[Federal Register Volume 89, Number 127 (Tuesday, July 2, 2024)]
[Notices]
[Pages 54786-54799]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-14533]


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CONSUMER FINANCIAL PROTECTION BUREAU


Fair Lending Report of the Consumer Financial Protection Bureau

AGENCY: Consumer Financial Protection Bureau.

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

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SUMMARY: The Consumer Financial Protection Bureau (CFPB) is issuing its 
eleventh Fair Lending Report of the Consumer Financial Protection 
Bureau (Fair Lending Report) to Congress. The CFPB is committed to 
ensuring fair, equitable, and nondiscriminatory access to credit for 
both individuals and communities. This report describes our fair 
lending activities in supervision and enforcement; guidance and 
rulemaking; interagency coordination; and outreach and education for 
calendar year 2023.

DATES: The CFPB released the 2023 Fair Lending Report on its website on 
June 26, 2024.

FOR FURTHER INFORMATION CONTACT: Susan Grutza, Senior Policy Counsel, 
Fair Lending, at 1-855-411-2372. If you require this document in an 
alternative electronic format, please contact 
[email protected].

SUPPLEMENTARY INFORMATION:

1. Fair Lending Enforcement and Supervision

1.1. Risk-Based Prioritization

    Because Congress charged the Consumer Financial Protection Bureau 
(CFPB) with the responsibility of overseeing many lenders and products, 
the CFPB has long used a risk-based approach to prioritizing 
supervisory examinations and enforcement activity. This approach helps 
ensure that the CFPB focuses on areas that present substantial risk of 
credit discrimination for consumers and small businesses.\1\
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    \1\ See Risk-Based Approach to Examinations, Supervisory 
Highlights Summer 2013 at 23, https://files.consumerfinance.gov/f/201308_cfpb_supervisory-highlights_august.pdf, for additional 
information regarding the CFPB's risk-based approach in prioritizing 
supervisory examinations.
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    As part of the prioritization process, the CFPB identifies emerging 
developments and trends by monitoring key consumer financial markets. 
If this field and market intelligence identifies

[[Page 54787]]

fair lending risks in a particular market, that information is used to 
determine the type and extent of assets applied to address those risks.
    The prioritization process incorporates a number of additional 
factors, including tips and leads from industry whistleblowers, 
advocacy groups, and government agencies; supervisory and enforcement 
history; consumer complaints; and results from analysis of Home 
Mortgage Disclosure Act (HMDA) and other data.
    As a result of its annual risk-based prioritization process, in 
2023 the CFPB focused much of its fair lending supervision efforts on: 
mortgage origination (including redlining, property valuation bias, and 
HMDA and Regulation C compliance); credit card marketing and the use of 
alternative data in digital marketing; and on the use of automated 
systems and models, sometimes marketed as artificial intelligence (AI) 
and machine learning models, in credit card originations.
    As in previous years, the CFPB's 2023 mortgage origination work 
continued to focus on redlining (intentional discrimination against 
applicants and prospective applicants living or seeking credit in 
minority neighborhoods, including by discouragement). The CFPB's 
mortgage work also included assessing potential discrimination in 
mortgage underwriting and pricing processes, including assessing 
whether there were disparities in application, underwriting, and 
pricing processes, and whether there were weaknesses in fair lending-
related compliance management systems. The CFPB's mortgage origination 
work also included reviewing residential property appraisal service 
providers to identify risks that may arise due to potential 
discrimination or bias as well as HMDA data integrity and validation 
reviews.
    The CFPB's credit card work included assessing credit card lenders' 
digital marketing practices relating to credit cards, as well as credit 
card lenders' use of alternative data in that marketing. The CFPB's 
credit card work also included evaluation of automated systems and 
models, sometimes marketed as artificial intelligence and machine 
learning models, used by credit card lenders in credit card 
originations, as well as assessing whether there were disparities in 
application, underwriting, and pricing processes, and whether the 
institutions searched for less discriminatory alternatives to the 
models used.
    Across multiple markets, the CFPB continued to assess whether 
lenders complied with the adverse action notice requirements of the 
Equal Credit Opportunity Act (ECOA) and Regulation B and evaluated 
whether lenders maintain policies and procedures that unlawfully 
exclude property on the basis of geography in underwriting decisions, 
unlawfully exclude certain types of income, and treat criminal history 
in an unlawful manner.

1.2. Fair Lending Enforcement

    Congress authorized the CFPB to bring actions to enforce the 
requirements of eighteen enumerated statutes, including ECOA, HMDA, and 
the Consumer Financial Protection Act of 2010 (CFPA), which prohibits 
unfair, deceptive, and abusive acts or practices. The CFPB is able to 
engage in research, conduct investigations, file administrative 
complaints, hold hearings, and adjudicate claims through the CFPB's 
administrative enforcement process. The CFPB also uses its independent 
litigation authority to file cases in Federal court alleging violations 
of fair lending laws under the CFPB's jurisdiction. Like other Federal 
regulators, the CFPB is required to refer matters to the Department of 
Justice (DOJ) when it has reason to believe that a creditor has engaged 
in a pattern or practice of lending discrimination.\2\
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    \2\ See 15 U.S.C. 1691e(g).
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1.2.1. ECOA-Related Public Enforcement Actions

    In 2023, the CFPB announced two ECOA-related public enforcement 
actions, relating to discrimination on the basis of race and national 
origin, one against Citibank N.A. (Citibank) and the other against 
Colony Ridge Development, LLC, and Colony Ridge BV, LLC, and affiliate 
mortgage company Colony Ridge Land, LLC (collectively, the Colony Ridge 
defendants). For more information on these ECOA-related enforcement 
actions, see section 6.1.2 of this report.

1.2.2. HMDA-Related Public Enforcement Actions

    HMDA, its implementing Regulation C, and Regulation B require 
mortgage lenders to report certain information about loan applications 
and originations to the CFPB and other Federal regulators. HMDA data 
are the most comprehensive source of publicly available information on 
the U.S. mortgage market. Both the public and regulators can use this 
information to monitor whether financial institutions are serving the 
housing needs of their communities, as well as to identify possible 
discriminatory lending patterns.
    In 2023, the CFPB announced public enforcement actions against two 
repeat offenders for reporting false, erroneous, or incorrect HMDA 
data: Freedom Mortgage Corporation (Freedom Mortgage) and Bank of 
America, N.A.
    The CFPB will continue to monitor the rate at which mortgage 
lenders fail to collect and report applicants' demographic information. 
The rate of nonreporting of demographic information has been increasing 
since 2019, potentially compromising the ability of the CFPB and other 
financial regulators, enforcement agencies, academics, other mortgage 
lenders, and civil rights and consumer advocates, to detect and remedy 
redlining, discouragement, and other forms of discrimination in the 
mortgage market. The CFPB's evaluations will include assessments of 
lenders' demographic reporting practices and HMDA compliance systems to 
ensure they are monitoring for inaccurate or incomplete demographic 
information reporting and complying with HMDA.
Freedom Mortgage
    On October 10, 2023, the CFPB filed a lawsuit against Freedom 
Mortgage, a residential mortgage loan originator and servicer, alleging 
that it submitted legally-required mortgage loan data that were riddled 
with errors.\3\ In 2020, Freedom Mortgage reported HMDA data on over 
700,000 applications and originated nearly 400,000 HMDA-reportable 
loans worth almost $100 billion, making it the third largest mortgage 
lender in the United States by origination volume. Freedom Mortgage is 
a repeat offender: at the time the CFPB filed its complaint, Freedom 
was already under a CFPB Consent Order related to previous HMDA 
violations. In 2019, the CFPB issued an order against Freedom finding 
that it intentionally misreported certain HMDA data fields from at 
least 2014 to 2017.\4\ In the CFPB's lawsuit, the CFPB alleges that the 
mortgage loan data for 2020 that Freedom Mortgage submitted contained 
widespread errors across multiple data fields, in violation of HMDA and 
Regulation C. The CFPB's complaint further alleges that by reporting 
inaccurate HMDA mortgage loan data for 2020, Freedom Mortgage also 
violated the 2019 order and the CFPA. The CFPB seeks appropriate 
injunctive relief and a civil money penalty.
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    \3\ See https://www.consumerfinance.gov/enforcement/actions/freedom-mortgage-corporation-hmda-2023/.
    \4\ See https://files.consumerfinance.gov/f/documents/cfpb_freedom-mortgage-corporation_consent-order_2019-05.pdf.

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[[Page 54788]]

Bank of America
    On November 28, 2023, the CFPB issued an order against Bank of 
America for routinely submitting falsified HMDA data.\5\ The CFPB found 
that between 2016 and late 2020, hundreds of Bank of America's loan 
officers failed to ask applicants for their race, ethnicity, and sex, 
as required by law, and instead falsely recorded that the applicants 
chose not to provide this information, in violation of HMDA, Regulation 
C, and the CFPA. The CFPB's order requires Bank of America to pay a $12 
million civil money penalty and to develop policies and procedures to 
ensure compliance with HMDA and Regulation C, including recording and 
auditing phone applications to make sure that HMDA data are accurately 
collected and recorded.
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    \5\ See https://www.consumerfinance.gov/enforcement/actions/bank-of-america-na-hmda-data-2023/.
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1.2.3. ECOA Referrals to Department of Justice

    The CFPB must refer to DOJ any matter when it has reason to believe 
that a creditor has engaged in a pattern or practice of lending 
discrimination in violation of ECOA.\6\ The CFPB may refer other 
potential ECOA violations to DOJ as well.\7\ In 2023, the CFPB referred 
18 matters to DOJ pursuant to 15 U.S.C. 1691e(g). More information on 
these referrals can be found in section 6.1.6 of this report.
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    \6\ 15 U.S.C. 1691e(g).
    \7\ Id.
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1.2.4. Implementing Enforcement Orders

    When an enforcement action is resolved through a public enforcement 
order, the CFPB (together with other government entities, when 
relevant) takes steps to ensure that the respondent or defendant 
complies with the requirements of the order. Depending on the specific 
requirements of individual public enforcement orders, the CFPB may take 
steps to ensure that borrowers who are eligible for compensation 
receive remuneration and that the defendant has complied with the 
injunctive provisions of the order, including implementing a 
comprehensive fair lending compliance management system.

