, including the
number of the application and date the application was received; the
type and purpose of loan or credit applied for; the amount of credit
applied for and approved; the type of action taken with regard to each
application and the date of such action; the census tract of the
principal place of business; the gross annual revenue of the business;
and the race, sex, and ethnicity of the principal owners of the
business. The Bureau's Fall 2016 Unified Agenda and Regulatory Plan
indicates that rulemaking pursuant to Section 1071 is now in the pre-
rule stage.\68\ This first stage of the Bureau's work will be focused
on outreach and research and on the potential ways to implement section
1071, after which the Bureau will begin developing proposed rules
concerning the data to be collected and determining the appropriate
operational procedures and privacy protections needed for information-
gathering and public disclosure.
---------------------------------------------------------------------------

\67\ Dodd-Frank Act section 1071 (codified at 15 U.S.C. 1691c-
2).
\68\ Semiannual Regulatory Agenda, 81 FR 94844, 94846 (Dec. 23,
2016).

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[[Page 25263]]

The Bureau has begun to explore some of the issues involved in the
rulemaking, including through ongoing engagement with industry and
other stakeholders. In addition, current and future small business
lending supervisory activity will help expand and enhance the Bureau's
knowledge in this area, including the credit application process;
existing data collection processes; and the nature, extent, and
management of fair lending risk. The Bureau is also considering how
best to work with other agencies to, in part, gain insight into
existing business lending data collection efforts and to explore
possible ways to cooperate in future efforts.
4.4 Amicus Program
The Bureau's Amicus Program files amicus, or friend-of-the-court,
briefs in court cases concerning the Federal consumer financial
protection laws that the Bureau is charged with implementing, including
ECOA. These amicus briefs provide the courts with our views on
significant consumer financial protection issues and help ensure that
consumer financial protection statutes and regulations are correctly
and consistently interpreted by the courts.
In 2016, the Bureau filed an amicus brief in Alexander v. AmeriPro
Funding, Inc., in which a group of consumer plaintiffs appealed the
dismissal by the United States District Court for the Southern District
of Texas of an ECOA complaint alleging discrimination by mortgage
lenders on the basis that all or part of the plaintiffs' income derived
from a public assistance program. The District Court held that the
complaint failed to allege facts that gave rise to a prima facie
showing of discrimination under the McDonnell-Douglas framework and
also failed to allege direct evidence of discrimination because the
allegations were ``conclusory'' and did not allege hostility or
animus.\69\ The Bureau filed its amicus brief on February 23, 2016, and
argued that the District Court's decision imposed pleading burdens on
ECOA plaintiffs that were not required by ECOA or the Federal Rules of
Civil Procedure.\70\
---------------------------------------------------------------------------

\69\ Alexander v. AmeriPro Funding, Inc., No. H-14-2947, 2015 WL
4545625 at *4-5 (S.D. Tex. July 28, 2015).
\70\ Br. of Amicus Curiae Consumer Financial Protection Bureau
in Supp. of Appellants and Reversal, Alexander, et al. v. AmeriPro
Funding, Inc., et al., No. 15-20710 (5th Cir. Feb. 23, 2016), ECF
No. 00513394181, https://www.consumerfinance.gov/policy-compliance/amicus/briefs/alexander-ameripro-funding/
---------------------------------------------------------------------------

On February 16, 2017, in a unanimous decision, the United States
Court of Appeals for the Fifth Circuit reversed the dismissal with
respect to some of the plaintiffs but affirmed the dismissal with
respect to others.\71\ Reversing the District Court, the court held
that one set of plaintiffs stated an ECOA claim because they alleged
that they applied for credit, that the creditor refused to consider
public assistance income in considering their credit applications, and
that the applicants as a result received less favorable mortgages.
Unlike the District Court's decision, the court did not require the
plaintiffs to also allege hostility or animus or to make a prima facie
showing of discrimination under the McDonnell-Douglas framework.
Affirming the District Court, the court also held that another set of
plaintiffs failed to state a claim under ECOA because they either
failed to allege sufficient facts of discriminatory conduct, failed to
allege facts indicating that they had applied for credit, or failed to
allege facts indicating that one defendant was a ``creditor'' under
ECOA.
---------------------------------------------------------------------------

