Notice2023-14197
Fair Lending Report of the Consumer Financial Protection Bureau, June 2023
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
July 6, 2023
Issuing agencies
Consumer Financial Protection Bureau
Abstract
The Consumer Financial Protection Bureau (CFPB) is issuing its eleventh Fair Lending Report of the Consumer Financial Protection Bureau (Fair Lending Report) to Congress. The CFPB is committed to ensuring fair, equitable, and nondiscriminatory access to credit for both individuals and communities. This report describes our fair lending activities in supervision and enforcement; guidance and rulemaking; interagency coordination; and outreach and education for calendar year 2022.
Full Text
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<title>Federal Register, Volume 88 Issue 128 (Thursday, July 6, 2023)</title>
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<body><pre>[Federal Register Volume 88, Number 128 (Thursday, July 6, 2023)]
[Notices]
[Pages 43087-43101]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-14197]
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BUREAU OF CONSUMER FINANCIAL PROTECTION
Fair Lending Report of the Consumer Financial Protection Bureau,
June 2023
AGENCY: Consumer Financial Protection Bureau.
ACTION: Fair Lending Report of the Consumer Financial Protection
Bureau.
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SUMMARY: The Consumer Financial Protection Bureau (CFPB) is issuing its
eleventh Fair Lending Report of the Consumer Financial Protection
Bureau (Fair Lending Report) to Congress. The CFPB is committed to
ensuring fair, equitable, and nondiscriminatory access to credit for
both individuals and communities. This report describes our fair
lending activities in supervision and enforcement; guidance and
rulemaking; interagency coordination; and outreach and education for
calendar year 2022.
DATES: The CFPB released the 2022 Fair Lending Report on its website on
June 28, 2023.
FOR FURTHER INFORMATION CONTACT: Bobby Conner, Senior 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#1f5c594f5d405e7c7c7a6c6c767d7673766b665f7c796f7d31787069"><span class="__cf_email__" data-cfemail="397a7f697b66785a5a5c4a4a505b5055504d40795a5f495b175e564f">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
1. Fair Lending Enforcement and Supervision
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
and small businesses.\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 assets applied to address those risks.
The prioritization process incorporates a number of additional
factors, including tips and leads from industry whistleblowers,
advocacy groups, and government agencies; supervisory and enforcement
history; consumer complaints; and results from analysis of Home
Mortgage Disclosure Act (HMDA) and other data.
As a result of its annual risk-based prioritization process, in
2022 the CFPB focused much of its fair lending supervision efforts on
mortgage origination and pricing, small business lending (including
agricultural lending), policies and procedures regarding geographic and
other exclusions in underwriting, and on the use of automated systems
and models, sometimes marketed as artificial intelligence and machine
learning models.
As in previous years, the CFPB's 2022 mortgage origination work
continued to focus on redlining (intentional discrimination against
applicants and prospective applicants living or seeking credit in
minority neighborhoods, including by discouragement); assessing
potential discrimination in underwriting and pricing processes;
assessing whether lenders are illegally steering applicants on a
prohibited basis; and HMDA data integrity and validation reviews (both
as standalone exams and in preparation for subsequent Equal Credit
Opportunity Act (ECOA) exams).
[[Page 43088]]
The CFPB's small business lending work assessed whether there were
disparities in application, underwriting, and pricing processes, and
whether there were weaknesses in fair lending-related compliance
management systems.
Across multiple markets, the CFPB assessed whether lenders complied
with the adverse action notice requirements of ECOA and Regulation B
and evaluated whether lenders maintain policies and procedures that
exclude property on the basis of geography in underwriting decisions
and to ensure those policies and procedures do not unlawfully exclude
certain types of income.
The CFPB continued to expand its evaluation of automated systems
and models, sometimes marketed as artificial intelligence 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
the Consumer Financial Protection Act of 2010 (CFPA), which prohibits
unfair, deceptive, and abusive acts or practices (UDAAPs). 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(g).