1.3. Fair Lending Supervision

    The CFPB's Supervision program assesses compliance with Federal 
consumer financial protection laws and regulations at banks and 
nonbanks over which the CFPB has supervisory authority. As a result of 
the CFPB's efforts to fulfill its fair lending mission during 2023, the 
CFPB initiated 28 fair lending examinations or targeted reviews.
    In 2023, two of the most frequently identified fair lending issues 
in supervisory communications related to the granting of pricing 
exceptions and HMDA violations.
    In 2023, the CFPB issued several fair lending-related Matters 
Requiring Attention and entered Memoranda of Understanding directing 
entities to take corrective actions that the CFPB will monitor through 
follow-up supervisory actions. In these communications, the CFPB 
directed mortgage lenders to correct violations relating to redlining, 
including by institutions providing consumer remediation designed to 
spur lending in redlined areas. The CFPB also directed lenders to 
enhance their fair lending compliance management systems in several 
ways, including by directing institutions to, when testing and 
approving credit scoring models, document the specific business needs 
the models serve, as well as document specific standards for assessing 
whether a model serves each stated business need. Further, the CFPB 
also directed the institutions to test credit scoring models for 
prohibited basis disparities and to require documentation of 
considerations the institutions will give to how to assess those 
disparities against the stated business needs. To ensure compliance 
with ECOA and Regulation B, institutions were directed to develop a 
process for the consideration of a range of less discriminatory models. 
Additionally, institutions were directed to test and validate the 
methodologies used to identify principal reasons in adverse action 
notices required under ECOA and Regulation B. Finally, institutions 
were directed to implement policies, procedures, and controls designed 
to effectively manage HMDA compliance, including regarding integrity of 
data collection.
    During 2023, informed by the Director's priority to address risks 
of consumer harm from advanced and emerging technologies in consumer 
finance, the CFPB continued to increase its technical capacity and 
analyses to ensure that the use of this technology does not pose risks 
to consumers or violate Federal consumer financial law.

2. Rulemaking and Guidance

2.1. Rulemaking

    During 2023, the CFPB issued a final rule on small business lending 
data collection and issued a notice of proposed rulemaking on automated 
valuation models (AVMs).
    The CFPB publishes an agenda of its planned rulemaking activity 
biannually, which is available at: https://www.consumerfinance.gov/rules-policy/regulatory-agenda.

2.1.1. Small Business Lending Data Collection Rulemaking

    In section 1071 of the Dodd-Frank Act, Congress directed the CFPB 
to adopt regulations governing the collection of small business lending 
data.\8\ Section 1071 amended ECOA to require financial institutions to 
compile, maintain, and submit to the CFPB certain data on applications 
for credit for women-owned, minority-owned, and small businesses.
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    \8\ 15 U.S.C. 1691c-2.
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    Congress enacted section 1071 for the purpose of facilitating 
enforcement of fair lending laws and enabling communities, governmental 
entities, and creditors to identify business and community development 
needs and opportunities for women-owned, minority-owned, and small 
businesses.
    On March 30, 2023, the CFPB issued a final rule amending Regulation 
B to implement changes to ECOA made by section 1071 of the Dodd-Frank 
Act.\9\ Consistent with section 1071, covered financial institutions 
are required to collect and report to the CFPB data on applications for 
credit for small businesses, including those that are owned by women or 
minorities. The rule also addresses the CFPB's approach to privacy 
interests and the publication of section 1071 data; shielding certain 
demographic data from underwriters and other persons; recordkeeping 
requirements; enforcement provisions; and the rule's effective and 
compliance dates.
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    \9\ CFPB, Small Business Lending under the Equal Credit 
Opportunity Act (Regulation B) (Mar. 30, 2023), https://www.consumerfinance.gov/rules-policy/final-rules/small-business-lending-under-the-equal-credit-opportunity-act-regulation-b/.
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    In light of court orders in ongoing litigation, the CFPB has 
announced plans to extend the compliance dates in the small business 
lending rule.\10\ More information about pending litigation is 
contained in section 5 of this report.
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    \10\ More information is available at: https://www.consumerfinance.gov/1071-rule/, a page compiling key materials 
related to the CFPB's small business rulemaking, including 
information on the interim final rule to extend compliance 
deadlines.
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2.1.2. Automated Valuation Models Rulemaking

    On June 1, 2023, the CFPB, along with its interagency partners, the 
Board of Governors of the Federal Reserve System (FRB), Office of the 
Comptroller of the Currency (OCC), Federal Deposit Insurance 
Corporation (FDIC), National

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Credit Union Administration (NCUA), and Federal Housing Finance Agency 
(FHFA) (collectively, the Agencies) requested public comment on a 
proposed rule designed to ensure the credibility and integrity of 
models used in real estate valuations.\11\ In particular, the proposed 
rule would implement quality control standards for AVMs used by 
mortgage originators and secondary market issuers in valuing real 
estate collateral securing mortgage loans. AVMs are used as part of the 
real estate valuation process, driven in part by advances in database 
and modeling technology and the availability of larger property 
datasets. While advances in AVM technology and data availability have 
the potential to contribute to lower costs and reduce loan cycle times, 
it is important that institutions using AVMs take appropriate steps to 
ensure the credibility and integrity of their valuations. It is also 
important that the AVMs that institutions are using adhere to quality 
control standards designed to comply with applicable nondiscrimination 
laws.
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    \11\ CFPB, OCC, FHFA, FRB, FDIC, NCUA. Quality Control Standards 
for Automated Valuation Models (June 1, 2023), https://files.consumerfinance.gov/f/documents/cfpb_automated-valuation-models_proposed-rule-request-for-comment_2023-06.pdf.
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    The proposed standards are designed to ensure a high level of 
confidence in the estimates produced by AVMs; help protect against the 
manipulation of data; seek to avoid conflicts of interest; require 
random sample testing and reviews; and promote compliance with 
applicable nondiscrimination laws.
    The comment period for the proposed rule closed on August 21, 2023.

2.2. Guidance

    The CFPB issues guidance to its various stakeholders in many forms, 
including Consumer Financial Protection Circulars (Circulars), advisory 
opinions, interpretive rules, statements, bulletins, publications such 
as Supervisory Highlights.

2.2.1. Proposed Interagency Guidance on Reconsiderations of Value for 
Residential Real Estate Valuations

    On June 8, 2023, the CFPB, along with FRB, FDIC, NCUA, and OCC 
requested public comment on proposed guidance addressing 
reconsiderations of value (ROV) for residential real estate 
transactions.\12\ ROVs are requests from a financial institution to an 
appraiser or other preparer of a valuation report to reassess the value 
of residential real estate. A ROV may be warranted if a consumer 
provides information to a financial institution about potential 
deficiencies or other information that may affect the estimated value. 
The proposed guidance advises on policies that financial institutions 
may implement to allow consumers to provide financial institutions with 
information that may not have been considered during an appraisal, or 
if deficiencies are identified in the original appraisal.
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    \12\ CFPB, OCC, FRB, FDIC, NCUA, Interagency Guidance on 
Reconsideration of Value of Residential Real Estate Valuations (June 
8, 2023), https://files.consumerfinance.gov/f/documents/cfpb_interagency-guidance-reconsiderations-of-value-of-residential-real-estate_2023-06.pdf.
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    The comment period for the proposed guidance closed on September 
19, 2023.

2.2.2. Consumer Financial Protection Circular 2023-03: Adverse Action 
Notification Requirements and the Proper Use of the CFPB's Sample Forms 
Provided in Regulation B

    On September 19, 2023, the CFPB released a circular pertaining to 
certain legal requirements that lenders must adhere to, including when 
using artificial intelligence and other complex models.\13\ The 
circular describes how, under ECOA and Regulation B, lenders must make 
available to an applicant a statement of specific and accurate reasons 
when taking adverse action against the applicant and cannot simply use 
the CFPB sample adverse action forms and checklists if they do not 
reflect the actual reason for the denial of credit or other adverse 
action. This requirement is especially important with the growth of 
advanced algorithms and personal consumer data in credit underwriting. 
The legal requirement to explain the reasons for adverse actions helps 
improve consumers' chances for future credit and protect consumers from 
illegal discrimination and serve an educational role, allowing 
consumers to understand the reasons for a creditor's action and take 
steps to improve their credit status or rectify mistakes made by 
creditors.
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    \13\ CFPB, Consumer Financial Protection Circular 2023-03 
Adverse action notification requirements and the proper use of the 
CFPB's sample forms provided in Regulation B (Sept. 19. 2023), 
https://www.consumerfinance.gov/compliance/circulars/circular-2023-03-adverse-action-notification-requirements-and-the-proper-use-of-the-cfpbs-sample-forms-provided-in-regulation-b/.
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2.2.3. Coverage of Franchise Financing Under ECOA, Including the Small 
Business Lending Rule

    On June 5, 2023, the CFPB published a document affirming the extent 
to which ECOA and Regulation B apply with respect to franchisees 
seeking credit to finance their businesses.\14\ Franchising is a 
significant portion of the small business ecosystem, and franchisees 
generally obtain credit either directly from the franchisor or from 
third party finance companies, which could be independent of the 
franchisor or brokered by or affiliated with the franchisor. These 
financing arrangements are likely ``credit'' and ``business credit'' 
under ECOA and Regulation B.
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    \14\ CFPB, Coverage of Franchise Financing Under the Equal 
Credit Opportunity Act, Including the Small Business Lending Rule 
(May 2023), https://files.consumerfinance.gov/f/documents/cfpb_coverage-of-franchise-financing_2023-05.pdf.
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2.2.4. Supervisory Highlights

    The CFPB's Supervisory Highlights reports provide general 
information about the CFPB's supervisory activities at banks and 
nonbanks without identifying specific entities. These reports 
communicate the CFPB's key examination findings and operational changes 
to the CFPB's supervision program. In 2023, the CFPB published three 
issues of Supervisory Highlights.\15\
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    \15\ CFPB Issue 29, Junk Fees Special Edition, Winter 2023; 
Issue 30, Summer 2023; Issue 31, Junk Fees Update Special Edition 
Fall 2023.
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    The CFPB released the 30th edition of Supervisory Highlights on 
July 26, 2023, which covered examinations completed between July 1, 
2022, and March 31, 2023.\16\ This report included findings of ECOA and 
Regulation B violations in several areas, including pricing 
discrimination and discriminatory lending restrictions. Specifically, 
examiners found that mortgage lenders violated ECOA and Regulation B by 
discriminating in the incidence of granting pricing exceptions for 
competitive offers across a range of ECOA-protected characteristics, 
including race, national origin, sex, and age.
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    \16\ CFPB, Issue 30, Summer 2023 (July 31, 2023), https://files.consumerfinance.gov/f/documents/cfpb_supervisory-highlights_issue-30_2023-07.pdf.
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    Additionally, this edition detailed examiners' findings on certain 
lending restrictions, including how lenders handled the treatment of 
applicants' criminal records. The use of criminal history in credit 
decisioning may create a heightened risk of violating ECOA and 
Regulation B. In this review, examiners uncovered risky policies and 
procedures relating to the use of criminal history information at 
several institutions in several areas of credit, including mortgage 
origination, auto lending, and credit cards, but most notably within 
small business lending.
    Further, examiners identified institutions improperly treating 
income derived from public assistance. In some instances, lenders 
imposed stricter standards on income derived from public assistance 
programs, while in

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other instances, institutions excluded income derived from certain 
public assistance programs.
    In 2023, the CFPB issued two other editions of Supervisory 
Highlights, which pertained specifically to junk fees.
    All issues of Supervisory Highlights are available at: https://www.consumerfinance.gov/compliance/supervisory-highlights/.