\71\ Alexander v. AmeriPro Funding, Inc., 848 F.3d 698 (5th Cir.
2017).
---------------------------------------------------------------------------

5. Interagency Coordination

5.1 Interagency Coordination and Engagement
The Office of Fair Lending regularly coordinates the CFPB's fair
lending regulatory, supervisory and enforcement activities with those
of other Federal agencies and State regulators to promote consistent,
efficient, and effective enforcement of Federal fair lending laws.\72\
Through our interagency engagement, we work to address current and
emerging fair lending risks.
---------------------------------------------------------------------------

\72\ Dodd-Frank Act section 1013(c)(2)(B) (codified at 12 U.S.C.
5493(c)(2)(B)).
---------------------------------------------------------------------------

On November 14, 2016, along with other members of the FFIEC, the
Bureau issued an updated Uniform Interagency Consumer Compliance Rating
System.\73\ The revisions reflect the regulatory, supervisory,
technological, and market changes that have occurred since the system
was established. The previous rating system was adopted in 1980, and
the proposed revisions aim to address the broad array of risks in the
market that can cause consumer harm, including fair lending violations.
The Bureau plans to implement the updated rating system on consumer
compliance examinations that begin on or after March 31, 2017.
---------------------------------------------------------------------------

\73\ Uniform Interagency Consumer Compliance Rating System, 81
FR 79473 (Nov. 14, 2016), https://www.federalregister.gov/documents/2016/11/14/2016-27226/uniform-interagency-consumer-compliance-rating-system.
---------------------------------------------------------------------------

The CFPB, along with the FTC, DOJ, HUD, FDIC, FRB, NCUA, OCC, and
the Federal Housing Finance Agency, comprise the Interagency Task Force
on Fair Lending. The Task Force meets regularly to discuss fair lending
enforcement efforts, share current methods of conducting supervisory
and enforcement fair lending activities, and coordinate fair lending
policies.
The CFPB belongs to a standing working group of Federal agencies--
with the DOJ, HUD, and FTC--that meets regularly to discuss issues
relating to fair lending enforcement. These agencies comprise the
Interagency Working Group on Fair Lending Enforcement. The agencies use
these meetings to discuss fair lending developments and trends,
methodologies for evaluating fair lending risks and violations, and
coordination of fair lending enforcement efforts. In addition to these
interagency working groups, we meet periodically and on an ad hoc basis
with the prudential regulators to coordinate our fair lending work.
The CFPB takes part in the FFIEC HMDA/Community Reinvestment Act
Data Collection Subcommittee, which is a subcommittee of the FFIEC Task
Force on Consumer Compliance, as its work relates to the collection and
processing of HMDA data, and the Bureau is one of the agencies to which
HMDA data is submitted by financial institutions.

6. Outreach: Promoting Fair Lending Compliance and Education

Pursuant to Dodd-Frank,\74\ the Office of Fair Lending regularly
engages in outreach with industry, bar associations, consumer
advocates, civil rights organizations, other government agencies, and
other stakeholders to help educate and inform about fair lending. The
Bureau is committed to communicating directly with all stakeholders on
its policies, compliance expectations, and fair lending priorities. As
part of this commitment to outreach and education in the area of fair
lending, equal opportunity, and ensuring fair access to credit, Bureau
personnel have engaged in dialogue with stakeholders on issues
including the use of public assistance income in underwriting,
redlining, disparate treatment, disparate impact, HMDA data collection
and reporting, indirect auto financing, the use of proxy methodology,
and the unique challenges facing LEP and lesbian, gay, bisexual and
transgender (LGBT) consumers in accessing credit. Outreach is
accomplished through issuance of Reports to Congress, Interagency

