Notice2022-10133
Fair Lending Report of the Consumer Financial Protection Bureau, May 2022
Primary source
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Published
May 12, 2022
Issuing agencies
Consumer Financial Protection Bureau
Abstract
The Consumer Financial Protection Bureau (Bureau or CFPB) is issuing its tenth Fair Lending Report of the Consumer Financial Protection Bureau (Fair Lending Report) to Congress. The Bureau 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 2021.
Full Text
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<title>Federal Register, Volume 87 Issue 92 (Thursday, May 12, 2022)</title>
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[Federal Register Volume 87, Number 92 (Thursday, May 12, 2022)]
[Notices]
[Pages 29117-29131]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-10133]
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BUREAU OF CONSUMER FINANCIAL PROTECTION
Fair Lending Report of the Consumer Financial Protection Bureau,
May 2022
AGENCY: Bureau of Consumer Financial Protection.
[[Page 29118]]
ACTION: Fair Lending Report of the Consumer Financial Protection
Bureau.
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SUMMARY: The Consumer Financial Protection Bureau (Bureau or CFPB) is
issuing its tenth Fair Lending Report of the Consumer Financial
Protection Bureau (Fair Lending Report) to Congress. The Bureau 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 2021.
DATES: The Bureau released the 2021 Fair Lending Report on its website
on May 6, 2022.
FOR FURTHER INFORMATION CONTACT: Susan Grutza, Policy Counsel, Fair
Lending, at 1-855-411-2372. If you require this document in an
alternative electronic format, please contact
<a href="/cdn-cgi/l/email-protection#c2818492809d83a1a1a7b1b1aba0abaeabb6bb82a1a4b2a0eca5adb4"><span class="__cf_email__" data-cfemail="13505543514c5270707660607a717a7f7a676a53707563713d747c65">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
1. Fair Lending Report of the Bureau of Consumer Financial Protection,
May 2022
Message From the Fair Lending Director
Starting and owning a small business is the foundation of dreams
and aspirations. There is a certain dignity in knowing the security and
love of a stable, safe home in community anchored by individuals and
businesses invested in the community's success. Both starting a
successful small business and owning one's home are key building blocks
of individual and generational wealth. Yet, individuals and communities
of color generally face barriers to financing their small businesses
and homes that their white counterparts do not experience. These
families and communities also own their homes at much lower rates than
non-Hispanic whites, and people of color who do own their homes are
more likely to be at risk of foreclosure. This is due, in part, to a
legacy of structural discrimination which extends to mortgage, auto,
student, and other credit markets. The mission of fair lending is to
break these discriminatory patterns and practices and to promote access
to credit to create fairer markets for all.
This report covers the Consumer Financial Protection Bureau's
(CFPB's) fair lending activities during 2021. Much of the CFPB's 2021
work centered on Acting Director Uejio's call for the CFPB to take bold
and swift action to address issues of pervasive racial injustice and
long-term economic impacts of the COVID-19 pandemic on individuals and
communities. In addition, Director Chopra has prioritized the CFPB's
foundations of financial inclusion, racial and economic equity, and
fair competition. As a result, we focused our fair lending work on
issues especially pertinent to people and communities of color and
those at risk of losing their housing or unable to access credit for
their small businesses. This work took various forms, utilizing all of
the CFPB's available tools, and touched nearly every market within our
purview.
Notably, this year we brought an enforcement action against
Trustmark National Bank (Trustmark) for redlining in the Memphis
Metropolitan Statistical Area (MSA). Trustmark discouraged prospective
applicants in Black and Hispanic neighborhoods, avoided locating
branches or assigning loan officers to these communities, and failed to
monitor its fair lending compliance. We continue to examine and
investigate entities who are engaged in redlining, as well as mortgage
pricing discrimination. Additionally, public reports of racist
practices in the home appraisal industry led us to prioritize resources
to ensure that the appraisals used to make lending decisions are
accurate and free from bias. Redlining, pricing discrimination, and
appraisal bias are significant barriers to fair competition in the
mortgage market, impeding the ability of an individual borrower to get
credit on fair terms, thus stifling growth in communities across the
country.
Home is not only the walls and beams of a house, but also the
community that supports it. From the small businesses that anchor our
neighborhoods, to the family farms that dot the countryside, these
businesses are the drivers of opportunity in a community. In 2021, the
CFPB took the significant step of issuing a notice of proposed
rulemaking (NPRM) for section 1071 of the Dodd-Frank Wall Street Reform
and Consumer Protection Act (Dodd-Frank Act), to collect certain data
on applications for credit for women-owned, minority-owned, and small
businesses. The need for this data was highlighted in 2020 and in 2021,
as small businesses were hit especially hard by the COVID-19 pandemic,
and as Black and Hispanic entrepreneurs faced headwinds in accessing
small business credit compared to their white counterparts. The data
collection intended with this proposed rule will allow the CFPB,
advocates, industry, and other stakeholders to better monitor small
business markets and community development needs to foster an inclusive
and competitive small business lending market.
Some bad actors target and exploit at-risk communities. In 2021,
the CFPB sued Libre by Nexus (Libre) and JPay for engaging in unfair,
deceptive, or abusive acts and practices. Libre targeted immigrants
held in detention centers for a services scam that traps victims into
paying expensive, long-term fees. JPay provided financial services to
prisons and jails nationwide, charging unfair fees to their customers.
In the United States, incarcerated individuals and individuals
reentering society are overwhelmingly men of color. The CFPB will
continue to fight discrimination that manifests as unfair, deceptive,
or abusive acts and practices.
I am encouraged by the possibility of utilizing vehicles like
special purpose credit programs to expand access to credit, but
skeptical of claims that advanced algorithms are the cure-all for bias
in credit underwriting and pricing. Home is a place, home is a feeling,
home shapes the people our children become. I am proud of what the CFPB
achieved in 2021, our tenth year of existence, and I look forward to
the future of fair lending and the next ten years, as we continue our
work so that entrepreneurs have the pride of owning a successful small
business and all individuals have the opportunity to know the comfort
of a place worth calling home.
Sincerely,
Patrice Alexander Ficklin
1. Fair Lending Supervision and Enforcement
1.1 Risk-Based Prioritization
Because Congress charged the 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.\1\
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\1\ For additional information regarding the CFPB's risk-based
approach in prioritizing supervisory examinations, see Section
2.2.3, Risk-Based Approach to Examinations, Supervisory Highlights
Summer 2013, available at <a href="https://files.consumerfinance.gov/f/201308_cfpb_supervisory-highlights_august.pdf">https://files.consumerfinance.gov/f/201308_cfpb_supervisory-highlights_august.pdf</a>.
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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 fair lending risks in
a particular market, that information is used to determine the type and
extent of attention required to address those risks.
The prioritization process incorporates a number of additional
[[Page 29119]]
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 for
2021, in 2021, the CFPB focused much of its fair lending enforcement
and supervision efforts on advancing the CFPB's priorities surrounding
racial and economic equity and promoting economic recovery related to
the COVID-19 pandemic.
Additionally, the CFPB focused its fair lending supervision efforts
on mortgage origination and pricing, small business lending, student
loan origination work, policies and procedures regarding geographic and
other exclusions in underwriting, and on the use of artificial
intelligence (AI) and machine learning models.
As in previous years, the CFPB's 2021 mortgage origination work
continued to focus on redlining (and whether lenders intentionally
discouraged prospective applicants living in, or seeking credit in
minority neighborhoods from applying for credit); assessing whether
there is discrimination in underwriting and pricing processes such as
steering; and HMDA data integrity and validation reviews (both as
standalone exams and in preparation for Equal Credit Opportunity Act
(ECOA) exams that will follow).
The CFPB's small business lending work looked to assess whether
there are disparities in application, underwriting, and pricing
processes, redlining, and whether there are weaknesses in fair lending-
related compliance management systems (CMS).
Across multiple markets, the CFPB evaluated whether lenders
maintain policies and procedures that exclude certain types of income
or exclude property on the basis of geography in underwriting
decisions.
The CFPB's student loan origination work included a focus on
lenders' policies and practices in underwriting or pricing for fair
lending compliance. The CFPB also is expanding its evaluation of AI and
machine learning models as used by institutions, including in
evaluating applicants for credit.
1.2 Fair Lending Enforcement
Congress authorized the CFPB to bring actions to enforce the
requirements of eighteen enumerated statutes, including ECOA, HMDA, and
Unfair, Deceptive, or Abusive Acts or Practices (UDAAP). The CFPB
engages in research, conducts investigations, files administrative
complaints, holds hearings, and adjudicates 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(h).
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1.2.1 Public Enforcement Actions
In 2021, the CFPB announced four fair lending-related enforcement
actions. These actions were brought under ECOA as well as other Federal
consumer financial laws that protect consumers and ensure fair access
to credit, including the Consumer Financial Protection Act of 2010
(CFPA) and the Electronic Fund Transfer Act (EFTA). These actions
included Trustmark National Bank (Trustmark); LendUp Loans, LLC
(LendUp); JPay, LLC (JPay); and Nexus Services, Inc. (Libre by Nexus).
Trustmark
On October 22, 2021, the CFPB, together with DOJ, filed a complaint
and proposed consent order in the Federal district court for the
Western District of Tennessee in settlement of claims against
Trustmark, which is headquartered in Jackson, Mississippi.\3\ The joint
complaint alleged that Trustmark engaged in unlawful discrimination
against applicants and prospective applicants, including by redlining
majority Black and Hispanic communities in the Memphis MSA and engaged
in acts and practices that would discourage prospective applicants from
applying for credit in violation of ECOA, Regulation B, and the CFPA.
In the joint complaint, DOJ also alleged that Trustmark's conduct
violated the Fair Housing Act (FHA).
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\3\ Consumer Fin. Prot. Bureau, Trustmark National Bank,
(<a href="https://www.consumerfinance.gov/enforcement/actions/trustmark-national-bank/">https://www.consumerfinance.gov/enforcement/actions/trustmark-national-bank/</a>).
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The consent order, as entered by the court on October 27, 2021,
requires Trustmark to invest $3.85 million in a loan subsidy program
that will offer qualified applicants for credit secured by properties
in majority Black and Hispanic neighborhoods in Memphis loans on a more
affordable basis than otherwise available from Trustmark; open a new
loan production office in a majority Black and Hispanic neighborhood in
the Memphis MSA; fund targeted advertising to generate applications for
credit from qualified consumers in majority Black and Hispanic
neighborhoods in Memphis; and take other remedial steps to improve its
fair lending compliance and serve the credit needs of majority Black
and Hispanic neighborhoods in the Memphis MSA. The order also requires
Trustmark to pay a civil money penalty of $5 million, $4 million of
which would be remitted as a penalty paid to the Office of the
Comptroller of the Currency (OCC) for FHA violations arising from the
same conduct alleged in the complaint.