2.2.5. HMDA Guidance and Resources

    Given the importance of accurate HMDA data, including to the CFPB's 
fair lending mission and for transparency in the mortgage market, the 
CFPB maintains a comprehensive suite of resources on its public website 
to help filers fulfill their reporting requirements under HMDA and 
Regulation C and to allow others to evaluate and study mortgage 
lending. A complete accounting of the CFPB's materials for HMDA data 
users and filers can be found in Appendix A of this report.

3. Stakeholder Engagement

    The CFPB engages with external stakeholders, including Tribal 
governments, consumer advocates, civil rights organizations, industry, 
academia, and other government agencies. This engagement comes in 
varied forms, including disseminating the CFPB's work and policy 
priorities through blogs, press releases, or speeches, as well as 
reaching out directly to advocates and consumers through website 
updates and social media. The CFPB also regularly issues research and 
reports analyzing data and market conditions. To further an all-of-
government approach to fair lending enforcement, the CFPB also 
participates in several interagency groups.

3.1. Promoting and Broadcasting the Fair Lending and Access to Credit 
Mission

3.1.1. CFPB Blog Posts, Press Releases, and Other Communications

    The CFPB regularly uses blog posts, statements, press releases, 
guides, brochures, social media, media interviews, and other tools to 
timely and effectively communicate with stakeholders.
    In 2023, the CFPB published numerous blog posts relating to fair 
lending topics, including: the joint letter sent to The Appraisal 
Foundation, urging it to revise its draft ethics rule; \17\ the CFPB's 
Statement of Interest filed in Connolly & Mott v. Lanham et al. and the 
CFPB's commitment to ensuring fair and accurate appraisals; \18\ the 
CFPB's Statement of Interest filed in Roberson v. Health Career 
Institute LLC; \19\ an interagency proposed rulemaking on AVMs; \20\ a 
blog explaining how chatbots, including those supported by large 
language models and those marketed as AI can fail to provide adequate 
customer service; \21\ the CFPB's Amicus brief in Saint-Jean v. 
Emigrant Mortgage Company; \22\ the publication of the 2022 Annual Fair 
Lending Report to Congress; \23\ the CFPB's initiative to better 
understand the financial experiences of immigrants in the United 
States; \24\ and the Appraisal Subcommittee's November 1 public hearing 
to discuss the challenges and solutions to preventing bias in the home 
appraisal process.\25\
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    \17\ Patrice Alexander Ficklin and Tim Lambert, Appraisal 
standards must include federal prohibitions against discrimination 
(Feb. 14, 2023), https://www.consumerfinance.gov/about-us/blog/appraisal-standards-must-include-federal-prohibitions-against-discrimination.
    \18\ Seth Frotman, Zixta Q. Martinez, and Jon Seward, Protecting 
homeowners from discriminatory home appraisals, (Mar. 13, 2023), 
https://www.consumerfinance.gov/about-us/blog/protecting-homeowners-from-discriminatory-home-appraisals/.
    \19\ Seth Frotman, Protecting people from discriminatory 
targeting (Apr. 14, 2023), https://www.consumerfinance.gov/about-us/blog/protecting-people-from-discriminatory-targeting/.
    \20\ Rohit Chopra, Algorithms, artificial intelligence, and 
fairness in home appraisals (June 1, 2023), https://www.consumerfinance.gov/about-us/blog/algorithms-artificial-intelligence-fairness-in-home-appraisals/.
    \21\ Eric Halperin and Lorelei Salas, The CFPB has entered the 
chat (June 7, 2023), https://www.consumerfinance.gov/about-us/blog/cfpb-has-entered-the-chat/.
    \22\ Seth Frotman, Protecting consumers' right to challenge 
discrimination (June 26, 2023), https://www.consumerfinance.gov/about-us/blog/protecting-consumers-right-to-challenge-discrimination/.
    \23\ Patrice Alexander Ficklin, The CFPB's 2022 fair lending 
annual report to congress (June 29, 2023), https://www.consumerfinance.gov/about-us/blog/the-cfpbs-2022-fair-lending-annual-report-to-congress/.
    \24\ Sonia Lin, Protecting immigrant access to fair credit 
opportunities, (Oct. 12, 2023), https://www.consumerfinance.gov/about-us/blog/protecting-immigrant-access-to-fair-credit-opportunities/.
    \25\ CFPB, Next public hearing on appraisal bias: November 1 
(Oct. 23, 2023), https://www.consumerfinance.gov/about-us/blog/next-public-hearing-on-appraisal-bias-november-1/.
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    The CFPB also issued several press releases relating to fair 
lending topics, including announcements regarding: the availability of 
the 2022 HMDA modified loan application register data; \26\ the 
finalization of the small business lending rule,\27\ the issuance of a 
joint statement confirming that automated systems and advanced 
technology is not an excuse for law-breaking behavior; \28\ the 
publication of the proposed AVM rule and request for public comment; 
\29\ an issue spotlight on AI chatbots in banking; \30\ the publication 
of two new reports on the financial opportunities and challenges facing 
Southern communities; \31\ the availability of 2022 HMDA data; \32\ a 
roundtable on special purpose credit programs (SPCPs); \33\ the 
issuance of Consumer Financial Protection Circular 2023-03, Adverse 
action notification requirements and the proper use of the CFPB's 
sample forms provided in Regulation B; \34\ the Freedom Mortgage 
enforcement action for reporting allegedly erroneous data under HMDA; 
\35\ the issuance of the CFPB and DOJ's joint statement reminding 
financial institutions that all credit applicants are protected from

[[Page 54791]]

discrimination on the basis of race, national origin, race, and other 
characteristics covered by ECOA, regardless of their immigration 
status; \36\ the publication of a new analysis on State Community 
Reinvestment Act (CRA) laws, highlighting how states ensure financial 
institutions' lending, services, and investment activities meet the 
credit needs of their communities; \37\ the Citibank enforcement 
action; \38\ the Bank of America enforcement action; \39\ and the 
Colony Ridge enforcement action.\40\
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    \26\ CFPB, 2022 HMDA Data on Mortgage Lending Now Available 
(Mar. 20, 2023), https://www.consumerfinance.gov/about-us/newsroom/2022-hmda-data-on-mortgage-lending-now-available/.
    \27\ CFPB, CFPB Finalizes Rule to Create a New Data Set on Small 
Business Lending in America (Mar. 30, 2023), https://www.consumerfinance.gov/about-us/newsroom/cfpb-finalizes-rule-to-create-a-new-data-set-on-small-business-lending-in- america/.
    \28\ CFPB, CFPB and Federal Partners Confirm Automated Systems 
and Advanced Technology Not an Excuse for Lawbreaking Behavior (Apr. 
25, 2023), https://www.consumerfinance.gov/about-us/newsroom/cfpb-federal-partners-confirm-automated-systems-advanced-technology-not-an-excuse-for-lawbreaking-behavior/.
    \29\ CFPB, Agencies Request Comment on Quality Control Standards 
for Automated Valuation Models Proposed Rule (June 1, 2023), https://www.consumerfinance.gov/about-us/newsroom/agencies-request-comment-on-quality-control-standards-for-automated-valuation-models-proposed-rule.
    \30\ CFPB, CFPB Issue Spotlight Analyzes ``Artificial 
Intelligence'' Chatbots in Banking (June 6, 2023), https://www.consumerfinance.gov/about-us/newsroom/cfpb-issue-spotlight-analyzes-artificial-intelligence-chatbots-in-banking/.
    \31\ CFPB, CFPB Releases Reports on Banking Access and Consumer 
Finance in Southern States (June 20, 2023), https://www.consumerfinance.gov/about-us/newsroom/cfpb-releases-reports-on-banking-access-and-consumer-finance-in-southern-states/.
    \32\ CFPB, FFIEC Announces Availability of 2022 Data on Mortgage 
Lending (June 29, 2023), https://www.consumerfinance.gov/about-us/newsroom/ffiec-announces-availability-of-2022-data-on-mortgage-lending/.
    \33\ CFPB, Agencies to Host Roundtable on Special Purpose Credit 
Programs (Aug. 24, 2023), https://www.consumerfinance.gov/about-us/newsroom/agencies-to-host-roundtable-on-special-purpose-credit-programs/.
    \34\ CFPB, CFPB Issues Guidance on Credit Denials by Lenders 
Using Artificial Intelligence (Sept. 19, 2023), https://www.consumerfinance.gov/about-us/newsroom/cfpb-issues-guidance-on-credit-denials-by-lenders-using-artificial-intelligence/.
    \35\ CFPB, CFPB Sues Repeat Offender Freedom Mortgage 
Corporation for Providing False Information to Federal Regulators 
(Oct. 10, 2023), https://www.consumerfinance.gov/about-us/newsroom/cfpb-sues-repeat-offender-freedom-mortgage-corporation-for-providing-false-information-to-federal-regulators/.
    \36\ CFPB, CFPB and Justice Department Issue Joint Statement 
Cautioning that Financial Institutions May Not Use Immigration 
Status to Illegally Discriminate Against Credit Applicants (Oct. 12, 
2023), https://www.consumerfinance.gov/about-us/newsroom/cfpb-and-justice-department-issue-joint-statement-cautioning-that-financial-institutions-may-not-use-immigration-status-to-illegally-discriminate-against-credit-applicants/.
    \37\ CFPB, CFPB Issues New Report on State Community 
Reinvestment Laws (Nov. 2, 2023), https://www.consumerfinance.gov/about-us/newsroom/cfpb-issues-new-report-on-state-community-reinvestment-laws/.
    \38\ CFPB, CFPB Orders Citi to Pay $25.9 Million for 
Intentional, Illegal Discrimination Against Armenian Americans (Nov. 
8, 2023), https://www.consumerfinance.gov/about-us/newsroom/cfpb-orders-citi-to-pay-25-9-million-for-intentional-illegal-discrimination-against-armenian- americans/.
    \39\ CFPB, CFPB Orders Bank of America to Pay $12 Million for 
Reporting False Mortgage Data (Nov. 28, 2023), https://www.consumerfinance.gov/about-us/newsroom/cfpb-orders-bank-of-america-to-pay-12-million-for-reporting-false-mortgage-data/.
    \40\ CFPB, CFPB and Justice Department Sue Developer and Lender 
Colony Ridge for Bait-and-Switch Land Sales and Predatory Financing 
(Dec. 20, 2023), https://www.consumerfinance.gov/about-us/newsroom/cfpb-and-doj-sue-developer-and-lender-colony-ridge-for-bait-and-switch-land-sales-and-predatory-financing/.
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3.1.2. CFPB Engagements With Stakeholders