[[Page 25264]]

Statements, Supervisory Highlights, Compliance Bulletins, letters, blog
posts, speeches and presentations at conferences and trainings, and
participation in meetings to discuss fair lending and access to credit
matters.
---------------------------------------------------------------------------

\74\ Dodd-Frank Act section 1013(c)(2)(C) (codified at 12 U.S.C.
5493(c)(2)(C)).
---------------------------------------------------------------------------

6.1 Blog Posts
The Bureau firmly believes that an informed consumer is the best
defense against discriminatory lending practices. When issues arise
that consumers need to know about, the Bureau uses many tools to aid
consumers in financial decision-making.^{75 76} The Bureau
regularly uses its blog as a tool to communicate effectively to
consumers on timely issues, emerging areas of concern, Bureau
initiatives, and more. In 2016 we published 14 blog posts related to
two main fair lending topics: Providing consumers updated information
about our fair lending enforcement actions and providing consumer
education on fair lending. Our enforcement update blog posts included
the announcement (in both English and Spanish) of the BancorpSouth Bank
settlement,^{77 78} updates on the Ally Financial Inc. and Ally
Bank settlement,^{79 80} updates on the Provident Funding
Association, L.P. settlement ^{81 82} and updates on the
American Honda Finance Corporation settlement.^{83 84} Our
consumer education blog posts included reminding consumers of their
rights for fair treatment in the financial marketplace,^{85 86}
a series of two blog posts about the history of ECOA \87\ and what it
means for consumers,\88\ a blog post outlining the 2017 priorities for
Fair Lending,\89\ and a blog post about shopping for an auto loan.\90\
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\75\ For helpful information on shopping for auto loans, please
see the Bureau's Know Before You Owe: Auto Loans toolkit, at
Consumer Financial Protection Bureau, Take control of your auto
loan, http://www.consumerfinance.gov/consumer-tools/auto-loans/.
\76\ For helpful information on shopping for home loans, please
see the Bureau's toolkit, at Consumer Financial Protection Bureau,
Owning a Home: Tools and resources for homebuyers, http://www.consumerfinance.gov/owning-a-home/.
\77\ Patrice Ficklin & Daniel Dodd-Ramirez, Redlining: CFPB and
DOJ action requires BancorpSouth Bank to pay millions to harmed
consumers, Consumer Financial Protection Bureau (June 29, 2016),
http://www.consumerfinance.gov/about-us/blog/redlining-cfpb-and-doj-action-requires-bancorpsouth-bank-pay-millions-harmed-consumers/.
\78\ Patrice Ficklin & Daniel Dodd-Ramirez, La
delimitaci[oacute]n ilegal: Acci[oacute]n del CFPB y del
Departamento de Justicia requiere que el banco BancorpSouth pague
millones de d[oacute]lares a consumidores perjudicados, Consumer
Financial Protection Bureau (July 6, 2016), http://www.consumerfinance.gov/about-us/blog/la-delimitacion-ilegal-accion-del-cfpb-y-del-departamento-de-justicia-requiere-que-el-banco-bancorpsouth-pague-millones-de-dolares-consumidores-perjudicados/.
\79\ Patrice Ficklin, Harmed Ally borrowers have been sent $80
million in damages, Consumer Financial Protection Bureau (Jan. 29,
2016), http://www.consumerfinance.gov/about-us/blog/harmed-ally-borrowers-have-been-sent-80-million-in-damages/.