LendUp Loans
On September 8, 2021, the CFPB filed a lawsuit in the United States
District Court for the Northern District of California against LendUp
Loans, LLC. LendUp is an online lender offering single-payment and
installment loans to consumers.\4\ In addition to other violations of
consumer protection laws, the CFPB alleged that LendUp failed to timely
issue required adverse-action notices and failed to provide accurate
denial reasons on its adverse-action notices to thousands of loan
applicants, in violation of ECOA and Regulation B, and that these
violations also constitute violations of the CFPA.
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\4\ Consumer Fin. Prot. Bureau, LendUp Loans, LLC, (<a href="https://www.consumerfinance.gov/enforcement/actions/lendup-loans-llc-2/">https://www.consumerfinance.gov/enforcement/actions/lendup-loans-llc-2/</a>).
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On December 21, 2021, the CFPB filed a proposed stipulated final
judgment and order to settle the lawsuit, which the court entered on
December 30, 2021. The order imposes an injunction, prohibiting LendUp
from offering or providing consumer credit, or assisting others that
are offering or providing consumer credit; from collecting on, selling,
or assigning outstanding subject loans, or assisting others in doing
so; from selling consumer information; and from making
misrepresentations in the sale or collection of consumer debt, or
assisting others in doing so. The order also imposes a $100,000 civil
money penalty and requires the payment of $40.5 million in consumer
redress, to be suspended upon payment of the civil money penalty based
on LendUp's demonstrated inability to pay.
JPay
On October 19, 2021, the CFPB ordered JPay to pay $4 million for
consumer redress, prohibited JPay from engaging in the illegal conduct
found by the CFPB, and required JPay to pay a $2
[[Page 29120]]
million civil money penalty.\5\ JPay, headquartered in Miramar,
Florida, contracts with Federal, State and local Departments of
Corrections around the country to provide financial products and
services to incarcerated and formerly incarcerated individuals. JPay
provided prepaid cards to formerly incarcerated individuals upon their
release from prison or jail (JPay debit release card). The debit
release cards contained the balance of funds owed to former inmates
upon their release, including their commissary money, as well as any
``gate money,'' which are entitlements provided pursuant to State or
local law, policy, or regulation to ease transition to society after
release from prison or jail. The CFPB found that JPay violated EFTA and
its implementing Regulation E by requiring consumers to establish an
account with the particular financial institution that issued the JPay
debit release card as a condition of receiving a government benefit,
namely their gate money. JPay's violations of EFTA and Regulation E
also constituted violations of CFPA. The CFPB also found that JPay
engaged in unfair and abusive acts and practices by causing fees to be
imposed through its JPay debit release card on consumers who were
required to get a JPay debit release card to access the money owed to
them at the time of their release from prison or jail. In addition, the
CFPB found that JPay violated the CFPA's prohibition against unfair
acts and practices by causing some consumers to be charged fees on
their JPay debit release card that were not authorized by their
cardholder agreements, and the CFPA's prohibition against deceptive
acts and practices by misrepresenting fees of some JPay debit release
cards.
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\5\ Consumer Fin. Prot. Bureau, JPay, LLC, (<a href="https://www.consumerfinance.gov/enforcement/actions/jpay-llc/">https://www.consumerfinance.gov/enforcement/actions/jpay-llc/</a>).
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Libre by Nexus
On February 22, 2021, the CFPB filed a lawsuit against Libre by
Nexus (Libre).\6\ The CFPB alleges that Libre and its owners operated a
scheme through which Libre offers to pay the immigration bonds to
secure the release of consumers held in Federal detention centers in
exchange for large upfront fees and hefty monthly payments, while
concealing or misrepresenting the true costs of its services.
Specifically, the CFPB alleges that Libre and its owners engaged in
deceptive and abusive acts or practices in violation of the CFPA. The
CFPB filed its complaint jointly with the Attorneys General of
Virginia, Massachusetts, and New York. The CFPB seeks an injunction,
damages or restitution to consumers, disgorgement of ill-gotten gains,
and the imposition of civil money penalties.
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\6\ Consumer Fin. Prot. Bureau, Nexus Services Inc., et al.,
(<a href="https://www.consumerfinance.gov/enforcement/actions/nexus-services-inc-et-al/">https://www.consumerfinance.gov/enforcement/actions/nexus-services-inc-et-al/</a>).
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1.2.2 ECOA Referrals to the Department of Justice
The CFPB must refer to DOJ a matter when it has reason to believe
that a creditor has engaged in a pattern or practice of lending
discrimination in violation of ECOA.\7\ The CFPB may refer other
potential ECOA violations to DOJ as well.\8\ In 2021, the CFPB referred
two matters to DOJ about discrimination pursuant to section 706(g) of
ECOA. The referrals involved discrimination in mortgage origination
policies and mortgage origination pricing based on race and national
origin.
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\7\ 15 U.S.C. 1691e(g).
\8\ Id.
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1.2.3 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 CMS.
1.2.4 Pending Fair Lending Investigations
In 2021, the CFPB had a number of ongoing and newly opened fair
lending investigations of institutions. The CFPB investigated or is
actively investigating potential discrimination in several markets,
including student lending, payday lending, credit cards, small business
lending, mortgage lending, including the unlawful practice of
redlining, and discrimination in mortgage pricing exceptions. In 2021,
the CFPB also investigated issues with HMDA reporting. The Bureau is
looking into potential discriminatory conduct, including under ECOA and
unfairness, as well as unlawful conduct targeted at vulnerable
populations.
1.3 Fair Lending Supervision
The CFPB's Supervision program assesses compliance with Federal
fair lending consumer financial 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 2021, the
CFPB initiated 31 fair lending examinations or targeted reviews.
For supervisory communications issued by Supervision during 2021,
the most frequently identified issues related to the CFPB's Prioritized
Assessments. Through Prioritized Assessments, the CFPB continued to
expand its supervisory approach to cover a greater number of
institutions than its typical examination schedule allows, gain a
greater understanding of industry responses to pandemic-related
challenges, and help ensure that entities are attentive to practices
that may result in consumer harm. Certain Prioritized Assessments
evaluated fair lending risks in the small business lending market.
In 2021, the CFPB issued several fair lending-related Matters
Requiring Attention, directing entities to take corrective actions that
will be monitored by the CFPB through follow-up supervisory events.
Regarding Prioritized Assessment observations, examiners encouraged
small business lenders to consider the fair lending risks associated
with participation in the Paycheck Protection Program (PPP), further
implementation of the PPP, and in any new lending program, and to
evaluate and address any risks.
During 2021, informed by the Director's priority to advance equity
using all the tools Congress gave the CFPB, Supervision continued to
develop and dedicate resources to those priorities. As a result of this
prioritization process, the CFPB focused additional fair lending
supervision efforts on various product lines, especially mortgage
origination and small business lending.
2. Rulemaking and Guidance
2.1 Rulemaking
As the CFPB focused on racial and economic equity and responding to
the COVID-19 pandemic, the CFPB was active in rulemaking activities
which are particularly critical for communities and individuals of
color, women, and those who struggled to pay their mortgages or access
small business loans as a result of the impacts of the COVID-19
pandemic. In 2021, the CFPB also issued an NPRM on section 1071 of the
Dodd-Frank Act (section 1071) to collect small business lending data;
participated in interagency rulemaking to improve quality control
standards for automated valuation models (AVM); and issued a final rule
to establish safeguards for mortgage borrowers
[[Page 29121]]
coming out of COVID-19 related forbearances.
The CFPB publishes an agenda of its planned rulemaking activity
biannually, which is available at: <a href="https://www.consumerfinance.gov/rules-policy/regulatory-agenda">https://www.consumerfinance.gov/rules-policy/regulatory-agenda</a>.
2.1.1 Small Business Lending and Data Collection Rulemaking
In the Dodd-Frank Act, Congress directed the CFPB to adopt
regulations governing the collection of small business lending data.
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.
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 September 1, 2021, the CFPB issued a proposed rule amending
Regulation B to implement changes to ECOA made by section 1071.\9\
Consistent with section 1071, the CFPB proposed to require covered
financial institutions to collect and to report to the CFPB data on
applications for credit for small businesses, including those that are
owned by women or minorities. The proposal 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 proposed
rule's effective and compliance dates.\10\
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\9\ The proposal was published in the Federal Register on Oct.
8, 2021. See 86 FR 56356.
\10\ Additional activity has occurred regarding this issue since
the end of this reporting period: The comment period for this
proposed rule closed on January 6, 2022.
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More information is available at: <a href="https://www.consumerfinance.gov/1071-rule/">https://www.consumerfinance.gov/1071-rule/</a>, a page compiling key materials related to the section 1071
rulemaking.
2.1.1 Automated Valuation Models Rulemaking
The CFPB is participating in interagency rulemaking processes with
the Federal Reserve Board (FRB), OCC, Federal Deposit Insurance
Corporation (FDIC), National Credit Union Administration (NCUA), and
Federal Housing Finance Agency (FHFA) (collectively, the Agencies) to
develop regulations to implement the amendments made by the Dodd-Frank
Act to the Financial Institutions Reform, Recovery, and Enforcement Act
of 1989 (FIRREA) concerning automated valuation models. The FIRREA
amendments require implementing regulations for quality control
standards for AVMs. These standards are designed to ensure a high level
of confidence in the estimates produced by the valuation models,
protect against the manipulation of data, seek to avoid conflicts of
interest, require random sample testing and reviews, and account for
any other such factor that the Agencies determine to be appropriate. In
2021, under the process established by Congress in the Small Business
Regulatory Enforcement Fairness Act of 1996 (SBREFA), the CFPB began
preparing the SBREFA process to consult with representatives of small
entities likely to be affected directly by the regulations the CFPB is
considering proposing. To address potential fair lending risk in
models, the CFPB is considering proposing a requirement that covered
institutions establish policies, practices, procedures, and control
systems to ensure that their AVMs comply with applicable
nondiscrimination laws. The Agencies will continue to work to develop a
proposed rule to implement the Dodd-Frank Act's AVM amendments to
FIRREA.\11\
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\11\ Additional activity has occurred regarding this issue since
the end of this reporting period: On February 23, 2022, the CFPB
published the Outline of Proposals and Alternatives Under
Consideration for the Small Business Advisory Review Panel for
Automated Valuation Model Rulemaking. More information is available
at: <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-outlines-options-to-prevent-algorithmic-bias-in-home-valuations/">https://www.consumerfinance.gov/about-us/newsroom/cfpb-outlines-options-to-prevent-algorithmic-bias-in-home-valuations/</a>.