    The CFPB often engages directly with external stakeholders to 
inform the CFPB's policy developments and message the CFPB's priorities 
and recent work. In 2023, CFPB staff participated in 69 stakeholder 
engagements related to fair lending and access to credit issues. 
Through speeches, presentations, podcasts, roundtables, webinars, and 
other smaller discussions on fair lending topics, the CFPB strives to 
keep abreast of economic and market realities that impact the lives of 
individuals, small businesses, and communities the CFPB is charged with 
protecting.
    Throughout 2023, numerous engagements centered around the use of 
advanced technologies including their use in discriminatory targeting, 
consumer surveillance, and digital redlining; redlining; discrimination 
on the basis of receipt of public assistance income; false and 
erroneous HMDA data reporting; student lending; and credit reporting.

3.2. Data and Reports

3.2.1. State Community Reinvestment Act: Summary of State Laws

    On November 2, 2023, the CFPB published a new analysis of state-
specific versions of CRA laws, highlighting how States ensure financial 
institutions' lending, services, and investment activities meet the 
credit needs of their communities. Many States adopted laws similar to 
the Federal CRA in the decades following the 1977 passage of the 
landmark Federal anti-redlining law. The report examined the laws of 
seven States (Connecticut, Illinois, Massachusetts, New York, Rhode 
Island, Washington, West Virginia) and the District of Columbia, and 
found that data collected by Federal agencies, such as HMDA, are often 
used for State CRA compliance and other oversight purposes.\41\
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    \41\ CFPB, State Community Reinvestment Act: Summary of State 
Laws (Nov. 2, 2023), https://www.consumerfinance.gov/data-research/research-reports/state-community-reinvestment-acts-summary-of-state-laws/.
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3.2.2. Banking and Credit Access in the Southern Region of the United 
States

    On June 21, 2023, the CFPB published a data spotlight, Banking and 
Credit Access in the Southern Region of the U.S.\42\ Spanning the 
States of Alabama, Arkansas, Georgia, Louisiana, Mississippi, North 
Carolina, South Carolina, and Tennessee, this report seeks to identify 
gaps as well as opportunities to increase financial access in the 
region, particularly through branch presence and bank account access, 
and capital access such as mortgage lending and small business lending. 
The analysis looks at trends by State, the region as a whole, and 
differences between rural and non-rural areas. Utilizing HMDA data, the 
analysis also identified differences for mortgage originations and 
denials by race and ethnicity in both rural and non-rural communities.
---------------------------------------------------------------------------

    \42\ CFPB, Banking and Credit Access in the Southern Region of 
the U.S. (June 21, 2023), https://files.consumerfinance.gov/f/documents/cfpb_ocp-data-spotlight_banking-and-credit-access_2023-06.pdf.
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3.2.3. Consumer Finances in Rural Areas of the Southern Region

    On June 21, 2023, the CFPB published a data spotlight, Consumer 
Finances in Rural Areas of the Southern Region.\43\ This report is the 
second in a series profiling the finances of consumers in rural 
communities. Nearly 48 million people live in the southern region 
examined in this report, which includes Alabama, Arkansas, Georgia, 
Louisiana, Mississippi, North Carolina, South Carolina, and Tennessee. 
Intended to provide a starting point in better understanding the 
financial lives of consumers in rural areas of the southern United 
States, this report takes a broad survey of consumer financial 
profiles, including credit scores, financial distress, medical debt, 
and other debt categories and compares profiles of consumers in the 
rural South to those in other geographies. Among other things, the 
report examines originations for auto loans by credit score and 
majority-minority census tracts, by State and for the region as a 
whole.
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    \43\ CFPB, Consumer Finances in Rural Areas of the Southern 
Region (June 21, 2023), https://files.consumerfinance.gov/f/documents/cfpb_or-data-point_consumer-finances-in-rural-south_2023-06.pdf.
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3.2.4. Availability of 2022 HMDA Data

    On March 20, 2023, the CFPB announced the initial availability of 
the 2022 HMDA modified loan application register data on the Federal 
Financial Institutions Examination Council's (FFIEC) HMDA Platform for 
approximately 4,394 HMDA filers.\44\ These published data contain loan-
level information filed by financial institutions, modified to protect 
consumer privacy.\45\
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    \44\ CFPB, 2021 HMDA Data on Mortgage Lending Now Available 
(Mar. 20, 2023), https://www.consumerfinance.gov/about-us/newsroom/2022-hmda-data-on-mortgage-lending-now-available/.
    \45\ Additional activity has occurred since the close of this 
reporting period. On March 26, 2024, the CFPB announced the 
availability of the HMDA modified loan application data for 2023, 
available at https://ffiec.cfpb.gov/data-publication/modified-lar/2023.
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    On June 29, 2023, the FFIEC announced the availability of static 
``Snapshot'' HMDA data, a static dataset of 2022 mortgage lending 
transactions at 4,460 financial institutions reported under HMDA as of 
May 1, 2023.\46\ These data include a total of 48 data points providing 
information about the applicants, the property securing the loan or 
proposed to secure the loan in the case of non-originated applications, 
the transaction, and identifiers.
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    \46\ CFPB, FFIEC Announces Availability of 2022 Data on Mortgage 
Lending (June 29, 2023), https://www.consumerfinance.gov/about-us/newsroom/ffiec-announces-availability-of-2022-data-on-mortgage-lending/.
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3.2.5. Report on the Home Mortgage Disclosure Act Rule Voluntary Review

    On March 3, 2023, the CFPB published a report containing the 
findings of the CFPB's voluntary review of the CFPB's final HMDA rule 
(issued in October 2015) and related

[[Page 54792]]

amendments (collectively, the HMDA Rule).\47\ The report analyzed, 
among other key issues, how changes in reporting thresholds and other 
amendments affected HMDA data coverage and the available data on the 
supply over time of open-ended lines of credit and closed-end mortgage 
loans; how new or revised HMDA data points have contributed to 
predicting underwriting and pricing outcomes; and how revised and 
expanded reporting of race and ethnicity helped provide additional data 
on subpopulation groups in the residential mortgage market.
---------------------------------------------------------------------------

    \47\ CFPB, Report on the Home Mortgage Disclosure Act Rule 
Voluntary Review (Mar. 3, 2023), https://files.consumerfinance.gov/f/documents/cfpb_hmda-voluntary-review_2023-03.pdf.
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3.2.6. Data Point: 2022 Mortgage Market Activity and Trends

    On September 27, 2023, the CFPB released its annual report on 
residential mortgage lending activity and trends for 2022.\48\ The 
report shows that in 2022, mortgage applications and originations 
declined markedly from the prior year, while rates, fees, discount 
points, and other costs increased. Overall affordability declined 
significantly, with borrowers spending more of their income on mortgage 
payments and lenders more often denying applications for insufficient 
income. Most refinances during the reported period were cash-out 
refinances, and, in a reversal of recent trends, the median credit 
score of refinance borrowers declined below the median credit score of 
purchase borrowers. As in years past, independent lenders continued to 
dominate home mortgage lending, with the exception of home equity lines 
of credit.
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    \48\ CFPB, Data Point: 2022 Mortgage Market Activity and Trends 
(Sept. 27, 2022), https://www.consumerfinance.gov/data-research/research-reports/data-point-2022-mortgage-market-activity-trends/.
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4. Interagency Engagement

    The CFPB regularly coordinates with other Tribal, Federal, State, 
county, municipal, and international government entities; policymakers; 
and the organizations that represent them regarding current and 
emerging fair lending risks. Through numerous interagency organizations 
and taskforces, the CFPB coordinated its 2023 fair lending regulatory, 
supervisory, and enforcement activities to promote consistent, 
efficient, and effective enforcement of Federal fair lending laws.
    The CFPB, along with the Department of Housing and Urban 
Development (HUD), Federal Trade Commission (FTC), FDIC, FRB, NCUA, 
OCC, DOJ, and FHFA, constitute the Interagency Task Force on Fair 
Lending. This 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. In 2023, the NCUA was the Chair of this Task Force.
    Through the FFIEC, the CFPB has robust engagements with other 
partner agencies that focus on fair lending issues. For example, 
throughout the reporting period, the CFPB has continued to chair the 
HMDA and CRA Data Collection Subcommittee, a subcommittee of the FFIEC 
Task Force on Consumer Compliance. This subcommittee oversees FFIEC 
projects and programs involving HMDA data collection and dissemination, 
the preparation of the annual FFIEC budget for processing services, and 
the development and implementation of other related HMDA processing 
projects as directed by this Task Force.
    Together with DOJ, HUD, and FTC, the CFPB also participates in the 
Interagency Working Group on Fair Lending Enforcement, a standing 
working group of Federal agencies that meets regularly to discuss 
issues relating to fair lending enforcement. The agencies use these 
meetings to also discuss fair lending developments and trends, 
methodologies for evaluating fair lending risks and violations, and 
coordination of fair lending enforcement efforts.
    As required by section 1022 of the Dodd-Frank Act, the CFPB also 
consults with other agencies as part of its rulemaking process.\49\ For 
example, in 2023, while developing its small business lending data 
collection final rule, the CFPB consulted or offered to consult with 
FRB, FDIC, NCUA, OCC, HUD, DOJ, FTC, the Department of Agriculture, the 
Department of the Treasury, the Economic Development Administration, 
the Farm Credit Administration (FCA), the Financial Crimes Enforcement 
Network, and the Small Business Administration (SBA) including, among 
other things, on consistency with any prudential, market, or systemic 
objectives administered by such agencies.
---------------------------------------------------------------------------

    \49\ 12 U.S.C. 5512.
---------------------------------------------------------------------------

    In addition to the established interagency organizations, CFPB 
personnel meet regularly with personnel from other agencies, including 
with DOJ, HUD, FTC, FHFA, State Attorneys General, and the prudential 
regulators to coordinate and discuss the CFPB's fair lending work.