\80\ Patrice Ficklin, Prestatarios perjudicados por Ally reciben
$80 millones en da[ntilde]os, Consumer Financial Protection Bureau
(Feb. 4, 2016), http://www.consumerfinance.gov/about-us/blog/prestatarios-perjudicados-por-ally-reciben-80-millones-en-danos/.
\81\ Patrice Ficklin, Provident Settlement Administrator to
contact eligible borrowers soon, Consumer Financial Protection
Bureau (Sept. 28, 2016), http://www.consumerfinance.gov/about-us/blog/provident-settlement-administrator-contact-eligible-borrowers-soon/.
\82\ Patrice Ficklin, Administrador del Acuerdo de Provident
planea ponerse en contacto con prestatarios elegibles
pr[oacute]ximamente, Consumer Financial Protection Bureau (Oct. 6,
2016), http://www.consumerfinance.gov/about-us/blog/administrador-del-acuerdo-de-provident-planea-ponerse-en-contacto-con-prestatarios-elegibles-proximamente/.
\83\ Patrice Ficklin, What you need to know to get money from
the settlement with Honda Finance for overcharging minorities,
Consumer Financial Protection Bureau (Oct. 3, 2016), http://www.consumerfinance.gov/about-us/blog/what-you-need-know-get-money-settlement-honda-finance-overcharging-minorities/.
\84\ Patrice Ficklin, Lo que necesita saber para recibir dinero
del acuerdo de compensaci[oacute]n con Honda Finance por cobrarles
de m[aacute]s a las minor[iacute]as, Consumer Financial Protection
Bureau (Oct. 11, 2016), http://www.consumerfinance.gov/about-us/blog/lo-que-necesita-saber-para-recibir-dinero-del-acuerdo-de-compensacion-con-honda-finance-por-cobrarles-de-mas-las-minorias/.
\85\ Patrice Ficklin, You have the right to be treated fairly in
the financial marketplace, Consumer Financial Protection Bureau
(Apr. 29, 2016), http://www.consumerfinance.gov/about-us/blog/you-have-right-be-treated-fairly-financial-marketplace/.
\86\ Patrice Ficklin, Usted tiene derecho a que lo traten de
manera justa en el mercado financiero, Consumer Financial Protection
Bureau (May 2, 2016), http://www.consumerfinance.gov/about-us/blog/usted-tiene-derecho-que-lo-traten-de-manera-justa-en-el-mercado-financiero/.
\87\ Brian Kreiswirth & Anna-Marie Tabor, What you need to know
about the Equal Credit Opportunity Act and how it can help you: Why
it was passed and what it is, Consumer Financial Protection Bureau
(Oct. 31, 2016), http://www.consumerfinance.gov/about-us/blog/what-you-need-know-about-equal-credit-opportunity-act-and-how-it-can-help-you-why-it-was-passed-and-what-it/.
\88\ Rebecca Gelfond & Frank Vespa-Papaleo, What you need to
know about the Equal Credit Opportunity Act and how it can help you:
Know your rights, Consumer Financial Protection Bureau (Nov. 2,
2016), http://www.consumerfinance.gov/about-us/blog/what-you-need-know-about-equal-credit-opportunity-act-and-how-it-can-help-you-know-your-rights/.
\89\ Patrice Ficklin, Fair Lending priorities in the new year,
Consumer Financial Protection Bureau (Dec. 16, 2016), http://www.consumerfinance.gov/about-us/blog/fair-lending-priorities-new-year/.
\90\ Patrice Ficklin & Daniel Dodd-Ramirez, Don't get taken for
a ride; protect yourself from an auto loan you can't afford,
Consumer Financial Protection Bureau (July 5, 2016), http://www.consumerfinance.gov/about-us/blog/dont-get-taken-ride-protect-yourself-auto-loan-you-cant-afford/.
_____________________________________-