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2.1.3 2021 Mortgage Servicing COVID-19 Rule
On June 28, 2021, the CFPB issued a final rule amending certain
provisions in Regulation X to reinforce equitable economic recovery as
the Federal foreclosure moratoria were phased out, to help protect
borrowers from unwelcome surprises as they exited forbearance, to
prevent unnecessary foreclosures, and to support the housing market's
smooth and orderly transition to post-pandemic operation.\12\ The rule
established temporary special safeguards (which expired on January 1,
2022) to help ensure that borrowers were evaluated for all options,
including loan modifications and selling their homes. Other temporary
protections in the rule, such as a provision permitting mortgage
servicers to offer certain COVID-19-related streamlined loan
modifications based on the evaluation of an incomplete application,
remain in effect. The rule covers loans on principal residences and
generally excludes small servicers. The rule took effect on August 31,
2021.
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\12\ Consumer Fin. Prot. Bureau, Protections for Borrowers
Affected by the COVID-19 Emergency Under the Real Estate Settlement
Procedures Act (RESPA), Regulation X (June 28, 2021), <a href="https://files.consumerfinance.gov/f/documents/cfpb_covid-mortgage-servicing_final-rule_2021-06.pdf">https://files.consumerfinance.gov/f/documents/cfpb_covid-mortgage-servicing_final-rule_2021-06.pdf</a>.
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2.2 Guidance
The CFPB issues guidance to its various stakeholders in many forms,
including interpretive rules, advisory opinions, statements, bulletins,
publications such as Supervisory Highlights, and other resources to aid
in compliance.
In 2021, the CFPB released an interpretive rule confirming that
ECOA's prohibitions on sex discrimination extend to sexual orientation
and gender identity; a statement on how to best serve those who are
limited English proficient; and a bulletin pertaining to supervision
and enforcement priorities related to housing insecurity. The CFPB also
published three issues of Supervisory Highlights and a suite of
resources pertaining to HMDA reporting and filing.
2.2.1 Interpretive Rule Regarding Sexual Orientation and Gender
Identity
On March 9, 2021, the CFPB issued an interpretive rule stating that
the prohibition against sex discrimination under ECOA and Regulation B
includes sexual orientation discrimination and gender identity
discrimination.\13\ This prohibition also covers discrimination based
on actual or perceived nonconformity with traditional sex- or gender-
based stereotypes, and discrimination based on an applicant's
associations. This interpretive rule explains that lenders cannot
discriminate based on sexual orientation or gender identity, and is
consistent with the Supreme Court's 2020 decision in Bostock v. Clayton
County, Georgia, where the Court ruled that the prohibition against sex
discrimination in Title VII of the Civil Rights Act of 1964 (Title VII)
encompasses sexual orientation discrimination and gender identity
discrimination.
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\13\ Consumer Fin. Prot. Bureau, Equal Credit Opportunity
(Regulation B), Discrimination on the Bases of Sexual Orientation
and Gender Identity (Mar. 9, 2021), <a href="https://files.consumerfinance.gov/f/documents/cfpb_ecoa-interpretive-rule_2021-03.pdf">https://files.consumerfinance.gov/f/documents/cfpb_ecoa-interpretive-rule_2021-03.pdf</a>.
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[[Page 29122]]
2.2.2 Statement Regarding the Provision of Financial Products and
Services to Consumers With Limited English Proficiency
On January 13, 2021, the CFPB issued the Statement Regarding the
Provision of Financial Products and Services to Consumers with Limited
English Proficiency (the Statement).\14\ In recognition of the unique
challenges faced by consumers with limited English proficiency (LEP) in
consumer financial markets, the Statement encourages financial
institutions to better serve all consumers, regardless of LEP status.
The Statement provides principles and guidelines to assist financial
institutions in complying with the Dodd-Frank Act, ECOA, and other
applicable laws.
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\14\ Consumer Fin. Prot. Bureau, Statement Regarding the
Provision of Financial Products and Services to Consumers with
Limited English Proficiency (Jan. 13, 2021), <a href="https://files.consumerfinance.gov/f/documents/cfpb_lep-statement_2021-01.pdf">https://files.consumerfinance.gov/f/documents/cfpb_lep-statement_2021-01.pdf</a>.
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2.2.3 Bulletin on Supervision and Enforcement Priorities Regarding
Housing Insecurity
On April 1, 2021, the CFPB issued a compliance bulletin warning
mortgage servicers to take all necessary steps to prevent a wave of
avoidable foreclosures.\15\ The Coronavirus Aid, Relief, and Economic
Security (CARES) Act provided borrowers with federally-backed mortgages
with access to forbearance, and private lenders have also provided
similar assistance. Much of this aid expired in the fall. In light of
these heightened risks to consumers in need of loss mitigation
assistance, the CFPB focused on how mortgage servicers respond to
borrower requests for loss mitigation assistance and process loss
mitigation applications. The CFPB urged servicers to dedicate
sufficient resources and staff to ensure they can communicate clearly
with borrowers (including LEP and other vulnerable borrowers),
effectively manage borrower requests for assistance, promote loss
mitigation, and ultimately reduce avoidable foreclosures and
foreclosure-related costs.
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\15\ Consumer Fin. Prot. Bureau, Bulletin 2021-02: Supervision
and Enforcement Priorities Regarding Housing Insecurity (Apr. 1,
2021), <a href="https://files.consumerfinance.gov/f/documents/cfpb_bulletin-2021-02_supervision-and-enforcement-priorities-regarding-housing_WHcae8E.pdf">https://files.consumerfinance.gov/f/documents/cfpb_bulletin-2021-02_supervision-and-enforcement-priorities-regarding-housing_WHcae8E.pdf</a>.
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2.2.4 Supervisory Highlights
The CFPB's Supervisory Highlights reports provide guidance and
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. Supervisory Highlights is also a
convenient and easily accessible resource for information on the CFPB's
recent guidance documents. In 2021, the CFPB published three issues of
Supervisory Highlights.\16\
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\16\ Issue 23, COVID-19 Prioritized Assessments Special Edition;
Issue 24, Summer 2021; Issue 25, Fall 2021.
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Issue 23, COVID-19 Prioritized Assessments Special Edition was
released on January 19, 2021.\17\ This special edition sought to inform
the public of observations in the CFPB's Prioritized Assessment
supervisory work conducted in 2020 after the sudden onset of the COVID-
19 pandemic. The Prioritized Assessments focused on evaluating risks to
consumers resulting from the pandemic. Examiners identified several
issues in small business lending that may pose fair lending risk. These
findings included policies that limited eligibility for PPP loans to
existing customers of the institution, and thereby restricted access to
PPP loans beyond the eligibility requirements of the CARES Act and
orders issued by the Small Business Administration (SBA). Examiners
found that these additional requirements or limitations, commonly known
as ``overlays,'' may have had a disproportionate impact on a prohibited
basis and presented heightened fair lending risk.\18\
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\17\ Consumer Fin. Prot. Bureau, Issue 23, COVID-19 Prioritized
Assessments Special Edition (Jan. 2021), <a href="https://files.consumerfinance.gov/f/documents/cfpb_supervisory-highlights_issue-23_2021-01.pdf">https://files.consumerfinance.gov/f/documents/cfpb_supervisory-highlights_issue-23_2021-01.pdf</a>.
\18\ Examiners did not, however, conduct a full analysis of any
institution's overlay, and did not make any determination about
whether an institution's use of the overlay complies with ECOA or
Regulation B. Examiners encouraged the small business lenders to
consider the fair lending risks associated with participation in the
PPP, in further implementation of the PPP, and in any new lending
program and to evaluate and address any risks.
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On June 29, 2021, the CFPB released the 24th edition of Supervisory
Highlights.\19\ The findings included in this report cover examinations
completed between January 1, 2020 to December 31, 2020. In one or more
institutions, examiners uncovered errors in reporting of HMDA data,
often tied to deficient CMS. Offending institutions were required to
review, correct, and resubmit their data, as well as enhance their
monitoring practices and make improvements to their CMS. Examiners also
uncovered an institution engaging in the unlawful practice of
redlining. The CFPB referred the matter to DOJ and is considering
additional actions. The lender plans to undertake remedial and
corrective actions regarding this violation, which are under review by
the CFPB.
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\19\ Consumer Fin. Prot. Bureau, Issue 25, Fall 2021 (Dec. 8,
2021), <a href="https://www.consumerfinance.gov/data-research/research-reports/supervisory-highlights-issue-24-summer-2021/">https://www.consumerfinance.gov/data-research/research-reports/supervisory-highlights-issue-24-summer-2021/</a>.
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The CFPB released the 25th edition of Supervisory Highlights on
December 8, 2021, covering examinations completed between January 2021
and June 2021.\20\ The findings included observations that mortgage
lenders violated ECOA and Regulation B by discriminating against
African American and female borrowers in the granting of pricing
exceptions. In response to these findings, lenders plan to undertake
remedial and corrective actions regarding these violations, which are
under review by the CFPB. Examiners also found that lenders violated
ECOA and Regulation B by improperly inquiring about small business
applicants' religion and by considering an applicant's religion in the
credit decision. For religious institutions applying for small business
loans, lenders utilized a questionnaire which contained explicit
inquiries about the applicant's religion. Examiners determined that
lenders also denied credit to an applicant identified as a religious
institution because the applicant did not respond to the questionnaire.
In response to these findings, lenders updated the questionnaire to
ensure compliance with ECOA and Regulation B. In addition, lenders also
identified affected applicants and provided an offer for each
identified applicant to reapply for a small business loan.
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\20\ Consumer Fin. Prot. Bureau, Issue 25, Fall 2021 (Dec. 8,
2021), <a href="https://www.consumerfinance.gov/documents/10279/cfpb_supervisory-highlights_issue-25_2021-12.pdf">https://www.consumerfinance.gov/documents/10279/cfpb_supervisory-highlights_issue-25_2021-12.pdf</a>.
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All issues of Supervisory Highlights are available at: <a href="https://www.consumerfinance.gov/compliance/supervisory-highlights/">https://www.consumerfinance.gov/compliance/supervisory-highlights/</a>.