4.1. Special Purpose Credit Program Interagency Roundtable

    On September 12, 2023, the CFPB, along with HUD, OCC, and FHFA 
hosted a roundtable discussion on SPCPs.\50\ In addition to remarks by 
the respective leaders of the participating agencies, the event 
included a roundtable discussion with representatives from community 
groups and trade organizations that are focused on the opportunities 
and benefits of SPCPs. The event was open to the public via livestream.
---------------------------------------------------------------------------

    \50\ CFPB, Agencies to Host Roundtable on Special Purpose Credit 
Programs, (Aug. 24, 2023), https://www.consumerfinance.gov/about-us/newsroom/agencies-to-host-roundtable-on-special-purpose-credit-programs/.
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4.2. Joint Statements

    On April 25, 2023, the CFPB, along with DOJ, Equal Employment 
Opportunity Commission, and FTC issued a joint statement committing to 
enforcement efforts against discrimination and bias in automated 
systems.\51\ In the statement, all four agencies resolved to vigorously 
enforce their collective authorities and to monitor the development and 
use of automated systems, including those sometimes marketed as AI.
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    \51\ CFPB; Dept. of Justice Civil Rights Div.; Equal Opportunity 
Comm'n; Federal Trade Comm'n; Joint Statement on Enforcement Efforts 
Against Discrimination and Bias in Automated Systems, (Apr. 25, 
2023), https://files.consumerfinance.gov/f/documents/cfpb_joint-statement-enforcement-against-discrimination-bias-automated-systems_2023-04.pdf.
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    On October 12, 2023, the CFPB along with DOJ, issued a joint 
statement reminding financial institutions that, while ECOA and 
Regulation B do not expressly prohibit consideration of immigration 
status, they prohibit creditors from using immigration status to 
discriminate on the basis of national origin, race, or any other 
characteristic covered by ECOA.\52\
---------------------------------------------------------------------------

    \52\ CFPB; Dept. of Justice Civil Rights Div. Joint Statement on 
Fair Lending and Credit Opportunities for Noncitizen Borrowers under 
the Equal Credit Opportunity Act (Oct. 12, 2023), https://files.consumerfinance.gov/f/documents/cfpb-joint-statement-on-fair-lending-and-credit-opportunities-for-noncitizen-b_jA2oRDf.pdf.
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4.3. Appraisal Bias

    Appraisal bias is a key fair lending priority of the CFPB. 
Throughout 2023, the CFPB has been very active with its interagency 
partners to advance work to combat appraisal bias through the FFIEC 
Appraisal Subcommittee (ASC), correspondence, court briefs, proposed 
guidance, and work of the Property

[[Page 54793]]

Appraisal and Valuation Equity Task Force.
    The ASC comprises designees from the CFPB and certain other Federal 
agencies, including FDIC, HUD, FRB, OCC, NCUA, and FHFA, and is tasked 
with providing Federal oversight of State appraiser and appraisal 
management company regulatory programs, as well as a monitoring and 
reviewing framework for The Appraisal Foundation, the private, 
nongovernmental organization that sets appraisal standards. CFPB Deputy 
Director Zixta Martinez currently serves as the Chairperson of the ASC. 
Through the ASC, the CFPB addresses topics including discriminatory 
bias in home appraisals.
    The ASC held its first-ever hearing about appraisal bias on January 
24, 2023. The hearing served to raise awareness of the issue of 
appraisal bias by focusing on its scope and impact, and to provide 
information on the role of the ASC in the appraisal regulatory system. 
On May 19, 2023, the ASC held its second public hearing, which explored 
the appraisal regulatory system and focused on appraisal standards, 
appraiser qualification criteria and barriers to entry into the 
profession, appraisal practice, and State regulation. The ASC held its 
third public hearing on November 1, 2023, which discussed how a 
residential appraisal is developed and reviewed, the ROV process for 
residential real estate valuations, and the development of rural 
appraisals. These hearings were the first three in a series of four 
planned hearings relating to appraisal bias.
    On February 14, 2023, senior officials from the CFPB, FDIC, HUD, 
NCUA, FRB, DOJ, OCC, and FHFA submitted a joint letter to The Appraisal 
Foundation. The letter urged The Appraisal Foundation to revise its 
draft Ethics Rule for appraisers to include a detailed statement of 
Federal prohibitions against discrimination that exist under the FHA 
and ECOA. The agencies expressed concern that some appraisers may be 
unaware of these prohibitions and, of particular concern, that the 
draft Ethics Rule emphasized that ``[a]n appraiser must not engage in 
unethical discrimination,'' implying that appraisers may engage in 
``ethical'' discrimination, a concept foreign to current law and 
practice.
    On March 13, 2023, the CFPB filed a joint statement of interest 
with DOJ in Connolly & Mott v. Lanham et al., explaining the 
application of the FHA and ECOA to lenders relying on discriminatory 
home appraisals. For more information on this statement of interest, 
see section 5.1 of this report.
    On June 1, 2023, the CFPB, in conjunction with the FRB, FDIC, FHFA, 
NCUA, and OCC, proposed a rule regarding quality control standards for 
AVMs. For more information on this rulemaking, see section 2.1.2 of 
this report.
    On June 8, 2023, the CFPB, in conjunction with the FRB, FDIC, NCUA, 
and OCC, requested public comment on proposed guidance addressing ROV 
for residential real estate transactions. The proposed guidance would 
advise on policies that financial institutions may implement to allow 
consumers to provide financial institutions with information that may 
not have been considered during an appraisal or if deficiencies are 
identified in the original appraisal. For more information on this 
proposed guidance, see section 2.2.1 of this report.
    In 2023, the CFPB also continued to engage with other agencies on 
issues of bias in home appraisals through the Interagency Task Force on 
Property Appraisal and Valuation Equity. More information on this Task 
Force is available at https://pave.hud.gov.

5. Amicus Program and Other Litigation

5.1. Amicus Briefs and Statements of Interest

    The CFPB files amicus, or ``friend-of-the-court,'' briefs in 
significant court cases concerning Federal consumer financial 
protection laws, including cases involving ECOA. These briefs provide 
courts with the CFPB's views and help ensure that consumer financial 
protection statutes are correctly and consistently interpreted. In 
2023, the CFPB filed two fair lending related amicus briefs and a 
statement of interest.
    On June 23, 2023, the CFPB filed an amicus brief in Saint-Jean et 
al. v. Emigrant Mortgage Co. & Emigrant Bank in support of Plaintiffs 
who won a jury verdict against Emigrant Mortgage Company and Emigrant 
Bank (Emigrant) for violating ECOA.\53\ The jury found that Emigrant 
had for years targeted Black and Latino borrowers and neighborhoods in 
New York City with predatory mortgage loans and practices. The CFPB's 
brief addresses three issues raised on appeal to explain why the jury 
verdict should be affirmed: (1) the timeliness of Plaintiff's claims 
under the doctrine of equitable tolling, (2) the propriety of the 
district court's jury instructions under ECOA, and (3) the public 
policy goals undermined by enforcing a waiver of claims in a loan 
modification agreement.\54\
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    \53\ Brief for CFPB as Amici Curiae Supporting Plaintiff-
Appellees, Saint-Jean v. Emigrant Mortg. Co., 50 F. Supp. 3d 300 
(E.D.N.Y. 2014) (No. 22-3094).
    \54\ See https://files.consumerfinance.gov/f/documents/cfpb_saint-jean-et-al-v-emigrant-mortgage-coemigrant-bank_2023-06.pdf.
---------------------------------------------------------------------------

    On April 14, 2023, the CFPB filed an amicus brief in Roberson v. 
Health Career Institute LLC.\55\ In the brief, the CFPB explained that 
discriminatory targeting violates ECOA. In particular, the CFPB's brief 
explains that ECOA's prohibition on discrimination applies to ``any 
aspect of a credit transaction,'' meaning it covers every aspect of a 
borrower's dealings with a creditor, not just the specific terms of a 
loan--like the interest rate or fees. The CFPB's brief also explains 
that in order to survive a motion to dismiss under ECOA, plaintiffs 
need only plead facts that plausibly allege discrimination, rather than 
the elements of a prima facia case, which is not a pleading requirement 
but rather an evidentiary standard.\56\
---------------------------------------------------------------------------

    \55\ Statement of Interest of the CFPB in Support of Plaintiffs, 
Roberson et al v. Health Career Institute LLC, et al. (S.D.Fla. 
2023) (No. 9:22CV81883).
    \56\ See https://www.consumerfinance.gov/compliance/amicus/briefs/roberson-v-health-career-institute-llc/.
---------------------------------------------------------------------------

    On March 13, 2023, the CFPB and DOJ filed a joint statement of 
interest in Connolly & Mott v. Lanham et al. explaining that relying on 
discriminatory home appraisals can violate ECOA.\57\ The law is clear 
that mortgage lenders cannot take race, sex, or any other prohibited 
bases into account when evaluating the creditworthiness of an 
applicant. As such, lenders cannot rely on a discriminatory appraisal 
if they knew, or should have known, that the appraisal was 
discriminatory. The statement of interest also explains that, to 
survive a motion to dismiss under ECOA, plaintiffs need only plead 
facts that plausibly allege discrimination, rather than establish a 
prima facie case, which is not a pleading requirement but rather an 
evidentiary standard. In the statement of interest, the Department of 
Justice also addresses how the FHA applies to discriminatory 
appraisals.\58\
---------------------------------------------------------------------------

    \57\ Statement of Interest for the United States, Connolly et 
al. v. Lanham et al., 685 F.Supp.3d 312 (No. 1:22CV02048).
    \58\ See https://www.consumerfinance.gov/compliance/amicus/briefs/connolly-mott-v-lanham-et-al/.
---------------------------------------------------------------------------

    More information regarding the CFPB's amicus program is available 
on the CFPB's website.\59\
---------------------------------------------------------------------------

    \59\ See generally https://www.consumerfinance.gov/policy-compliance/amicus/.
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5.2. Litigation

    In September 2022, the CFPB was sued in the U.S. District Court for 
the

[[Page 54794]]