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1.2.1. Public Enforcement Actions
In 2022, the CFPB announced one fair lending-related enforcement
action, Trident Mortgage Company, LP (Trident).\3\ On July 27, 2022,
the CFPB, together with the DOJ, filed a complaint and proposed consent
order in the United States District Court for the Eastern District of
Pennsylvania to resolve the agencies' allegations against Trident. The
court entered the order on September 14, 2022. Trident is incorporated
in Delaware and had locations in Delaware, New Jersey, and Pennsylvania
at the time of the alleged conduct. Before the complaint was filed,
Trident ceased originating mortgages. The States of Delaware, New
Jersey, and Pennsylvania entered into concurrent agreements with
Trident. The CFPB and DOJ's joint complaint alleged that Trident
engaged in unlawful discrimination on the basis of race, color, and
national origin against applicants and prospective applicants,
including by redlining majority-minority neighborhoods in the
Philadelphia-Camden-Wilmington Metropolitan Statistical Area
(Philadelphia MSA) and engaged in acts and practices directed at
prospective applicants that would discourage prospective applicants
from applying for credit in violation of ECOA, Regulation B, and the
CFPA. DOJ also alleged that Trident's conduct violated the Fair Housing
Act (FHA). As part of remediation, the order requires Trident to invest
$18.4 million in a loan subsidy program under which Trident will
contract with a lender to increase the credit extended in majority-
minority neighborhoods in the Philadelphia MSA and make loans under the
loan subsidy fund. That lender must also maintain at least four
licensed branch locations in majority-minority neighborhoods in the
Philadelphia MSA. Trident must also fund targeted advertising to
generate applications for credit from qualified consumers in majority-
minority neighborhoods in the Philadelphia MSA and take other remedial
steps to serve the credit needs of majority-minority neighborhoods in
the Philadelphia MSA. Trident must also pay a civil money penalty of $4
million. This settlement is the first Federal government resolution
involving illegal lending discrimination by a nonbank mortgage lender.
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\3\ Consumer Fin. Prot. Bureau, CFPB, DOJ Order Trident Mortgage
Company to Pay More Than $22 Million for Deliberate Discrimination
Against Minority Families (July 27, 2022), <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-doj-order-trident-mortgage-company-to-pay-more-than-22-million-for-deliberate-discrimination-against-minority-families/">https://www.consumerfinance.gov/about-us/newsroom/cfpb-doj-order-trident-mortgage-company-to-pay-more-than-22-million-for-deliberate-discrimination-against-minority-families/</a>.
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1.2.2. ECOA Referrals to 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.\4\ The CFPB may refer other
potential ECOA violations to DOJ as well.\5\ In 2022, the CFPB referred
five matters to DOJ about discrimination pursuant to section 706(g) of
ECOA. The referrals included four matters involving discrimination on
the basis of race and national origin in mortgage lending (redlining)
and one matter involving discrimination in underwriting mortgage loans
on the basis of receipt of public assistance income.
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\4\ 15 U.S.C. 1691e(g).
\5\ 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 compliance management system.
1.2.4. Pending Fair Lending Enforcement Investigations
In 2022, 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, and mortgage lending, including the unlawful practices of
redlining and discriminatory targeting, as well as discrimination in
home valuation and mortgage pricing exceptions. In 2022, the CFPB also
investigated issues with HMDA reporting. The CFPB is looking into
potential discriminatory conduct, including under ECOA and the
statutory prohibition on unfair acts or practices targeted at
vulnerable populations and leading to bias in automated systems and
models.
1.3. Fair Lending Supervision
The CFPB's Supervision program assesses compliance with Federal
consumer financial protection laws and regulations at banks and
nonbanks over which the CFPB has supervisory authority. As a result of
the CFPB's efforts to fulfill its fair lending mission during 2022, the
CFPB initiated 32 fair lending examinations or targeted reviews, which
represents a 146 percent increase in fair lending examinations/targeted
reviews since 2020.
For supervisory communications issued by Supervision during 2022,
the most frequently identified issues related to the CFPB's review of
mortgage origination underwriting policies and guidelines, particularly
those that
[[Page 43089]]
exclude lending for properties in certain locations or geographies.
In 2022, the CFPB issued several fair lending-related Matters
Requiring Attention and entered Memoranda of Understanding directing
entities to take corrective actions that the CFPB will monitor through
follow-up supervisory actions. Examiners encouraged lenders to enhance
oversight and identification of fair lending risk and to implement
policies, procedures, and controls designed to effectively manage HMDA
activities, including regarding integrity of data collection. The CFPB
also directed mortgage lenders to correct violations relating to
redlining, including by providing consumer remediation designed to spur
lending in the redlined areas.
During 2022, informed by the Director's priority to address risks
of consumer harm from advanced and emerging technologies in consumer
finance, the CFPB focused additional resources on advanced data science
and analytics during exam events to identify fair lending risks and
violations in models.