2.2.5 HMDA Guidance and Resources
Given the importance of accurately reported HMDA data to the CFPB's
fair lending mission, 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. These resources include: An
Executive Summary of HMDA rule changes; \21\ Small Entity Compliance
Guide; \22\ Key
[[Page 29123]]
Dates Timeline; \23\ Institutional and Transactional Coverage Charts;
\24\ Reportable HMDA Data Chart; \25\ sample data collection form; \26\
FAQs; \27\ and downloadable webinars,\28\ which provide an overview of
the HMDA rule. 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.\29\
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\21\ Consumer Fin. Prot. Bureau, Executive Summary of the 2020
Home Mortgage Disclosure Act (Regulation C) Final Rule (Apr. 16,
2020), <a href="https://files.consumerfinance.gov/f/documents/cfpb_hmda_executive-summary_2020-04.pdf">https://files.consumerfinance.gov/f/documents/cfpb_hmda_executive-summary_2020-04.pdf</a>.
\22\ Consumer Fin. Prot. Bureau, Home Mortgage Disclosure
(Regulation C) Small Entity Compliance Guide (May 2020), <a href="https://files.consumerfinance.gov/f/documents/cfpb_hmda_small-entity-compliance-guide.pdf">https://files.consumerfinance.gov/f/documents/cfpb_hmda_small-entity-compliance-guide.pdf</a>.
\23\ Consumer Fin. Prot. Bureau, HMDA Rule Key Dates Timeline,
January 1, 2020 to December 31, 2022, <a href="https://files.consumerfinance.gov/f/documents/cfpb_hmda-key-dates-timeline-2020-2022.pdf">https://files.consumerfinance.gov/f/documents/cfpb_hmda-key-dates-timeline-2020-2022.pdf</a>.
\24\ Consumer Fin. Prot. Bureau, HMDA Institutional Coverage
Chart, <a href="https://www.consumerfinance.gov/documents/9568/cfpb_2020-hmda-institutional-coverage_03-2021.pdf">https://www.consumerfinance.gov/documents/9568/cfpb_2020-hmda-institutional-coverage_03-2021.pdf</a>; Consumer Fin. Prot. Bureau,
HMDA Transactional Coverage Chart, <a href="https://www.consumerfinance.gov/documents/8724/cfpb_2020-hmda-transactional-coverage.pdf">https://www.consumerfinance.gov/documents/8724/cfpb_2020-hmda-transactional-coverage.pdf</a>.
\25\ Consumer Fin. Prot. Bureau, Reportable HMDA Data: A
Regulatory and Reporting Overview Reference Chart for HMDA Data
Collected in 2021, <a href="https://files.consumerfinance.gov/f/documents/cfpb_2021-reportable-hmda-data.pdf">https://files.consumerfinance.gov/f/documents/cfpb_2021-reportable-hmda-data.pdf</a>.
\26\ Consumer Fin. Prot. Bureau, Sample Data Collection Form,
<a href="https://files.consumerfinance.gov/f/documents/201708_cfpb_hmda-sample-data-collection-form.pdf">https://files.consumerfinance.gov/f/documents/201708_cfpb_hmda-sample-data-collection-form.pdf</a>.
\27\ Consumer Fin. Prot. Bureau, Home Mortgage Disclosure Act
FAQs, <a href="https://www.consumerfinance.gov/compliance/compliance-resources/mortgage-resources/hmda-reporting-requirements/home-mortgage-disclosure-act-faqs/">https://www.consumerfinance.gov/compliance/compliance-resources/mortgage-resources/hmda-reporting-requirements/home-mortgage-disclosure-act-faqs/</a>.
\28\ Consumer Fin. Prot. Bureau, HMDA Webinars, <a href="https://www.consumerfinance.gov/compliance/compliance-resources/mortgage-resources/hmda-reporting-requirements/webinars/">https://www.consumerfinance.gov/compliance/compliance-resources/mortgage-resources/hmda-reporting-requirements/webinars/</a>.
\29\ See, Interactive Bureau Regulations, Regulation C, <a href="https://www.consumerfinance.gov/rules-policy/regulations/1003/">https://www.consumerfinance.gov/rules-policy/regulations/1003/</a>.
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Together with the Federal Financial Institutions Examination
Council (FFIEC),\30\ 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 October 2021, the CFPB released the 2022
Filing Instructions Guide \31\ and the 2021 Supplemental Guide for
Quarterly Filers.\32\ Together with the FFIEC, in March 2021, the CFPB
also published the 2021 edition of the HMDA Getting it Right Guide.\33\
The CFPB also works with the FFIEC to publish data submission resources
for HMDA filers and vendors on its Resources for HMDA Filers website,
<a href="https://ffiec.cfpb.gov">https://ffiec.cfpb.gov</a>.
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\30\ 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, <a href="http://www.ffiec.gov">http://www.ffiec.gov</a> (last
visited Mar. 11, 2022).
\31\ Consumer Fin. Prot. Bureau, Filing instructions guide for
HMDA data collected in 2022 (Oct. 2021), <a href="https://s3.amazonaws.com/cfpb-hmda-public/prod/help/2022-hmda-fig.pdf">https://s3.amazonaws.com/cfpb-hmda-public/prod/help/2022-hmda-fig.pdf</a>.
\32\ Consumer Fin. Prot. Bureau, Supplemental Guide for
Quarterly Filers for 2022 (Sep. 2021), <a href="https://s3.amazonaws.com/cfpb-hmda-public/prod/help/supplemental-guide-for-quarterly-filers-for-2022.pdf">https://s3.amazonaws.com/cfpb-hmda-public/prod/help/supplemental-guide-for-quarterly-filers-for-2022.pdf</a>.
\33\ Federal Fin. Instit. Examination Council, A Guide to HMDA
Reporting, Getting it Right! (Mar. 22, 2021), <a href="https://www.ffiec.gov/hmda/pdf/2021Guide.pdf">https://www.ffiec.gov/hmda/pdf/2021Guide.pdf</a>.
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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 <a href="/cdn-cgi/l/email-protection#5810151c19103d3428183b3e283a763f372e"><span class="__cf_email__" data-cfemail="f1b9bcb5b0b9949d81b192978193df969e87">[email protected]</span></a>. 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 <a href="http://www.reginquiries.consumerfinance.gov">www.reginquiries.consumerfinance.gov</a>.
3. Stakeholder Engagement
The CFPB robustly engages with external stakeholders including
consumer advocates, civil rights organizations, industry, academia, and
other government agencies. This engagement comes in varied forms,
including broadcasting the CFPB's work and policy priorities through
CFPB channels like blogs, videos, press releases, or speeches; reaching
out directly to advocates and consumers through website updates,
issuing Requests for Information (RFIs), hosting tech sprints, and
ordering entities to engage with the CFPB. The CFPB also regularly
issues numerous reports analyzing data and market conditions. To
further an all-of-government approach to fair lending enforcement, the
CFPB also participates in interagency groups. All of these engagements
are critical to informing the CFPB's work and broadcasting the CFPB's
priorities and recent work to its stakeholders.
3.1 Promoting and Broadcasting the Fair Lending and Access to Credit
Mission
3.1.1 CFPB Blog Posts, Press Releases, Videos, and Other Communications
The CFPB regularly uses blog posts, statements, press releases,
videos, guides, brochures, social media, and other tools to timely and
effectively communicate with stakeholders. These tools are targeted to
individuals, advocates, civil rights organizations, government
agencies, small business owners, financial institutions, and other
stakeholders to promote and broadcast news and information about
emerging fair lending issues, areas of concern, CFPB initiatives, and
more.
In 2021, the CFPB published 10 blog posts related to fair lending
topics including: The publication of the LEP statement; \34\ team
presentations from the CFPB's tech sprints; \35\ the publication of the
2020 Fair Lending Annual Report; \36\ the CFPB's commitment to racial
and economic equity; \37\ a report analyzing differences in lending
patterns for lenders below and above the 100-loan closed-end threshold
set by the 2020 HMDA rule; \38\ a report on Asian American and Pacific
Islanders in the Mortgage Market; \39\ the CFPB's prioritization of
resources to focus on the role of racial bias in home appraisals; \40\
mortgage servicers' communication capabilities and outreach efforts for
borrowers; \41\ updates to the whistleblower page; \42\ and the CFPB's
Amicus brief in Fralish v. Bank of America.\43\
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\34\ Kathleen L. Kraninger, Bureau takes additional steps to
foster an inclusive financial system (Jan. 13, 2021), <a href="https://www.consumerfinance.gov/about-us/blog/bureau-takes-additional-steps-to-foster-an-inclusive-financial-system/">https://www.consumerfinance.gov/about-us/blog/bureau-takes-additional-steps-to-foster-an-inclusive-financial-system/</a>.
\35\ Dave Uejio, Innovation and collaboration: Tech sprints
support improvements in consumer notifications and data collection
and processing (Apr. 26, 2021), <a href="https://www.consumerfinance.gov/about-us/blog/innovation-and-collaboration-tech-sprints-support-improvements-consumer-notifications-data-collection-processing/">https://www.consumerfinance.gov/about-us/blog/innovation-and-collaboration-tech-sprints-support-improvements-consumer-notifications-data-collection-processing/</a>.
\36\ Patrice Alexander Ficklin, Frank Vespa-Papaleo, Protecting
consumers through a pandemic: 2020 Fair Lending Report to Congress
(Apr. 14, 2021), <a href="https://www.consumerfinance.gov/about-us/blog/2020-fair-lending-report-to-congress/">https://www.consumerfinance.gov/about-us/blog/2020-fair-lending-report-to-congress/</a>.
\37\ Dave Uejio, Addressing racial inequities in consumer
finance markets (June 2, 2021), <a href="https://www.consumerfinance.gov/about-us/blog/addressing-racial-inequities-consumer-finance-markets/">https://www.consumerfinance.gov/about-us/blog/addressing-racial-inequities-consumer-finance-markets/</a>.
\38\ Feng Liu and Alex Rodrigue, HMDA Threshold Report Blog
(June 14, 2021), <a href="https://www.consumerfinance.gov/about-us/blog/hmda-threshold-report-blog/">https://www.consumerfinance.gov/about-us/blog/hmda-threshold-report-blog/</a>.
\39\ Alexandra Dobre and Young Jo, Challenging the Model
Minority Myth: A closer look at Asian American and Pacific Islanders
in the mortgage market (July 1, 2021), <a href="https://www.consumerfinance.gov/about-us/blog/challenging-model-minority-myth-asian-american-pacific-islanders-mortgage-market/">https://www.consumerfinance.gov/about-us/blog/challenging-model-minority-myth-asian-american-pacific-islanders-mortgage-market/</a>.