Eastern District of Texas by the U.S. Chamber of Commerce et al., 
challenging an update to the UDAAP section of the CFPB's examination 
manual. The updated manual clarified that discriminatory conduct may 
violate the CFPA's prohibition on unfair practices and provided 
guidance to examiners on how discriminatory conduct should be examined 
to determine whether it violates the unfairness prohibition. The court 
granted plaintiffs' motion for summary judgment, vacated the manual 
update, and permanently enjoined the CFPB from engaging in any 
examination, supervision, or enforcement action against any member of 
the plaintiff associations based on the CFPB's interpretation of its 
unfairness authority set forth in the updated manual. The CFPB filed a 
notice of appeal in November 2023, and the appeal was stayed by the 
Fifth Circuit pending the Supreme Court's resolution of CFPB v. 
CFSA.\60\
---------------------------------------------------------------------------

    \60\ Additional activity has occurred since the close of this 
reporting period. On May 16, 2024, the Supreme Court issued a 
decision in CFPB v. CFSA. See CFPB v. Cmty. Fin. Servs. Ass'n of 
Am., Ltd., 601 U.S. 416 (2024).
---------------------------------------------------------------------------

    On March 30, 2023, the CFPB issued its final rule on small business 
lending under ECOA, as required by section 1071 of the Dodd-Frank 
Act.\61\ On April 26, 2023, the Texas Bankers Association and Rio Bank 
sued the CFPB in the U.S. District Court for the Southern District of 
Texas challenging the validity of the final rule. The court entered a 
preliminary injunction enjoining the CFPB from enforcing or 
implementing the rule against plaintiffs (including the American 
Bankers Association, who had joined as a plaintiff via an amended 
complaint filed on May 14, 2023) and their members, and stayed the 
compliance dates for plaintiffs and their members pending a decision in 
CFPB v. CFSA.\62\ On October 26, 2023, the court extended that order to 
apply to all covered entities following the intervention of other 
plaintiffs seeking to join the lawsuit. Separately, on August 11, 2023, 
the Kentucky Bankers Association and several Kentucky banks sued to 
challenge the rule in the U.S. District Court for the Eastern District 
of Kentucky. The court preliminarily enjoined the CFPB from enforcing 
the rule pending a decision in CFPB v. CFSA.\63\ A third lawsuit was 
filed on December 26, 2023, in the U.S. District Court for the Southern 
District of Florida by the Revenue Based Finance Coalition, a trade 
association representing merchant cash advance providers.
---------------------------------------------------------------------------

    \61\ See https://www.consumerfinance.gov/rules-policy/final-rules/small-business-lending-under-the-equal-credit-opportunity-act-regulation-b/.
    \62\ Additional activity has occurred since the close of this 
reporting period. See n.65, supra.
    \63\ Additional activity has occurred since the close of this 
reporting period. See n.65, supra.
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6. Interagency Reporting on ECOA and HMDA

    The CFPB is statutorily required to file a report to Congress 
annually describing the administration of its functions under ECOA, 
summarizing public enforcement actions taken by other agencies with 
administrative enforcement responsibilities under ECOA, and providing 
an assessment of the extent to which compliance with ECOA has been 
achieved.\64\ 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.\65\ The information below provides the required 
reporting.
---------------------------------------------------------------------------

    \64\ 15 U.S.C. 1691f.
    \65\ 12 U.S.C. 2807.
---------------------------------------------------------------------------

6.1. Reporting on ECOA Enforcement

    The enforcement and compliance efforts and assessments made by the 
eleven agencies assigned enforcement authority under section 704 of 
ECOA are discussed in this section, as reported by the agencies.
BILLING CODE 4810-AM-P

[[Page 54795]]

[GRAPHIC] [TIFF OMITTED] TN02JY24.001

[GRAPHIC] [TIFF OMITTED] TN02JY24.002

6.1.1. Public Enforcement Actions
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    \66\ Collectively, 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 (Bureau) comprise the Federal Financial 
Institutions Examination Council (FFIEC). The State Liaison 
Committee was added to FFIEC in 2006 as a voting member. Federal 
Financial Institutions Examination Council, http://www.ffiec.gov 
(last visited Mar. 30, 2021).>
    \67\ The Grain Inspection, Packers and Stockyards Administration 
(GIPSA) was eliminated as a stand-alone agency within USDA in 2017. 
The functions previously performed by GIPSA have been incorporated 
into the Agricultural Marketing Service (AMS), and ECOA reporting 
comes from the Packers and Stockyards Division, Fair Trade Practices 
Program, AMS.
    \68\ 15 U.S.C. 1691c.
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    In 2023, of the Federal agencies with ECOA enforcement authority, 
the CFPB, FDIC, and FTC brought a total of four fair lending 
enforcement actions. Information on the DOJ's fair lending

[[Page 54796]]

program and fair lending related public enforcement actions can be 
found at: https://www.justice.gov/crt/fair-lending-program-0.

6.1.2. CFPB Enforcement Actions

    In 2023, the CFPB brought two fair lending enforcement actions: 
Citibank and Colony Ridge.
Citibank
    On November 8, 2023, the CFPB ordered Citibank, N.A. to pay $25.9 
million in fines and consumer redress for intentionally and illegally 
discriminating against credit card applicants the bank identified as 
Armenian American.\69\ From at least 2015 through 2021, Citibank 
discriminated against retail services credit card applicants with 
surnames that Citibank employees associated with consumers of Armenian 
national origin, targeting applicants with surnames ending in ``-ian'' 
and ``-yan'' as well as applicants in or around Glendale, California. 
Nicknamed ``Little Armenia,'' Glendale is home to approximately 15 
percent of the Armenian American population in the U.S. When Citibank 
identified credit card applicants as potentially being of Armenian 
national origin, the bank applied more stringent criteria to these 
applications, including denying them outright and requiring additional 
information or placing a block on the account.
---------------------------------------------------------------------------

    \69\ See https://www.consumerfinance.gov/enforcement/actions/citibank-n-a/.
---------------------------------------------------------------------------

    Further, Citibank supervisors conspired to hide the discrimination 
by instructing employees not to discuss the discriminatory practices in 
writing or on recorded phone lines. Citibank employees also lied about 
the bases of denial, providing false reasons to denied applicants.
Colony Ridge
    On December 20, 2023, the CFPB, together with DOJ, filed a 
complaint against the Texas-based Colony Ridge defendants.\70\ The 
lawsuit alleges Colony Ridge sells unsuspecting families flood-prone 
land without water, sewer, or electrical infrastructure, and that the 
company sets borrowers up to fail with loans they cannot afford. As 
alleged in the complaint, roughly one in four Colony Ridge loans ends 
in foreclosure, after which the company repurchases the properties and 
sells them to new borrowers. As alleged in the complaint, Colony Ridge 
targets Hispanic borrowers. In particular, Colony Ridge advertises 
almost exclusively in Spanish, often on TikTok or other social media 
platforms, often featuring national flags and regional music from Latin 
America. In their marketing, Colony Ridge promised consumers the 
American dream of home ownership with its own seller financing: an 
easy-to-obtain loan product that requires no credit check and only a 
small deposit. The complaint alleges that foreclosure and property deed 
records from September 2019 through September 2022 show that Colony 
Ridge initiated foreclosures on at least 30 percent of seller-financed 
lots within just three years of the purchase date, with most loan 
failures occurring even sooner. Records also confirm that Colony Ridge 
accounted for more than 92 percent of all foreclosures recorded in 
Liberty County, Texas between 2017 and 2022.
---------------------------------------------------------------------------

    \70\ See https://www.consumerfinance.gov/enforcement/actions/colony-ridge/.
---------------------------------------------------------------------------

    In the complaint, the CFPB and DOJ allege that defendants violated 
ECOA by targeting consumers of Hispanic origin with a predatory loan 
product. The CFPB separately alleges that the Colony Ridge defendants 
violated the CFPA by making deceptive representations to consumers; 
that Colony Ridge Development and Colony Ridge BV violated the 
Interstate Land Sales Full Disclosure Act (ILSA) by making untrue 
statements, omitting material facts, failing to provide required 
accurate translations, and failing to report and disclose required 
information; and that defendants violated the CFPA by virtue of their 
violations of ECOA and ILSA, respectively. DOJ further alleges 
defendants' conduct violated the FHA.
    The joint complaint seeks, among other things, injunctions against 
defendants to prevent future violations of Federal consumer financial 
laws, redress to consumers, damages, and the imposition of civil money 
penalties.

6.1.3. Interagency Enforcement Actions

    In 2023, the FTC, along with the State of Wisconsin, brought an 
enforcement action in Federal court against Rhinelander, a Wisconsin 
auto dealer group, its current and former owners, and general manager 
Daniel Towne, alleging, among other things, that defendants violated 
ECOA and Regulation B by discriminating against American Indian 
consumers by charging them higher financing costs and fees.\71\ Among 
other things, the settlement with Rhinelander's current owners and 
Defendant Towne requires the company to establish a comprehensive fair 
lending program that will, among other components, allow consumers to 
seek outside financing for a purchase, and cap the additional interest 
markup Rhinelander can charge consumers, as well as require the current 
owners and Defendant Towne to pay $1 million to refund affected 
consumers.\72\ The former owners, Rhinelander Auto Center, Inc. and 
Rhinelander Motor Company, agreed to a separate settlement, that 
requires the companies to permanently wind down the businesses and pay 
$100,000 to refund affected consumers.\73\
---------------------------------------------------------------------------

    \71\ FTC v. Rhinelander Auto Ctr., Inc., No. 23-cv-737 (W.D. 
Wis., filed Oct. 24, 2023), available at https://www.ftc.gov/system/files/ftc_gov/pdf/1-ComplaintbyFTC-WIagainstRhinelander.pdf.
    \72\ FTC v. Rhinelander Auto Ctr., Inc., No. 23-cv-737 (W.D. 
Wis. Nov. 6, 2023) (stipulated order for permanent injunction, 
monetary judgment, and other relief as to Defendants Rhinelander 
Auto Group LLC, Rhinelander Import Group LLC, and Daniel Towne), 
https://www.ftc.gov/system/files/ftc_gov/pdf/18-ConsentJudgmentEnteredastoRAGRMGandTowne.pdf.
    \73\ FTC v. Rhinelander Auto Ctr., Inc., No. 23cv737 (W.D. Wis. 
Nov. 6, 2023) (stipulated order for permanent injunction, monetary 
judgment, and other relief as to Defendants Rhinelander Auto Center, 
Inc., and Rhinelander Motor Company), https://www.ftc.gov/system/files/ftc_gov/pdf/17-ConsentJudgmentEnteredastoRACandRMC.pdf.
---------------------------------------------------------------------------

    On March 8, 2023, the FDIC issued a public consent order for Cross 
River bank under section 3(q) of the Federal Deposit Insurance Act 
(Act), 12 U.S.C. 1813(q). The FDIC determined that Cross River bank 
engaged in unsafe or unsound banking practices related to its 
compliance with applicable fair lending laws and regulations by failing 
to establish and maintain internal controls, information systems, and 
prudent credit underwriting practices in conformance with the Safety 
and Soundness Standards contained in appendix A of 12 CFR part 364, or 
the violations of ECOA, 15 U.S.C. 1691, et seq., as implemented by 
Regulation B, 12 CFR part 1002, and the Truth in Lending Act, 15 U.S.C. 
1601, et seq., as implemented by Regulation Z, 12 CFR part 1026.