1.4. Annual Performance Plan Metrics
Consistent with a recommendation from the Government Accountability
Office (GAO) \6\ the CFPB re-introduced several measures and
performance goals specific to its fair lending supervision and
enforcement, specifically the number of fair lending supervision events
opened during the fiscal year and the percentage of all fair lending
enforcement cases concluded by the CFPB that were successfully resolved
through litigation, a settlement, issuance of a default judgment, or
other means. The CFPB will again report progress for all supervisory
and enforcement events relating to fair lending laws within the CFPB's
jurisdiction in subsequent years in the CFPB's Annual Performance Plan.
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\6\ Govt. Accountability Office, CFPB Needs to Assess the Impact
of Recent Changes to Its Fair Lending Activities (May 2021), <a href="https://www.gao.gov/assets/gao-21-393.pdf">https://www.gao.gov/assets/gao-21-393.pdf</a>.
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2. Rulemaking and Guidance
2.1. Rulemaking
During 2022, the CFPB continued to make progress on the small
business lending data collection rulemaking required by Congress under
section 1071 of the Dodd-Frank Act and participated in an interagency
rulemaking to implement quality control standards for automated
valuation models (AVMs). Under HMDA (Regulation C), the CFPB also
issued a final rule amending the official commentary regarding the
asset-size exemption threshold and a technical amendment regarding the
coverage threshold for closed-end mortgage loans.
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 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.
The CFPB previously issued a proposed rule amending Regulation B to
implement changes to ECOA made by section 1071.\7\ The comment period
for this proposed rule closed on January 6, 2022. 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 addressed the CFPB's approach to
privacy interests and the publication of small business lending data,
shielding certain demographic data from underwriters and other persons,
recordkeeping requirements, enforcement provisions, and the proposed
rule's effective and compliance dates.\8\
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\7\ The proposal was published in the Federal Register on
October 8, 2021. See 86 FR 56356.
\8\ Additional activity has occurred since the close of this
reporting period. On March 30, 2023, the CFPB released its final
rule implementing section 1071. See <a href="https://www.consumerfinance.gov/rules-policy/final-rules/small-business-lending-under-the-equal-credit-opportunity-act-regulation-b/">https://www.consumerfinance.gov/rules-policy/final-rules/small-business-lending-under-the-equal-credit-opportunity-act-regulation-b/</a>.
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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 CFPB's small
business lending rulemaking.
2.1.2. Automated Valuation Models Rulemaking
The CFPB determined that the AVM rulemaking should follow the
process set forth in the Small Business Regulatory Enforcement Fairness
Act of 1996 (SBREFA) to obtain input from small business that are
likely to be impacted by the proposed regulation. In 2021, the CFPB
began the SBREFA process to consult with representatives of small
entities likely to be affected directly by the proposed AVM rulemaking.
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.\9\ To address potential
fair lending risk in models, the proposal noted that the CFPB would
consider proposing a requirement that covered institutions establish
policies, practices, procedures, and control systems to ensure that
their AVMs comply with applicable nondiscrimination laws.
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\9\ CFPB, Small Business Advisory Review Panel for Automated
Valuation Model (AVM) Rulemaking: Outline of Proposals and
Alternatives under Consideration (Feb. 23, 2022), <a href="https://files.consumerfinance.gov/f/documents/_avm_outline-proposals_2022-02.pdf">https://files.consumerfinance.gov/f/documents/_avm_outline-proposals_2022-02.pdf</a>.
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The CFPB is participating in this interagency rulemaking with the
Federal Reserve Board (FRB), Office of the Comptroller of the Currency
(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 AVMs.
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. The Agencies have continued to work to develop a proposed
rule to implement the Dodd-Frank Act's AVM amendments to FIRREA.\10\
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\10\ Additional activity has occurred since the close of this
reporting period. On June 1, 2023, the Agencies released a proposed
AVM rule. See <a href="https://www.consumerfinance.gov/about-us/newsroom/agencies-request-comment-on-quality-control-standards-for-automated-valuation-models-proposed-rule/">https://www.consumerfinance.gov/about-us/newsroom/agencies-request-comment-on-quality-control-standards-for-automated-valuation-models-proposed-rule/</a>.
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2.1.3. HMDA (Regulation C) Adjustment to Asset-Size Exemption Threshold
On December 27, 2022, the CFPB issued a final rule amending the
official
[[Page 43090]]
commentary that interprets the requirements of Regulation C to reflect
the asset-size exemption threshold for banks, savings associations, and
credit unions based on the annual percentage change in the average of
the Consumer Price Index for Urban Wage Earners and Clerical
Workers.\11\
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\11\ CFPB, Home Mortgage Disclosure (Regulation C) Adjustment to
Asset-Size Exemption Threshold (Dec. 27, 2022), <a href="https://files.consumerfinance.gov/f/documents/cfpb_hmda_annual-adjustments_2022-12.pdf">https://files.consumerfinance.gov/f/documents/cfpb_hmda_annual-adjustments_2022-12.pdf</a>.