\40\ Patrice Alexander Ficklin, CFPB Prioritizing Resources
Against Racial Bias in Home Appraisals (July 2, 2021), <a href="https://www.consumerfinance.gov/about-us/blog/cfpb-prioritizing-resources-against-racial-bias-home-appraisals/">https://www.consumerfinance.gov/about-us/blog/cfpb-prioritizing-resources-against-racial-bias-home-appraisals/</a>.
\41\ Consumer Fin. Prot. Bureau, New rule ensures mortgage
servicers provide options to potentially vulnerable borrowers
exiting forbearance (Sep. 30, 2021), <a href="https://www.consumerfinance.gov/about-us/blog/new-rule-ensures-mortgage-servicers-provide-options-potentially-vulnerable-borrowers-exiting-forbearance/">https://www.consumerfinance.gov/about-us/blog/new-rule-ensures-mortgage-servicers-provide-options-potentially-vulnerable-borrowers-exiting-forbearance/</a>.
\42\ Erie Meyer, CFPB calls tech workers to action (Dec. 15,
2021), CFPB calls tech workers to action [verbar] Consumer Financial
Protection Bureau (<a href="http://consumerfinance.gov">consumerfinance.gov</a>).
\43\ Seth Frotman, CFPB is standing up for civil rights
protections (Dec. 17, 2021), <a href="https://www.consumerfinance.gov/about-us/blog/cfpb-standing-up-civil-rights-protections/">https://www.consumerfinance.gov/about-us/blog/cfpb-standing-up-civil-rights-protections/</a>.
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[[Page 29124]]
In 2021, the CFPB also issued 12 press releases related to fair
lending and access to credit issues, including: The Libre by Nexus
enforcement action; \44\ the sexual orientation and gender identity
interpretive rule; \45\ the Interagency RFI on Artificial Intelligence
(AI); \46\ the availability of the 2020 HMDA Data; \47\ the extension
of the comment period for the AI RFI; \48\ the proposed small business
lending rule; \49\ two press releases related to the LendUp enforcement
action; \50\ the JPay enforcement action; \51\ the CFPB's orders to
tech giants to turn over information on their payment system plans;
\52\ the Trustmark enforcement matter; \53\ and the RFI to seek input
on detecting discrimination in mortgage lending.\54\
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\44\ Consumer Fin. Prot. Bureau, Consumer Financial Protection
Bureau and Virginia, Massachusetts, and New York Attorneys General
Sue Libre for Predatory Immigrant-Services Scam (Feb. 22, 2021),
<a href="https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-and-virginia-massachusetts-and-new-york-attorneys-general-sue-libre-for-predatory-immigrant-services-scam/">https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-and-virginia-massachusetts-and-new-york-attorneys-general-sue-libre-for-predatory-immigrant-services-scam/</a>.
\45\ Consumer Fin. Prot. Bureau, CFPB Clarifies That
Discrimination by Lenders on the Basis of Sexual Orientation and
Gender Identity Is Illegal (Mar. 9, 2021), <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-clarifies-discrimination-by-lenders-on-basis-of-sexual-orientation-and-gender-identity-is-illegal/">https://www.consumerfinance.gov/about-us/newsroom/cfpb-clarifies-discrimination-by-lenders-on-basis-of-sexual-orientation-and-gender-identity-is-illegal/</a>.
\46\ Consumer Fin. Prot. Bureau, Agencies Seek Wide Range of
Views on Financial Institutions' Use of Artificial Intelligence
(Mar. 29, 2021), <a href="https://www.consumerfinance.gov/about-us/newsroom/agencies-seek-wide-range-of-views-on-financial-institutions-use-of-artificial-intelligence/">https://www.consumerfinance.gov/about-us/newsroom/agencies-seek-wide-range-of-views-on-financial-institutions-use-of-artificial-intelligence/</a>.
\47\ Consumer Fin. Prot. Bureau, 2020 HMDA Data on Mortgage
Lending Now Available (Mar. 31, 2021), <a href="https://www.consumerfinance.gov/about-us/newsroom/2020-hmda-data-on-mortgage-lending-now-available/">https://www.consumerfinance.gov/about-us/newsroom/2020-hmda-data-on-mortgage-lending-now-available/</a>.
\48\ Consumer Fin. Prot. Bureau, Agencies Extend Comment Period
on Request for Information on Artificial Intelligence (May 17,
2021), <a href="https://www.consumerfinance.gov/about-us/newsroom/agencies-extend-comment-period-on-request-for-information-on-artificial-intelligence/">https://www.consumerfinance.gov/about-us/newsroom/agencies-extend-comment-period-on-request-for-information-on-artificial-intelligence/</a>.
\49\ Consumer Fin. Prot. Bureau, CFPB Proposes Rule to Shine New
Light on Small Businesses' Access to Credit (Sep. 1, 2021), <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-proposes-rule-to-shine-new-light-on-small-businesses-access-to-credit/">https://www.consumerfinance.gov/about-us/newsroom/cfpb-proposes-rule-to-shine-new-light-on-small-businesses-access-to-credit/</a>.
\50\ Consumer Fin. Prot. Bureau, CFPB Sues LendUp Loans for
Violating 2016 Consent Order and Deceiving Borrowers (Sep. 8, 2021),
<a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-sues-lendup-loans-for-violating-2016-consent-order-and-deceiving-borrowers/">https://www.consumerfinance.gov/about-us/newsroom/cfpb-sues-lendup-loans-for-violating-2016-consent-order-and-deceiving-borrowers/</a>;
Consumer Fin. Prot. Bureau, CFPB Shutters Lending by VC-Backed
Fintech for Violating Agency Order (Dec. 21, 2021), <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-shutters-lending-by-vc-backed-fintech-for-violating-agency-order/">https://www.consumerfinance.gov/about-us/newsroom/cfpb-shutters-lending-by-vc-backed-fintech-for-violating-agency-order/</a>.
\51\ Consumer Fin. Prot. Bureau, CFPB Penalizes JPay for
Siphoning Taxpayer-Funded Benefits Intended to Help People Re-enter
Society After Incarceration (Oct. 19, 2021), <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-penalizes-jpay-for-siphoning-taxpayer-funded-benefits-intended-to-help-people-re-enter-society-after-incarceration/">https://www.consumerfinance.gov/about-us/newsroom/cfpb-penalizes-jpay-for-siphoning-taxpayer-funded-benefits-intended-to-help-people-re-enter-society-after-incarceration/</a>.
\52\ Consumer Fin. Prot. Bureau, CFPB Orders Tech Giants to Turn
Over Information on their Payment System Plans (Oct. 21, 2021),
<a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-orders-tech-giants-to-turn-over-information-on-their-payment-system-plans/">https://www.consumerfinance.gov/about-us/newsroom/cfpb-orders-tech-giants-to-turn-over-information-on-their-payment-system-plans/</a>.
\53\ Consumer Fin. Prot. Bureau, CFPB, DOJ and OCC Take Action
Against Trustmark National Bank for Deliberate Discrimination
Against Black and Hispanic Families (Oct. 22, 2021), <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-doj-and-occ-take-action-against-trustmark-national-bank-for-deliberate-discrimination-against-black-and-hispanic-families/">https://www.consumerfinance.gov/about-us/newsroom/cfpb-doj-and-occ-take-action-against-trustmark-national-bank-for-deliberate-discrimination-against-black-and-hispanic-families/</a>.
\54\ Consumer Fin. Prot. Bureau, CFPB Seeks Input on Detecting
Discrimination in Mortgage Lending (Nov. 16, 2021), <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-seeks-input-on-detecting-discrimination-in-mortgage-lending/">https://www.consumerfinance.gov/about-us/newsroom/cfpb-seeks-input-on-detecting-discrimination-in-mortgage-lending/</a>.
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In addition, the CFPB produced two fair lending-related videos in
2021, one by Acting Director Uejio on racial inequities in consumer
finance markets,\55\ and one by Fair Lending Director Patrice Ficklin
promoting the small business tell your story portal.\56\
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\55\ Consumer Fin. Prot. Bureau, Director's Message: Addressing
financial discrimination & racial equity (June 3, 2021), <a href="https://www.youtube.com/watch?app=desktop&v=tFVyvqVCr1A&feature=youtu.be">https://www.youtube.com/watch?app=desktop&v=tFVyvqVCr1A&feature=youtu.be</a>.
\56\ Consumer Fin. Prot. Bureau, Share your small business story
(Sep. 1, 2021), <a href="https://www.youtube.com/watch?app=desktop&v=rVti779N8wE&feature=youtu.be">https://www.youtube.com/watch?app=desktop&v=rVti779N8wE&feature=youtu.be</a>.
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On August 17, 2021, the CFPB published a revised Focus on Reentry:
Criminal Justice Guide as a part of the CFPB's Your Money, Your Goals
financial empowerment resources.\57\ The Guide is designed to help
frontline staff address the unique challenges of individuals involved
in the criminal justice system.
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\57\ Consumer Fin. Prot. Bureau, Focus on Reentry: Criminal
Justice Guide (July 2021), <a href="https://files.consumerfinance.gov/f/documents/cfpb_ymyg_reentry_supplement.pdf">https://files.consumerfinance.gov/f/documents/cfpb_ymyg_reentry_supplement.pdf</a>.
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Also, in 2021, the CFPB updated two brochures \58\ on credit
discrimination, titled Know Your Rights, Credit Discrimination is
Illegal and Helping Consumers Spot Credit Discrimination. The brochures
target consumers as well as those who work with consumers. The
brochures are available in English, Spanish, Chinese, Vietnamese,
Korean, Tagalog, Russian, Haitian Creole, and Arabic.
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\58\ Consumer Fin. Prot. Bureau, What protections do I have
against credit discrimination? <a href="https://www.consumerfinance.gov/fair-lending/">https://www.consumerfinance.gov/fair-lending/</a>.
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3.1.2 CFPB Engagements With Stakeholders
The CFPB often engages directly with stakeholders to inform the
CFPB's policy decisions and message the CFPB's priorities and recent
work. In 2021, CFPB staff participated in 236 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 and
communities the CFPB is charged with protecting.
For example, on June 15, 2021, the CFPB hosted a public roundtable
to look closer at the role of racial bias in home appraisals.\59\ At
the roundtable, the CFPB heard from civil rights activists, consumer
advocates, and local leaders who see the impacts of these biases in
their communities. The roundtable also included partner agencies,
including the NCUA, the OCC, and the Department of Housing and Urban
Development (HUD). Additionally, Director Chopra hosted other
roundtables in 2021 with consumer groups that pertained to fair
lending-related issues.