6.1.4. Number of Institutions Cited for ECOA/Regulation B Violations

    In 2023, the agencies and the CFPB collectively reported citing 189 
institutions with violations of ECOA and/or Regulation B.

6.1.5. 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 as follows:

[[Page 54797]]



     Table 3--Regulation B Violations Cited by FFIEC Agencies, 2023
------------------------------------------------------------------------
                                                      FFIEC Agencies
          Regulation B violations: 2023                  reporting
------------------------------------------------------------------------
12 CFR 1002.4, 1002.7(d)(1): Discrimination--     NCUA,\74\ CFPB.\75\
 Discrimination on a prohibited basis in a
 credit transaction; improperly requiring the
 signature of the applicant's spouse or other
 person.
12 CFR 1002.5(b), 12 CFR 1002.5(c), 12 CFR        FDIC,\76\ OCC.\77\
 1002.5(d): Inquiring about protected class--
 Inquiring about the race, color, religion,
 national origin, or sex of an applicant or any
 other person in connection with a credit
 transaction, except as permitted in sec.
 1002.5(b)(1) and (b)(2), or sec.1002.8 in the
 case of a special purpose credit program;
 requesting any information concerning an
 applicant's spouse or former spouse, except as
 permitted in sec. 1002.5(c)(2); requesting the
 marital status of a person applying for
 individual, unsecured credit, except as
 permitted in sec. 1002.5(d)(1) (for credit
 other than individual, unsecured, a creditor
 may inquire about the applicant's marital
 status, but must only use the terms
 ``married,'' ``unmarried,'' and ``separated'');
 inquiring as to whether income stated in an
 application is derived from alimony, child
 support, or separate maintenance payments,
 except as permitted in sec.1002.5(d)(2); or
 requesting information about birth control
 practices, intentions concerning the bearing or
 rearing of children, or capability to bear
 children, except as permitted in sec.
 1002.5(d)(3).
12 CFR 1002.6 (b)(2), (5): Specific rules         CFPB.
 concerning use of information--Improperly
 evaluating age, receipt of public assistance in
 a credit transaction..
12 CFR 1002.9(a)(1)(i), (a)(2), (b)(1); (b)(2);   OCC,\78\ NCUA,\79\
 (c): Adverse Action--Failure to provide notice    FRB,\80\ FDIC,\81\
 to the applicant 30 days after receiving a        CFPB.\82\
 completed application concerning the creditor's
 approval of, counteroffer to, or adverse action
 on the application; failure to provide
 appropriate notice to the applicant 30 days
 after taking adverse action on an incomplete
 application; failure to provide sufficient
 information in an adverse action notification,
 including the specific reasons for the action
 taken.
12 CFR 1002.13(a)(1), (b): Information for        OCC.
 Monitoring Purposes--Failure to obtain
 information for monitoring purposes; failure to
 request information on an application
 pertaining to the applicant's ethnicity or race.
12 CFR 1002.14 (a)(1), (a)(2), (a)(3), (a)(4):    OCC,\83\ NCUA.\84\
 Appraisals and Valuations--Failure to provide
 appraisals and other valuations.
------------------------------------------------------------------------

    Among institutions examined for compliance with ECOA and Regulation 
B, the Non-FFIEC agencies reported that the most frequently cited 
violations were as follows:
---------------------------------------------------------------------------

    \74\ 12 CFR 1002.4(a).
    \75\ 12 CFR 1002.4, 1002.7(d)(1).
    \76\ 12 CFR 1002.5(b)-(d).
    \77\ 12 CFR 1002.5(b).
    \78\ 12 CFR 1002.9(a)(2); 1002.9(a)(1)(i); 1002.9(b)(2).
    \79\ 12 CFR 1002.9(a)(1); 1002.9(a)(2); 1002.9(b)(2).
    \80\ 12 CFR 1002.9(a)(1)(i); 1002.9(b)(2).
    \81\ 12 CFR 1002.9(a)(1);(a)(2); (b)(2).
    \82\ 12 CFR 1002.9(a)(1),(2); 1002.9(b); 1002.9(c).
    \83\ 12 CFR 1002.14(a)(1); 1002.14(a)(2).
    \84\ 12 CFR 1002.14(a)(2).

 TABLE 4: Regulation B Violations Cited by Non-FFIEC Agencies Enforcing
                               ECOA, 2023
------------------------------------------------------------------------
                                                    Non-FFIEC  agencies
          Regulation B violations: 2023                  reporting
------------------------------------------------------------------------
12 CFR 1002.9(a)(1)(i), (a)(2): Adverse Action--  FCA.
 Failure to provide notice to the applicant 30
 days after receiving a completed application
 concerning the creditor's approval of,
 counteroffer to, or adverse action on the
 application; failure to provide sufficient
 information in an adverse action notification,
 including the specific reasons for the action
 taken.
12 CFR 1002.13: Failure to request and collect    FCA.
 information for monitoring purposes--Failure to
 obtain information for monitoring purposes.
------------------------------------------------------------------------

    The AMS, SEC, and the SBA reported that they received no complaints 
based on ECOA or Regulation B in 2023. The FTC is an enforcement agency 
and does not conduct compliance examinations.

6.1.6. Referrals to the Department of Justice

    The agencies assigned enforcement authority under section 704 of 
ECOA must refer a matter to DOJ when there is reason to believe that a 
creditor has engaged in a pattern or practice of lending discrimination 
in violation of ECOA.\85\ They also may refer other potential ECOA 
violations to DOJ.\86\ In 2023, 5 agencies (FDIC, NCUA, FRB, OCC and 
CFPB) collectively made 33 such referrals to DOJ involving 
discrimination in violation of ECOA. This is an increase of 175 percent 
in such referrals since 2020 (12 referrals). A brief description of 
those matters follows.
---------------------------------------------------------------------------

    \85\ 15 U.S.C. 1691e(g).
    \86\ Id.
---------------------------------------------------------------------------

    In 2023, the CFPB referred 18 fair lending matters to DOJ. The 
referrals included: discrimination on the basis of race and national 
origin in mortgage lending (redlining); discrimination in underwriting 
on the basis of receipt of public assistance income; predatory 
targeting on the basis of race and national origin; discrimination in 
pricing exceptions on the basis of race, national origin, sex, and age; 
and discrimination in credit cards on the basis of national origin and 
race.
    In 2023, the FDIC referred seven fair lending matters to DOJ. The 
referrals included: one matter involving discrimination on the basis of 
race in mortgage lending (redlining); three matters for discrimination 
on the basis of race and national origin in mortgage lending 
(redlining); one matter involving discrimination in underwriting in 
commercial loans on the basis of race, color, national origin, and 
religion; one matter involving discrimination in auto loan pricing on 
the basis of sex or gender; and one matter for discrimination in auto 
loan pricing on the basis of race and national origin.
    NCUA referred six ECOA matters to DOJ which involved discrimination

[[Page 54798]]

based on age and discrimination based on marital status.
    The OCC made one referral to DOJ for a matter that involved 
discrimination on the basis of race, color, or national origin in 
mortgage lending (redlining).
    The FRB referred one fair lending matter to DOJ. The matter 
involved discrimination on the basis of marital status in agricultural 
and commercial lending.

6.2. Reporting on HMDA

    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 loan data in order to disclose 
the number and dollar amount of certain mortgage loans and 
applications, grouped according to various characteristics.\87\ The 
CFPB, in consultation with HUD, finds that itemization and tabulation 
of these data furthers the purposes of HMDA.
---------------------------------------------------------------------------

    \87\ 12 U.S.C. 2807.
---------------------------------------------------------------------------

7. Looking Forward & Focus on Digital Discrimination

    The CFPB has made clear that the same laws and regulations apply to 
all technologies, regardless of the complexity or novelty of the 
technology deployed by institutions, including when it comes to 
combatting unlawful discrimination or explaining how certain credit 
decisions are made. ECOA is a powerful means to address unlawful 
digital discrimination in any aspect of a credit transaction. In 2023, 
the CFPB continued to combat digital discrimination through enforcement 
matters,\88\ supervisory matters,\89\ rulemaking,\90\ guidance,\91\ and 
using an all-of-government interagency approach.\92\
---------------------------------------------------------------------------

    \88\ See https://www.consumerfinance.gov/enforcement/actions/colony-ridge/.
    \89\ See section 1.3, supra.
    \90\ CFPB, OCC, FHFA, FRB, FDIC, NCUA, Quality Control Standards 
for Automated Valuation Models (June 1, 2023), https://files.consumerfinance.gov/f/documents/cfpb_automated-valuation-models_proposed-rule-request-for-comment_2023-06.pdf.
    \91\ CFPB, Consumer Financial Protection Circular 2023-03 
Adverse action notification requirements and the proper use of the 
CFPB's sample forms provided in Regulation B (Sept. 19. 2023), 
https://www.consumerfinance.gov/compliance/circulars/circular-2023-03-adverse-action-notification-requirements-and-the-proper-use-of-the-cfpbs-sample-forms-provided-in-regulation-b/.
    \92\ CFPB, OCC, FRB, FDIC, NCUA, Interagency Guidance on 
Reconsideration of Value of Residential Real Estate Valuations (June 
8, 2023), https://files.consumerfinance.gov/f/documents/cfpb_interagency-guidance-reconsiderations-of-value-of-residential-real-estate_2023-06.pdf; CFPB; Dept. of Justice Civil Rights Div.; 
Equal Opportunity Comm'n; Federal Trade Comm'n; Joint Statement on 
Enforcement Efforts Against Discrimination and Bias in Automated 
Systems (Apr. 25, 2023), https://files.consumerfinance.gov/f/documents/cfpb_joint-statement-enforcement-against-discrimination-bias-automated-systems_2023-04.pdf.
---------------------------------------------------------------------------