The blog posts may be accessed any time at www.consumerfinance.gov/blog.
6.2 Supervisory Highlights
Supervisory Highlights reports anchor the Bureau's efforts to
communicate about the Bureau's supervisory activity. Because the
Bureau's supervisory process is confidential, Supervisory Highlights
reports provide information on supervisory trends the Bureau observes,
without identifying specific entities, as well as information on public
enforcement matters that arise from supervisory reviews. In 2016,
Supervisory Highlights covered many topical issues pertaining to fair
lending, including mortgage servicing, HMDA examinations where
institutions improperly coded actions taken on conditionally-approved
applications with unmet underwriting conditions, LEP consumers,
redlining, and settlement updates for recent enforcement actions that
originated in the supervisory process.
More information about the topics discussed this year in
Supervisory Highlights can be found in Section 2.1 of this Report. As
with all Bureau resources, all editions of Supervisory Highlights are
available on www.consumerfinance.gov/reports.
6.3 Speaking Engagements & Roundtables
To meet our mission of educating and informing stakeholders about
fair lending, the Office of Fair Lending and Equal Opportunity had the
opportunity to participate in a number of outreach speaking events and
roundtables throughout 2016. In these events, we shared information on
fair lending priorities, emerging issues, and heard feedback from our
stakeholders on the work we do.
Fair Lending staff attended numerous roundtables throughout the
year on a variety of issues related to fair lending. Some examples of
the topics covered include student lending, language access issues,
HMDA, small business lending, mortgage servicing, and credit reporting.

7. Interagency Reporting

Pursuant to ECOA, the CFPB is required to file a report to Congress
describing the administration of its functions under ECOA, providing an
assessment of the extent to which compliance with ECOA has been
achieved, and giving a summary of public enforcement actions taken by
other agencies with administrative enforcement responsibilities under

[[Page 25265]]

ECOA.\91\ This section of this report provides the following
information:
---------------------------------------------------------------------------

\91\ 15 U.S.C. 1691f.
---------------------------------------------------------------------------

A description of the CFPB's and other agencies' ECOA
enforcement efforts; and
an assessment of compliance with ECOA.
In addition, the CFPB's annual HMDA reporting requirement calls for
the CFPB, in consultation with HUD, to report annually on the utility
of HMDA's requirement that covered lenders itemize certain mortgage
loan data.\92\
---------------------------------------------------------------------------

\92\ 12 U.S.C. 2807.
---------------------------------------------------------------------------

7.1 Equal Credit Opportunity Act Enforcement
The enforcement efforts and compliance assessments made by all the
agencies assigned enforcement authority under section 704 of ECOA are
discussed in this section.
7.1.1 Public Enforcement Actions
In addition to the CFPB, the agencies charged with administrative
enforcement of ECOA under section 704 include: The FRB, the FDIC, the
OCC, and the NCUA (collectively, the FFIEC agencies); \93\ the FTC, the
Farm Credit Administration (FCA), the Department of Transportation
(DOT), the Securities and Exchange Commission (SEC), the Small Business
Administration (SBA), and the Grain Inspection, Packers and Stockyards
Administration (GIPSA) of the Department of Agriculture.\94\ In 2016,
CFPB had two public enforcement actions for violations of ECOA, and the
OCC issued one public enforcement action for violations of ECOA and/or
Regulation B.
---------------------------------------------------------------------------

\93\ The FFIEC is a ``formal interagency body empowered to
prescribe uniform principles, standards, and report forms for the
Federal examination of financial institutions'' by the member
agencies listed above and the State Liaison Committee ``and to make
recommendations to promote uniformity in the supervision of
financial institutions.'' Federal Financial Institutions Examination
Council, http://www.ffiec.gov (last visited March 31, 2017).
\94\ 15 U.S.C. 1691c.
---------------------------------------------------------------------------

7.1.2 Violations Cited During ECOA Examinations
Among institutions examined for compliance with ECOA and Regulation
B, the FFIEC agencies reported that the most frequently cited
violations were:

