[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)).


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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).
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    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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    \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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    \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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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/.
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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.
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    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.
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    \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.
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    \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).
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    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\
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    \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.
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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.
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    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\
---------------------------------------------------------------------------

    \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.
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    \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.
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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