    Looking forward, the CFPB will continue to enforce the law to root 
out unlawful discrimination, including when discrimination may be 
disguised by other processes within credit transactions. This includes 
actions that financial institutions take around the selection and 
procurement of data for use in advanced technological methods. Data 
brokers sell myriad types of personal data and sensitive information 
about consumers, some of which may directly implicate protected bases 
under ECOA. These data, alone or in combination with other data, may 
create proxies for, or have a disparate impact on, any of the ECOA 
prohibited bases. Creditors subject to ECOA and Regulation B may 
violate these laws if they use these data to engage in discriminatory 
targeting, steering, redlining, or in other ways that create unlawful 
discrimination.
    The same holds true for fraud screens purported to facilitate 
compliance with other consumer protection and banking laws. While fraud 
detection compliance regimes may serve important purposes, institutions 
that are subject to ECOA and Regulation B may not use fraud screens and 
associated policies and procedures as an excuse to violate or 
circumvent fair lending laws.\93\
---------------------------------------------------------------------------

    \93\ Discrimination on a prohibited basis can violate ECOA and 
Regulation B when it occurs in any aspect of a credit transaction, 
including when it occurs through practices that entities may 
characterize as related to fraud detection. See, e.g., https://www.consumerfinance.gov/enforcement/actions/citibank-n-a/.
---------------------------------------------------------------------------

    Further, as the CFPB continues to monitor markets and institutions 
for fair lending compliance, the CFPB will also continue to review the 
fair lending testing regimes of financial institutions. Robust fair 
lending testing of models should include regular testing for disparate 
treatment and disparate impact, including searches for and 
implementation of less discriminatory alternatives using manual or 
automated techniques. CFPB exam teams will continue to explore the use 
of open-source automated debiasing methodologies to produce potential 
alternative models to the insitutions' credit scoring models.
    In 2024 and beyond, the CFPB will continue to combat digital 
discrimination and also continue to take steps to be a leader when it 
comes to building the Federal government's capabilities to address 
these types of transformative technologies.

Appendix A: HMDA Resources

    As stated in section 2.2.5, the CFPB maintains a comprehensive 
suite of resources pertaining to the reporting and use of HMDA data, in 
addition to the annual HMDA filing guides released annually by the 
FFIEC. These resources include: Executive Summaries of HMDA rule 
changes; \94\ Small Entity Compliance Guide; \95\ Institutional and 
Transactional Coverage Charts; \96\ Reportable HMDA Data Chart; \97\ 
sample data collection form; \98\ FAQs; \99\ a Beginners Guide to 
Accessing and Using HMDA Data; \100\ and downloadable webinars,\101\ 
which provide an overview of the HMDA rule. In June of 2023, the CFPB 
published a summary of the 2022 data on mortgage lending.\102\ The CFPB 
also provides on its website an interactive version of Regulation C 
that is easier to access and navigate than the printed version of 
Regulation C.\103\
---------------------------------------------------------------------------

    \94\ CFPB, Executive Summary of the 2020 Home Mortgage 
Disclosure Act (Regulation C) Final Rule (Apr. 16, 2020), https://files.consumerfinance.gov/f/documents/cfpb_rule-executive-summary_hmda-2020.pdf; https://www.consumerfinance.gov/about-us/blog/changes-to-hmda-closed-end-loan-reporting-threshold/. Summaries 
for different reporting years are available at: https://www.consumerfinance.gov/compliance/compliance-resources/mortgage-resources/hmda-reporting-requirements/.
    \95\ CFPB, Home Mortgage Disclosure (Regulation C) Small Entity 
Compliance Guide (Feb. 2023), https://files.consumerfinance.gov/f/documents/cfpb_hmda_small-entity-compliance-guide_2023-02.pdf.
    \96\ CFPB, HMDA Institutional Coverage Chart, https://files.consumerfinance.gov/f/documents/cfpb_hmda-institutional-coverage_2023.pdf; CFPB, HMDA Transactional Coverage Chart, https://files.consumerfinance.gov/f/documents/cfpb_hmda-transactional-coverage_2023.pdf.
    \97\ CFPB, Reportable HMDA Data: A Regulatory and Reporting 
Overview Reference Chart for HMDA Data Collected in 2023 (Feb. 9, 
2023), https://files.consumerfinance.gov/f/documents/cfpb_reportable-hmda-data_regulatory-and-reporting-overview-reference-chart_2023-02.pdf.
    \98\ CFPB, Sample Data Collection Form, https://files.consumerfinance.gov/f/documents/201708_cfpb_hmda-sample-data-collection-form.pdf.
    \99\ CFPB, Home Mortgage Disclosure Act FAQs, https://www.consumerfinance.gov/compliance/compliance-resources/mortgage-resources/hmda-reporting-requirements/home-mortgage-disclosure-act-faqs/.
    \100\ CFPB, A Beginner's Guide to Accessing and Using Home 
Mortgage Disclosure Act Data (June 13, 2022), https://files.consumerfinance.gov/f/documents/cfpb_beginners-guide-accessing-using-hmda-data_guide_2022-06.pdf.
    \101\ CFPB, HMDA Webinars, https://www.consumerfinance.gov/compliance/compliance-resources/mortgage-resources/hmda-reporting-requirements/webinars/.
    \102\ CFPB, Summary of 2022 Data on Mortgage Lending (June 29, 
2023), https://www.consumerfinance.gov/data-research/hmda/summary-of-2022-data-on-mortgage-lending/.
    \103\ Interactive Bureau Regulations, Regulation C, https://www.consumerfinance.gov/rules-policy/regulations/1003/.
---------------------------------------------------------------------------

    Together with the Federal Financial Institutions Examination 
Council

[[Page 54799]]

(FFIEC),\104\ the CFPB also routinely updates its HMDA resources 
throughout the year to ensure HMDA reporters have the most up-to-date 
information. For example, in November 2023, the CFPB released the 2024 
Filing Instructions Guide,\105\ an online interactive Filing 
Instructions Guide,\106\ and the 2023 Supplemental Guide for Quarterly 
Filers.\107\ Together with the FFIEC, in March of 2023, the CFPB also 
published the 2023 edition of the HMDA Getting it Right Guide.\108\ The 
CFPB also works with the FFIEC to publish data submission resources for 
HMDA filers and vendors on its Resources for HMDA Filers website, 
https://ffiec.cfpb.gov.
---------------------------------------------------------------------------

    \104\ Collectively, 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 CFPB comprise the 
Federal Financial Institutions Examination Council (FFIEC). The 
State Liaison Committee was added to FFIEC in 2006 as a voting 
member. Federal Fin. Instit. Examination Council, http://www.ffiec.gov (last visited June 5, 2024).
    \105\ CFPB, Filing instructions guide for HMDA data collected in 
2024 (Nov. 2023), https://s3.amazonaws.com/cfpb-hmda-public/prod/help/2024-hmda-fig.pdf.
    \106\ 2023 FIG (Filing Instructions Guide), https://ffiec.cfpb.gov/documentation/fig/2023/overview.
    \107\ CFPB, Supplemental Guide for Quarterly Filers for 2024 
(Aug. 2023), https://s3.amazonaws.com/cfpb-hmda-public/prod/help/supplemental-guide-for-quarterly-filers-for-2024.pdf.
    \108\ Federal Fin. Instit. Examination Council, A Guide to HMDA 
Reporting, Getting it Right! (Mar. 23, 2023), https://www.ffiec.gov/hmda/pdf/2023Guide.pdf.
---------------------------------------------------------------------------

    In addition, HMDA reporters can ask questions about HMDA and 
Regulation C, including how to submit HMDA data, by emailing the CFPB's 
HMDA Help at [email protected]. The CFPB also offers financial 
institutions, service providers, and others informal staff guidance on 
specific questions about the statutes and rules the CFPB implements, 
including ECOA and Regulation B and HMDA and Regulation C, through its 
Regulation Inquiries platform at www.reginquiries.consumerfinance.gov.

Appendix B: Defined Terms

------------------------------------------------------------------------
               Term                              Definition
------------------------------------------------------------------------
AMS...............................  Agricultural Marketing Service of
                                     the U.S. Department of Agriculture.
ASC...............................  FFIEC's Appraisal Subcommittee.
AVM...............................  Automated Valuation Models.
CFPA..............................  Consumer Financial Protection Act of
                                     2010.
CFPB..............................  Consumer Financial Protection
                                     Bureau.
CRA...............................  Community Reinvestment Act.
Dodd-Frank Act....................  Dodd-Frank Wall Street Reform and
                                     Consumer Protection Act.
DOJ...............................  U.S. Department of Justice.
DOT...............................  U.S. Department of Transportation.
ECOA..............................  Equal Credit Opportunity Act.
FCA...............................  Farm Credit Administration.
FDIC..............................  Federal Deposit Insurance
                                     Corporation.
FHA...............................  Fair Housing Act.
FHFA..............................  Federal Housing Finance Agency.
Federal Reserve Board or FRB......  Board of Governors of the Federal
                                     Reserve System.
FFIEC.............................  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.
FTC...............................  Federal Trade Commission.
HMDA..............................  Home Mortgage Disclosure Act.
HUD...............................  U.S. Department of Housing and Urban
                                     Development.
ILSA..............................  Interstate Land Sales Full
                                     Disclosure Act.
NCUA..............................  National Credit Union
                                     Administration.
OCC...............................  Office of the Comptroller of the
                                     Currency.
ROV...............................  Reconsideration of Value.
SBA...............................  Small Business Administration.
SEC...............................  Securities and Exchange Commission.
SPCP..............................  Special Purpose Credit Program.
UDAAP.............................  Unfair, Deceptive, or Abusive Acts
                                     or Practices.
USDA..............................  U.S. Department of Agriculture.
------------------------------------------------------------------------

Signing Authority

    The Director of the Bureau, Rohit Chopra, having reviewed and 
approved this document, is delegating the authority to electronically 
sign this document to Laura Galban, a Bureau Federal Register Liaison, 
for purposes of publication in the Federal Register.

Laura Galban,
Federal Register Liaison, Consumer Financial Protection Bureau.
[FR Doc. 2024-14533 Filed 7-1-24; 8:45 am]
BILLING CODE 4810-AM-P