Table 1--Most Frequently Cited Regulation B Violations by FFIEC
Agencies: 2016
------------------------------------------------------------------------
FFIEC agencies reporting Regulation B violations: 2016
------------------------------------------------------------------------
CFPB, FDIC, FRB, NCUA, OCC........ 12 CFR 1002.4(a): Discrimination on
a prohibited basis in a credit
transaction.
12 C.F.R. 1002.6(b): Improperly
considering age, receipt of public
assistance, certain other income,
or another prohibited basis in a
system of evaluating applicant
creditworthiness.
12 C.F.R. 1002.7(d)(1): Improperly
requiring the signature of an
applicant's spouse or other person.
12 C.F.R. 1002.9(a)(1), (a)(1)(i),
(a)(2), (b), (b)(2), (c): Failure
to timely notify an applicant when
an application is denied; failure
to provide notice to the applicant
30 days after receiving a completed
application concerning the
creditor's approval of,
counteroffer or adverse action on
the application; failure to provide
sufficient information in an
adverse action notification,
including the specific reasons the
application was denied; failure to
timely and/or appropriately notify
an applicant of either action taken
or of incompleteness after
receiving an application that is
incomplete.
12 C.F.R. 1002.12(b)(1),
(b)(1)(ii)(A): Failure to preserve
records on actions taken on an
application or of incompleteness.
12 C.F.R. 1002.13(a)(1)(i): Failure
to request information on an
application pertaining to an
applicant's ethnicity.
12 C.F.R. 14(a), (a)(1): Failure to
routinely provide an applicant with
a copy of all appraisals and other
written valuations developed in
connection with an application for
credit that is to be secured by a
first lien on a dwelling, and/or
failure to provide an applicant
with a notice in writing of the
applicant's right to receive a copy
of all written appraisals developed
in connection with the application.
------------------------------------------------------------------------

TABLE 2--Most Frequently Cited Regulation B Violations by Other ECOA
Agencies, 2016
------------------------------------------------------------------------
Other ECOA agencies Regulation B violations: 2016
------------------------------------------------------------------------
FCA............................... 12 CFR 1002.9: Failure to timely
notify an applicant when an
application is denied; failure to
provide sufficient information in
an adverse action notification,
including the specific reasons the
application was denied.
12 CFR 1002.13(a)(1): Failure to
request and collect information
about the race, ethnicity, sex,
marital status, and age of
applicants seeking certain types of
mortgage loans.
------------------------------------------------------------------------

The GIPSA, the SEC, and the SBA reported that they received no
complaints based on ECOA or Regulation B in 2016. In 2016, the DOT
reported that it received a ``small number of consumer inquiries or
complaints concerning credit matters possibly covered by ECOA,'' which
it ``processed informally.'' The FTC is an enforcement agency and does
not conduct compliance examinations.
7.2 Referrals to the Department of Justice
In 2016, the FFIEC agencies including the CFPB referred a total of
20 matters to the DOJ. The FDIC referred four matters to the DOJ. These
matters alleged discriminatory treatment of persons in credit
transactions due to protected characteristics, including age, race,
national origin, and receipt of public assistance income. The FRB
referred seven matters to the DOJ. These matters alleged discriminatory
treatment of persons in credit transactions due to protected
characteristics, including race, national origin, and marital status.
The OCC referred one matter to the DOJ on the basis of marital status
discrimination. The CFPB referred eight matters to the DOJ during 2016,
finding discrimination in credit transactions on the following
prohibited bases: Race, national origin, age, receipt of public
assistance income, sex, and marital status.

[[Page 25266]]

7.3 Reporting on the Home Mortgage Disclosure Act
The CFPB's annual HMDA reporting requirement calls for the CFPB, in
consultation with the Department of Housing and Urban Development
(HUD), to report annually on the utility of HMDA's requirement that
covered lenders itemize loan data in order to disclose the number and
dollar amount of certain mortgage loans and applications, grouped
according to various characteristics.\95\ The CFPB, in consultation
with HUD, finds that itemization and tabulation of these data further
the purposes of HMDA. For more information on the Bureau's proposed
amendments to HMDA's implementing regulation, Regulation C, please see
the Rulemaking section of this report (Section 4).
---------------------------------------------------------------------------