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\59\ A recording of the event can be accessed at: <a href="https://www.consumerfinance.gov/about-us/events/archive-past-events/virtual-home-appraisal-bias-event/">https://www.consumerfinance.gov/about-us/events/archive-past-events/virtual-home-appraisal-bias-event/</a>.
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Throughout 2021, numerous other engagements centered around racial
and economic equity issues; COVID-19 impacts on consumers; traditional
and digital redlining, to include algorithmic bias issues; special
purpose credit programs; the section 1071 rulemaking governing small
business lending data collection and reporting; HMDA; agricultural and
rural lending; student lending; and credit reporting.
3.1.3 Website Updates
On September 1, 2021, the CFPB launched a new landing page for
small business owners and entrepreneurs. Titled, ``Shining a light on
small business lending,'' the landing page highlights statistics about
small businesses and provides numerous resources on how to start and
grow a small business for small business owners and entrepreneurs. The
landing page also has information about lending discrimination and how
ECOA protects small businesses, including minority-owned and women-
owned businesses, against discrimination. The page also provides a way
for small business owners and entrepreneurs to communicate directly
with the CFPB with a ``Share your small business story'' portal. This
portal allows small business owners to share their experiences with
trying to get a small business loan. In conjunction with broader small
business lending data collection rulemaking efforts (see section
2.1.1), this information will help inform the CFPB's work to protect
small business owners and create a fairer marketplace. The web page is
available at: <a href="http://consumerfinance.gov/about-us/small-business-lending">consumerfinance.gov/about-us/small-business-lending</a>.
In a call to action targeted at tech workers such as engineers,
data
[[Page 29125]]
scientists, and others having detailed knowledge of algorithms and
technologies used by industry, on December 15, 2021, the CFPB announced
that the whistleblower web page was redesigned. This redesign better
supports the CFPB's mission in a rapidly evolving consumer financial
market, which ensures that all credible tips, including those that
involve technology or implicate fair lending, receive appropriate
analysis and investigation. The web page is available at: <a href="https://www.consumerfinance.gov/enforcement/information-industry-whistleblowers/">https://www.consumerfinance.gov/enforcement/information-industry-whistleblowers/</a>.
In May of 2021, the CFPB launched a new racial equity landing page
as a resource and repository of racial equity content. The page
includes information about the pandemic's effects on underserved
communities, housing insecurity issues, as well as the CFPB's
responsive work in these areas. This web page is a resource for
individuals, advocates, and others. The web page is available at:
<a href="https://www.consumerfinance.gov/about-us/racial-equity">https://www.consumerfinance.gov/about-us/racial-equity</a>.
Throughout 2021, the CFPB continued to manage an interagency
housing portal which serves as a repository of resources for
homeowners, renters, and landlords, available in seven languages. The
portal includes a rental assistance finder, which helps renters locate
and contact organizations that may be able to provide support for
COVID-19 related rent shortfalls, past due utility bills, and moving
expenses. The portal also provides resources for those who may have
lost their housing. The web page is available at: <a href="https://www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/">https://www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/</a>.
3.2 Seeking Information
3.2.1 Requests for Information
On March 29, 2021, the CFPB, the OCC, the FRB, the FDIC, and the
NCUA published an RFI seeking information from the public on how
financial institutions use AI in their activities, including fraud
prevention, personalization of customer services, credit underwriting,
and other operations. More specifically, the RFI sought comments to
better understand the use of AI, including machine learning, by
financial institutions; appropriate governance, risk management, and
controls over AI; and challenges in developing, adopting, and managing
AI. On May 17, 2021, the agencies announced that they extended the
comment period on the RFI.\60\ The comment period closed on July 1,
2021.
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\60\ Consumer Fin. Prot. Bureau, Request for Information and
Comment on Financial Institutions' Use of Artificial Intelligence,
including Machine Learning (May 17, 2021), <a href="https://files.consumerfinance.gov/f/documents/cfpb_ai-rfi_frn_2021-03.pdf">https://files.consumerfinance.gov/f/documents/cfpb_ai-rfi_frn_2021-03.pdf</a>.
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On November 16, 2021, the CFPB issued an RFI seeking input on rules
implementing HMDA in order to conduct an assessment of the 2015 HMDA
Rule and related amendments.\61\ The CFPB requested public comment on
its plans for the assessment as well as certain recommendations and
information that may be useful in conducting the planned assessment.
The RFI specifically sought information on institutional and
transactional coverage; data points; benefits of the new data and
disclosure requirements; and operational and compliance costs.
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\61\ Consumer Fin. Prot. Bureau, Request for Information
Regarding the HMDA Rule Assessment (Nov. 16, 2021), <a href="https://files.consumerfinance.gov/f/documents/cfpb_hmda-rule-assessment_rfi_2021-11.pdf">https://files.consumerfinance.gov/f/documents/cfpb_hmda-rule-assessment_rfi_2021-11.pdf</a>.
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3.2.2 HMDA Tech Sprint: Improving HMDA Data Submissions and Publishing
On March 22-26, 2021, the CFPB held its second tech sprint which
focused on improvements to submitting and publishing HMDA data.
Participants in this tech sprint were invited to help create additional
tools for users on the HMDA Platform and to develop and document HMDA
Platform Applicant Programming Interfaces, known as the ``Publications
Track.'' Alternatively, participants were able to develop additional
enhancements to HMDA data products and services, or new ways to
interact with existing products, data analysis capabilities, or
interfaces to other datasets, known as the ``Submissions Track.''
Seventeen teams participated during the tech sprint, which concluded
with a demonstration day where each team presented their resulting
innovations to a panel of experts who reviewed them on creativity and
innovation; effectiveness and impact; and market readiness.
Recordings of the team presentations are available at: <a href="https://www.consumerfinance.gov/rules-policy/innovation/cfpb-tech-sprints/home-mortgage-disclosure-act-tech-sprint/">https://www.consumerfinance.gov/rules-policy/innovation/cfpb-tech-sprints/home-mortgage-disclosure-act-tech-sprint/</a>.
3.2.3 Big Tech Orders
On October 21, 2021, the CFPB issued a series of orders pursuant to
section 1022(c)(4) of the CFPA to large technology companies (Big Tech)
operating payments systems to collect information on their business
practices.\62\ This information will help the CFPB better understand
how these firms use personal payments data and manage data access to
users so the CFPB can ensure adequate consumer protection.
Specifically, the orders sought information on data harvesting and
monetization, access restriction and user choice, and other consumer
protections.
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\62\ Consumer Fin. Prot. Bureau, Order To File Information On
Payments Products (Oct. 21, 2021), <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-orders-tech-giants-to-turn-over-information-on-their-payment-system-plans/">https://www.consumerfinance.gov/about-us/newsroom/cfpb-orders-tech-giants-to-turn-over-information-on-their-payment-system-plans/</a>.
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3.3 Data and Reports
3.3.1 Availability of 2020 HMDA Data
The HMDA data are the most comprehensive publicly available
information on mortgage market activity. The data are used by consumer
groups, regulators, industry, and others to assess potential fair
lending risks and for other purposes.
On March 31, 2021, the CFPB announced the availability of the 2020
HMDA modified loan application register data on the FFIEC's HMDA
Platform for approximately 4,400 HMDA filers.\63\ These published data
contain loan-level information filed by financial institutions,
modified to protect privacy.
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\63\ Consumer Fin. Prot. Bureau, 2020 HMDA Data on Mortgage
Lending Now Available (Mar. 31, 2021), <a href="https://www.consumerfinance.gov/about-us/newsroom/2020-hmda-data-on-mortgage-lending-now-available/">https://www.consumerfinance.gov/about-us/newsroom/2020-hmda-data-on-mortgage-lending-now-available/</a>.
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On June 17, 2021, the FFIEC announced the availability of
additional data on 2020 mortgage lending transactions at 4,475
financial institutions reported under HMDA.\64\ This data included 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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\64\ Consumer Fin. Prot. Bureau, FFIEC Announces Availability of
2020 Data on Mortgage Lending (June 17, 2021), <a href="https://www.consumerfinance.gov/about-us/newsroom/ffiec-announces-availability-of-2020-data-on-mortgage-lending/">https://www.consumerfinance.gov/about-us/newsroom/ffiec-announces-availability-of-2020-data-on-mortgage-lending/</a>.
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3.3.2 A Brief Note on General Lending Patterns of Small to Medium Size
Closed-End HMDA Reporters
The CFPB released a report analyzing differences in lending
patterns for lenders below and above the 100-loan closed-end threshold
set by the 2020 HMDA rule.\65\ Released on June 14, 2021, the report,
though preliminary,\66\
[[Page 29126]]
found some differences in lending patterns for lenders above and below
the threshold. In general, those lenders newly exempted under the 2020
HMDA Rule (i.e., with annual origination volumes that exceed the 25-
loan threshold but fall below the 100-loan threshold) do not appear to
be more or less likely to lend to Black and non-white Hispanic
borrowers than larger volume lenders. There is some evidence that these
lenders might be more likely to lend to non-natural persons, i.e.,
trusts, corporations or partnerships. The analysis also suggests that a
higher percentage of their loans are secured by properties in low-to-
moderate income census tracts, properties in rural areas, second liens,
and investment properties. Their borrowers also appear to have higher
incomes than larger lenders' borrowers as well.
---------------------------------------------------------------------------
\65\ Consumer Fin. Prot. Bureau, A Brief Note on General Lending
Patterns of Small to Medium Size Closed-end HMDA Reporters (June 14,
2021), <a href="https://files.consumerfinance.gov/f/documents/cfpb_general-lending-patterns-hmda-reporters_report_2021-06.pdf">https://files.consumerfinance.gov/f/documents/cfpb_general-lending-patterns-hmda-reporters_report_2021-06.pdf</a>.
\66\ The analysis in this report is necessarily limited and
preliminary and is not an assessment by the CFPB as to the
effectiveness of the thresholds change in meeting HMDA's objectives.
Additional analysis is needed to better understand these findings
and to explore the impact of the threshold changes on data available
for specific markets.
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Data Point: Asian Americans and Pacific Islanders in the Market
On July 1, 2021, the CFPB released a report examining the
differences in mortgage characteristics within the Asian American and
Pacific Islanders (AAPI) population.\67\ The ``Model Minority myth''
characterizes this expansive demographic group as a monolithic group,
with uniform high achievement and high income, relatively untouched by
racial and ethnic discrimination. Using the 2020 HMDA data, the report
found that borrowers who identified their AAPI subgroup as Asian Indian
or Chinese paid lower interest rates than non-Hispanic white borrowers.