\95\ See 12 U.S.C. 2807.
---------------------------------------------------------------------------

8. Conclusion

In this, our fifth Fair Lending Report to Congress, we outline our
work in furtherance of our statutory mandate to ensure fair, equitable,
and nondiscriminatory access to credit. Our work continues to reflect
the areas that pose the greatest risk of consumer harm, and we continue
to reprioritize our approach to better position our work to understand
and address emerging issues. Our multipronged approach uses the full
variety of tools at our disposal--supervision, enforcement, rulemaking,
outreach, research, data-driven prioritization, interagency
coordination, and more. We are pleased to present this report as we
continue to fulfill our statutory mandate as well as the Bureau's
mission to help consumer finance markets work by making rules more
effective, by consistently and fairly enforcing these rules, and by
empowering consumers to take more control over their economic lives.

Appendix A: Defined Terms

------------------------------------------------------------------------
Term Definition
------------------------------------------------------------------------
Bureau............................ The Consumer Financial Protection
Bureau.
CFPB.............................. The Consumer Financial Protection
Bureau.
CMS............................... Compliance Management System.
CRA............................... Community Reinvestment Act.
Dodd-Frank Act.................... The Dodd-Frank Wall Street Reform
and Consumer Protection Act.
DOJ............................... The U.S. Department of Justice.
DOT............................... The U.S. Department of
Transportation.
ECOA.............................. The Equal Credit Opportunity Act.
FCA............................... Farm Credit Administration.
FDIC.............................. The U.S. Federal Deposit Insurance
Corporation.
Federal Reserve Board............. The U.S. Board of Governors of the
Federal Reserve System.
FFIEC............................. The U.S. Federal Financial
Institutions Examination Council--
the FFIEC member agencies are the
Board of Governors of the Federal
Reserve System (FRB), the Federal
Deposit Insurance Corporation
(FDIC), the National Credit Union
Administration (NCUA), the Office
of the Comptroller of the Currency
(OCC), and the Consumer Financial
Protection Bureau (CFPB). The State
Liaison Committee was added to
FFIEC in 2006 as a voting member.
FRB............................... The U.S. Board of Governors of the
Federal Reserve System.
FTC............................... The U.S. Federal Trade Commission.
GIPSA............................. Grain Inspection, Packers and
Stockyards Administration (GIPSA)
of the U.S. Department of
Agriculture.
HMDA.............................. The Home Mortgage Disclosure Act.
HUD............................... The U.S. Department of Housing and
Urban Development.
LEP............................... Limited English Proficiency.
LGBT.............................. Lesbian, gay, bisexual and
transgender.
NCUA.............................. The National Credit Union
Administration.
OCC............................... The U.S. Office of the Comptroller
of the Currency.
SBA............................... Small Business Administration.
SEC............................... U.S. Securities and Exchange
Commission.
------------------------------------------------------------------------

[2]. Regulatory Requirements

This Fair Lending Report of the Consumer Financial Protection
Bureau summarizes existing requirements under the law, and summarizes
findings made in the course of exercising the Bureau's supervisory and
enforcement authority. It is therefore exempt from notice and comment
rulemaking requirements under the Administrative Procedure Act pursuant
to 5 U.S.C. 553(b). Because no notice of proposed rulemaking is
required, the Regulatory Flexibility Act does not require an initial or
final regulatory flexibility analysis. 5 U.S.C. 603(a), 604(a). The
Bureau has determined that this Fair Lending Report does not impose any
new or revise any existing recordkeeping, reporting, or disclosure
requirements on covered entities or members of the public that would be
collections of information requiring OMB approval under the Paperwork
Reduction Act, 44 U.S.C. 3501, et seq.

Dated: May 24, 2017.
Richard Cordray,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2017-11318 Filed 5-31-17; 8:45 am]
BILLING CODE 4810-AM-P