In contrast, Hawaiian or Pacific Islanders (HoPIs), as a group, paid
higher interest rates and loan costs when compared to other Asian
borrowers, with considerable variation within subgroups of HoPIs.
Denial rates varied across AAPI subgroups, with some subgroups and
HoPIs being denied at rates similar to denial rates for Black and
Hispanic white borrowers, further challenging the myth that the AAPI
population does not experience racial and ethnic discrimination in the
mortgage market. Even though AAPIs, on average, had lower interest
rates, homeownership rates generally lag those of non-Hispanic whites.
This lag in homeownership, as well as the variability in denial rates
and loan costs, could have implications for the ability of AAPI
communities to build wealth and stability.
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\67\ Consumer Fin. Prot. Bureau, Data Point: Asian American and
Pacific Islanders in the Mortgage Market (July 1, 2021), <a href="https://www.consumerfinance.gov/documents/9852/cfpb_aapi-mortgage-market_report_2021-07.pdf">https://www.consumerfinance.gov/documents/9852/cfpb_aapi-mortgage-market_report_2021-07.pdf</a>.
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Data Point: 2020 Mortgage Market Activity and Trends
On August 19, 2021, the CFPB released a report on residential
mortgage lending trends.\68\ The report found that the total number of
closed-end originations as well as applications increased substantially
between 2019 and 2020. Most of the increase was driven by the refinance
boom observed in 2020. The report also notes that, while the number of
financial institutions reporting 2020 HMDA data declined compared to
2019, the number of closed-end records in 2020 increased compared to
the previous year. While mortgage activity generally increased, year
over year, significant differences between demographic groups
persisted, including higher interest rates and denials among Black and
Hispanic consumers in the mortgage market.
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\68\ Consumer Fin. Prot. Bureau, Data Point: 2020 Mortgage
Market Activity and Trends (Aug. 19, 2021), <a href="https://www.consumerfinance.gov/documents/10009/cfpb_2020-mortgage-market-activity-trends_report_2021-08.pdf">https://www.consumerfinance.gov/documents/10009/cfpb_2020-mortgage-market-activity-trends_report_2021-08.pdf</a>.
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Manufactured Housing Finance: New Insights From HMDA Data Report
On May 27, 2021, the CFPB released a report examining the
differences between mortgage loans for site-built homes, mortgage loans
for manufactured homes (referred to as ``MH mortgages''), and chattel
loans for manufactured homes.\69\ Comparison of these three financing
types finds that borrowers with chattel loans face higher denial rates
when applying for financing than manufactured housing mortgage and
site-built borrowers. When they do get a loan, these borrowers pay
higher interest rates than their MH mortgage and site-built
counterparts and are also less likely to refinance. Analysis shows that
Black, Hispanic, and American Indian and Alaska Native borrowers are
more likely to get chattel loans than their non-Hispanic white
counterparts, even when controlling for land ownership. Additionally,
the market for MH lending--and chattel in particular--is more
concentrated among relatively few lenders than the market for mortgages
on site-built homes.
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\69\ Consumer Fin. Prot. Bureau, Manufactured Housing Finance:
New Insights from the Home Mortgage Disclosure Act Data (Aug. 19,
2021), <a href="https://www.consumerfinance.gov/documents/9806/cfpb_manufactured-housing-finance-new-insights-hmda_report_2021-05.pdf">https://www.consumerfinance.gov/documents/9806/cfpb_manufactured-housing-finance-new-insights-hmda_report_2021-05.pdf</a>.
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Updated Data From National Survey of Mortgage Originations
On July 29, 2021, the CFPB and the FHFA published updated loan-
level data for public use collected through the National Survey of
Mortgage Originations. The data provide insights into borrowers'
experiences obtaining residential mortgages.
COVID-19 Special Issue Briefs
As a result of the COVID-19 pandemic's uneven impacts among
individuals and markets, the CFPB released numerous COVID-19 Special
Issue Briefs analyzing different consumer and market segments. Two such
reports explored and summarized the impacts on the renters and
homeowners: Housing insecurity and the COVID-19 pandemic and
Characteristics of Mortgage Borrowers During the COVID-19 Pandemic.
Issued March 1, 2021, Housing insecurity and the COVID-19 pandemic
summarized some of the relevant data and research on the impact of the
pandemic on the rental and mortgage market, and particularly its impact
on low income and minority households.\70\ This report found that as of
December 2020, 11 million renter and homeowner households were
significantly overdue on their regular housing payments, placing them
at heightened risk of losing their homes to foreclosure or eviction.
Black and Hispanic households were more than twice as likely to report
being behind on their payments than white households.
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\70\ Consumer Fin. Prot. Bureau, Housing insecurity and the
COVID-19 pandemic (Mar. 1, 2021), <a href="https://www.consumerfinance.gov/documents/9512/cfpb_Housing_insecurity_and_the_COVID-19_pandemic.pdf">https://www.consumerfinance.gov/documents/9512/cfpb_Housing_insecurity_and_the_COVID-19_pandemic.pdf</a>.
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Another Special Issue Brief, Characteristics of Mortgage Borrowers
During the COVID-19 Pandemic, was released on May 4, 2021.\71\ This
report explored the characteristics, including demographics, of
mortgage borrowers in forbearance or delinquent during the COVID-19
pandemic. The report used data from the National Mortgage Database,
which is a random 1-in-20 sample of closed-end first-lien mortgages in
the United States, as reported through March 2021. The data showed that
a significant share of these borrowers were minorities, lived in
majority-minority tracts, and lived in relatively lower-income areas.
Many of these borrowers also may be single-income households, making it
more difficult for them to recover from income shocks. A significant
share of
[[Page 29127]]
borrowers also showed distress in terms of non-mortgage products.
---------------------------------------------------------------------------
\71\ Consumer Fin. Prot. Bureau, Characteristics of Mortgage
Borrowers During the COVID-19 Pandemic (May 4, 2021), <a href="https://www.consumerfinance.gov/documents/9695/cfpb_characteristics-mortgage-borrowers-during-covid-19-pandemic_report_2021-05.pdf">https://www.consumerfinance.gov/documents/9695/cfpb_characteristics-mortgage-borrowers-during-covid-19-pandemic_report_2021-05.pdf</a>.
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3.4 Interagency Engagement
Seeking to address current and emerging fair lending risks, the
CFPB regularly coordinates with other Federal, State, tribal, county,
municipal, and international government entities, policymakers, and the
organizations that represent them. Through numerous interagency
organizations and taskforces, the CFPB coordinated its 2021 fair
lending regulatory, supervisory, and enforcement activities to promote
consistent, efficient, and effective enforcement of Federal fair
lending laws.
The CFPB, along with the Federal Trade Commission (FTC), HUD, 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. The FDIC is currently 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 chaired the HMDA/
Community Reinvestment Act (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.
The CFPB also participates in the Interagency Working Group on Fair
Lending Enforcement, a standing working group of Federal agencies--with
the DOJ, HUD, and FTC--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.
The CFPB is also a member of the FFIEC's Appraisal Subcommittee
(ASC) that provides Federal oversight of State appraiser and appraisal
management company regulatory programs, and a monitoring framework for
The Appraisal Foundation and the Federal Financial Institutions
Regulatory Agencies in their roles to protect Federal financial and
public policy interests in real estate appraisals utilized in federally
related transactions.\72\ The ASC responsibilities include promoting
fairness and equity in valuations.\73\
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\72\ During the reporting period, the Bureau served as vice
chair of the ASC.
\73\ The Appraisal Subcommittee includes the FFIEC agencies,
HUD, and the FHFA.
---------------------------------------------------------------------------
The CFPB engaged with other agencies on issues of bias in home
appraisals through the Property Appraisal and Valuation Equity (PAVE)
Taskforce.\74\ The PAVE Task Force is chaired by HUD Secretary Marcia
Fudge and Assistant to the President for Domestic Policy and Director
of the Domestic Policy Council, Ambassador Susan Rice. This Task Force
also includes cabinet-level leaders from executive departments and
additional members from independent agencies, including the CFPB.
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\74\ Additional activity has occurred regarding this issue since
the end of this reporting period: On March 23, 2022, the PAVE
taskforce released its final report. The report is available at:
<a href="https://pave.hud.gov/sites/pave.hud.gov/files/documents/PAVEActionPlan.pdf">https://pave.hud.gov/sites/pave.hud.gov/files/documents/PAVEActionPlan.pdf</a>.
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In addition to these established interagency organizations, CFPB
personnel meet regularly with agency personnel, including with DOJ,
HUD, FTC, FHFA, State Attorneys General, and the prudential regulators
to coordinate and discuss the CFPB's fair lending work.
4. Amicus Program and Other Litigation
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 2021, the CFPB and the DOJ, FRB, and FTC filed an amicus brief
in Fralish v. Bank of America, a case in which an individual consumer
sued his bank for closing his credit card account without providing an
explanation mandated by ECOA. In its defense, Bank of America argued
that ECOA only applies when people are applying for credit. The CFPB's
jointly filed brief explains that Bank of America's argument is wrong,
contradicted by the language and history of the law. ECOA's crucial
protections against credit discrimination do not disappear the moment
that credit is extended. Instead, ECOA shields existing borrowers from
discrimination in all aspects of a credit arrangement and gives
consumers the right to an explanation when their application for credit
is denied, or when an existing account is terminated, or its terms are
unfavorably changed. These ``adverse action notices'' discourage
discrimination and help educate consumers about the reasons for a
creditor's decision. Like ECOA's core ban on discrimination, this
requirement applies to current borrowers as well as those seeking
credit. Information regarding the CFPB's amicus program, including a
description of previously filed amicus briefs, is available on the
CFPB's website, at <a href="http://www.consumerfinance.gov/policy-compliance/amicus/">www.consumerfinance.gov/policy-compliance/amicus/</a>.
In August 2020, the CFPB was sued in the U.S. District Court for
the District of Columbia by the National Community Reinvestment
Coalition, et al., over the CFPB's final rule amending Regulation C to
raise the loan-volume coverage thresholds for financial institutions
reporting data under HMDA (the 2020 HMDA rule). The Plaintiffs argue
that the 2020 HMDA rule violates the Administrative Procedure Act. This
litigation is ongoing.
In 2019, the CFPB was sued in the U.S. District Court for the
Northern District of California by the California Reinvestment
Coalition, et al., regarding the CFPB's obligation to issue rules
implementing section 1071. In February 2020, the court approved a
stipulated settlement agreement. Among other things, the settlement
agreement also provides a process for setting appropriate deadlines for
the issuance of a proposed and final rule implementing section 1071.
The CFPB has made significant progress with this rulemaking, including
timely issuing a notice of proposed rulemaking. For a comprehensive
update on 1071 activity, see section 2.1.1 of this report.
5. 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.\75\ 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
[[Page 29128]]
requirement that covered lenders itemize certain mortgage loan
data.\76\
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\75\ 15 U.S.C. 1691f.
\76\ 12 U.S.C. 2807.
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5.1 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.
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\77\ 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 Bureau of Consumer
Financial Protection (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, <a href="http://www.ffiec.gov">http://www.ffiec.gov</a>
(last visited Mar. 30, 2021).
\78\ 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.
\79\ 15 U.S.C. 1691c.
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BILLING CODE 4810-AM-P
[GRAPHIC] [TIFF OMITTED] TN12MY22.000
[[Page 29129]]
BILLING CODE 4810-AM-C
5.1.1 Public Enforcement Actions
In 2021, of the Federal agencies with ECOA enforcement authority,
only the CFPB, together with DOJ, brought public enforcement actions
for violations of ECOA.
In October of 2021, the CFPB, together with DOJ, brought a public
enforcement action in Federal district court in the Western District of
Tennessee against Trustmark, headquartered in Jackson, Mississippi. The
joint complaint alleged that Trustmark engaged in unlawful
discrimination against applicants and prospective applicants, including
by redlining majority Black and Hispanic communities, and engaged in
acts and practices directed at prospective applicants that would
discourage prospective applicants from applying for credit in violation
of ECOA and Regulation B.\80\
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\80\ At the same time, pursuant to the FHA, the OCC issued a
consent order with Trustmark, which imposed a $4 million civil money
penalty for failing to provide equal access to residents seeking
mortgage loans in majority minority census tracts and high minority
census tracts in the Memphis MSA during the period 2014-2016.
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Additionally, on September 8, 2021, the CFPB brought a public
enforcement action in Northern District of California against LendUp
Loans, LLC. In addition to other violations of consumer protection
laws, the CFPB alleged that LendUp failed to timely issue required
adverse-action notices and failed to provide accurate denial reasons on
its adverse-action notices to thousands of loan applicants, in
violation of ECOA and Regulation B.
Both the Trustmark and LendUp actions are described further in
section 1.2.1 of this report.
5.1.2 Number of Institutions Cited for ECOA/Reg B Violations
In 2021, the FFIEC agencies reported citing 198 institutions with
violations of ECOA and/or Regulation B.
5.1.3 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:
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\81\ 12 CFR 1002.4(a).
\82\ 12 CFR 1002.7 (d)(1).
\83\ 12 CFR 1002.7 (d)(1).
\84\ 12 CFR 1002.4(a).
\85\ 12 CFR 1002.5(b)-(d).
\86\ 12 CFR 1002.5(b).
\87\ 12CFR 1002.6(b)(8).
\88\ 12 CFR 1002.6(b)(9).
\89\ 12 CFR 1002.9(a)(2); 1002.9(b)(2).
\90\ 12 CFR 1002.9(a)(2); 1002.9(b)(2); 1002.9(c).
\91\ 12 CFR 1002.9(a)(1)(i); 1002.9(b)(1); 1002.9(b)(2).
\92\ 12 CFR 1002.9(a)(1)(i); (a)(2).
\93\ 12 CFR 1002.9(a)(1);1002.9(b).
Table 3--Regulation B Violations Cited by FFIEC Agencies, 2021
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Regulation B violations: 2021 FFIEC agencies reporting
----------------------------------------------------------------------------------------------------------------
12 CFR 1002.4(a), 1002.7(d)(1): NCUA,\81\ FRB,\82\ OCC,\83\ CFPB.\84\
Discrimination.
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,\85\ CFPB.\86\
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. Sec. 1002.5(b)(1) and (b)(2),
or 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)(8), (b)(9): Specific NCUA,\87\ CFPB.\88\
rules concerning use of information.
Failure to evaluate married and unmarried
applicants by the same standards; in
evaluating joint applicants, a creditor
shall not treat applicants differently
based on the existence, absence, or
likelihood of a marital relationship
between the parties; a creditor shall not
consider race, color, religion, national
origin, sex (or an applicant's or other
person's decision not to provide the
information) in any aspect of a credit
transaction..
12 CFR 1002.9(a)(1)(i), (a)(2), (b)(1); FDIC,\89\ NCUA,\90\ OCC,\91\ FRB,\92\ CFPB.\93\
(b)(2); (c): Adverse Action.
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 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): Information for CFPB.
Monitoring Purposes.
Failure to request as part of an
application for credit for purchase or
refinancing of a dwelling occupied or to
be occupied by the applicant as a
principal residence, where the extension
of credit will be secured by the dwelling
the following information regarding the
applicant(s): Ethnicity and race; sex;
marital status; and age..
12 CFR 1002.14 (a)(1), (a)(2), (a)(3), OCC,\94\ FDIC.\95\
(a)(4): 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:
[[Page 29130]]
Table 4--Regulation B Violations Cited by Non-FFIEC Agencies Enforcing ECOA, 2021
----------------------------------------------------------------------------------------------------------------
Regulation B violations: 2021 Non-FFIEC agencies reporting
----------------------------------------------------------------------------------------------------------------
12 CFR 1002.9(a)(1)(i): Adverse Action.... FCA.
Failure to provide notice to the applicant
30 days after receiving a completed
application concerning the creditor's
approval of, counteroffer or adverse
action on the application; failure to
provide sufficient information in an
adverse action notification, including
the specific reasons for the action
taken; failure to provide ECOA notice..
12 CFR 1002.13: Information for monitoring FCA.
purposes.
Failure to obtain information for
monitoring purposes..
----------------------------------------------------------------------------------------------------------------
The AMS and the SBA reported that they received no complaints based
on ECOA or Regulation B in 2021. The SEC had nothing to report. The FTC
is an enforcement agency and does not conduct compliance examinations.
---------------------------------------------------------------------------
\94\ 12 CFR 1002.14(a)(1); 1002.14(a)(2).
\95\ 12 CFR 1002.14(a)(1-4).
---------------------------------------------------------------------------
5.1.4 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.\96\ They also may refer other potential ECOA
violations to DOJ.\97\ In 2021, 3 agencies (FDIC, NCUA, and CFPB) made
6 such referrals to DOJ involving discrimination in violation of ECOA.
A brief description of those matters follows.
---------------------------------------------------------------------------
\96\ 15 U.S.C. 1691e(g).
\97\ Id.
---------------------------------------------------------------------------
In 2021, the FDIC referred two fair lending matters to DOJ. The
first matter involved illegal credit discrimination in the underwriting
of private student loans on the prohibited basis of the applicant's
race. The second matter involved illegal credit discrimination on the
prohibited basis of race by redlining majority Black communities in the
origination of residential mortgage loans.
NCUA referred two ECOA matters to DOJ, both involving
discrimination on the basis of age. DOJ declined to open an independent
investigation and deferred to NCUA for administrative enforcement on
both referrals.
As reported in section 1.2.2 above, in 2021, the CFPB referred two
matters to DOJ. The referrals involved discrimination in mortgage
origination policies and mortgage origination pricing based on race and
national origin.
5.2 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.\98\ The
CFPB, in consultation with HUD, finds that itemization and tabulation
of these data furthers the purposes of HMDA.
---------------------------------------------------------------------------
\98\ 12 U.S.C. 2807.
---------------------------------------------------------------------------
6. Conclusion
Throughout 2021, the CFPB worked to ensure that individuals and
communities had fair, equitable, and nondiscriminatory access to
credit, in accordance with its Congressional mandate through
supervision and enforcement actions, research and market monitoring
activities, rulemaking and guidance, amicus activity, and consumer
education.
The CFPB is looking ahead to the future of financial services
markets, which will be increasingly shaped by predictive analytics,
algorithms, and machine learning. While technology holds great promise,
it can also reinforce historical biases that have excluded too many
Americans from opportunities.
In particular, the CFPB will be sharpening its focus on digital
redlining and algorithmic bias. As more technology platforms, including
Big Tech firms, influence the financial services marketplace, the CFPB
will be working to identify emerging risks and to develop appropriate
policy responses.
The CFPB is committed to protecting individuals, small businesses,
and communities from discrimination, holding institutional and
individual bad actors accountable, and ensuring robust and
comprehensive ameliorative remedies for violations of the laws under
our jurisdiction.
Appendix A--Defined Terms
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
AAPI.......................................................... Asian American and Pacific Islanders.
AMS........................................................... Agricultural Marketing Service of the U.S.
Department of Agriculture.
AI............................................................ Artificial Intelligence.
ASC........................................................... FFIEC's Appraisal Subcommittee.
AVM........................................................... Automated Valuation Models.
CARES Act..................................................... Coronavirus Aid, Relief, and Economic Security
Act.
CFPA.......................................................... Consumer Financial Protection Act of 2010.
CFPB.......................................................... Consumer Financial Protection Bureau.
CMS........................................................... Compliance Management System.
COVID-19...................................................... Coronavirus Disease/Pandemic 2019.
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.
EFTA.......................................................... Electronic Fund Transfer Act.
FCA........................................................... Farm Credit Administration.
FDIC.......................................................... Federal Deposit Insurance Corporation.
FHA........................................................... Fair Housing Act.
FHFA.......................................................... Federal Housing Finance Agency.
[[Page 29131]]
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.
FIRREA........................................................ Financial Institutions Reform, Recovery, and
Enforcement Act of 1989.
FTC........................................................... Federal Trade Commission.
GIPSA......................................................... Grain Inspection, Packers and Stockyards
Administration of the U.S. Department of
Agriculture.
HMDA.......................................................... Home Mortgage Disclosure Act.
HoPI.......................................................... Hawaiian or Pacific Islander.
HUD........................................................... U.S. Department of Housing and Urban
Development.
LEP........................................................... Limited English Proficient.
MH............................................................ Manufactured Home.
MSA........................................................... Metropolitan Statistical Area.
NCUA.......................................................... National Credit Union Administration.
NPRM.......................................................... Notice of Proposed Rulemaking.
OCC........................................................... Office of the Comptroller of the Currency.
PAVE.......................................................... Property Appraisal and Valuation Equity.
PPP........................................................... Paycheck Protection Program (CARES Act).
RFI........................................................... Request for Information.
SBA........................................................... Small Business Administration.
SBREFA........................................................ Small Business Regulatory Enforcement Fairness
Act of 1996.
SEC........................................................... Securities and Exchange Commission.
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. 2022-10133 Filed 5-11-22; 8:45 am]
BILLING CODE 4810-AM-P
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