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2.1.4. HMDA (Regulation C); Judicial Vacatur of Coverage Threshold for
Closed-End Mortgage Loans
On December 21, 2022, the CFPB issued a technical amendment to
Regulation C to reflect the closed-end mortgage loan reporting
threshold of 25 mortgage loans.\12\
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\12\ CFPB, Home Mortgage Disclosure (Regulation C); Judicial
Vacatur of Coverage Threshold for Closed-End Mortgage Loans (Dec. 9,
2022), <a href="https://files.consumerfinance.gov/f/documents/cfpb_judicial-vacatur-_technical-amendment_2022-12.pdf">https://files.consumerfinance.gov/f/documents/cfpb_judicial-vacatur-_technical-amendment_2022-12.pdf</a>.
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In April 2020, the CFPB issued a final rule (2020 HMDA Final Rule)
to amend Regulation C that increased the closed-end mortgage loan
reporting threshold from 25 loans to 100 loans. On September 23, 2022,
the United States District Court for the District of Columbia vacated
the 2020 HMDA Final Rule as to the increased loan volume reporting
threshold for closed-end mortgage loans. As a result of the September
23, 2022, court order, the threshold for reporting data about closed-
end mortgage loans is the 25-loan threshold established by the 2015
HMDA Rule. This technical amendment updates the Code of Federal
Regulations to reflect the effective closed-end loan reporting
threshold. For more information regarding this and other litigation
matters, please see section 4 of this report.
2.2. Guidance
The CFPB issues guidance to its various stakeholders in many forms,
including Consumer Financial Protection Circulars (Circulars), advisory
opinions, interpretive rules, statements, bulletins, publications such
as Supervisory Highlights, and other resources to aid in compliance.
2.2.1. Consumer Financial Protection Circular 2022-03: Adverse Action
Notification Requirements in Connection With Credit Decisions Based on
Complex Algorithms
On May 26, 2022, the CFPB released a Circular to remind the public,
including those responsible for enforcing Federal consumer financial
protection law, of creditors' adverse action notice requirements under
ECOA.\13\ The Circular affirmed that Federal anti-discrimination law
requires companies to explain to applicants the specific reasons for
denying an application for credit or taking other adverse actions, even
if the creditor is relying on credit models using complex algorithms.
The Circular makes clear that Federal consumer financial protection
laws, including adverse action requirements, should be enforced
regardless of the technology used by creditors, and that creditors
cannot justify noncompliance with ECOA based on the mere fact that the
technology they use to evaluate credit applications is too complicated,
too opaque in its decision-making, or too new.
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\13\ CFPB, Consumer Financial Protection Circular 2022-03,
Adverse action notification requirements in connection with credit
decisions based on complex algorithms (May 26, 2022), <a href="https://www.consumerfinance.gov/compliance/circulars/circular-2022-03-adverse-action-notification-requirements-in-connection-with-credit-decisions-based-on-complex-algorithms/">https://www.consumerfinance.gov/compliance/circulars/circular-2022-03-adverse-action-notification-requirements-in-connection-with-credit-decisions-based-on-complex-algorithms/</a>.
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2.2.2. Advisory Opinion Regarding ECOA and Regulation B and Revocations
or Unfavorable Changes to the Terms of Existing Credit Arrangements
On May 9, 2022, the CFPB issued an advisory opinion affirming that
ECOA bars lenders from discriminating against applicants after they
have received a loan, not just during the application process.\14\ The
advisory opinion and accompanying analysis clarify that ECOA protects
borrowers from discrimination in all aspects of a credit transaction.
The advisory opinion is consistent with a legal brief filed in 2021 by
the CFPB, the Federal Trade Commission (FTC), the FRB, and DOJ.\15\
Among other things, the advisory opinion affirms that ECOA and
Regulation B protect applicants who have received credit and are
existing account holders, not just those in the process of applying for
credit. In addition, the advisory opinion explains that creditors must
provide adverse action notices to applicants against whom they take
adverse action, and that certain adverse actions--such as revoking
existing credit or changing the terms of an existing credit
arrangement--are only actions that can be taken against applicants who
have already received credit.
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\14\ CFPB, Equal Credit Opportunity (Regulation B); Revocations
or Unfavorable Changes to the Terms of Existing Credit Arrangements
(May 5, 2022), <a href="https://files.consumerfinance.gov/f/documents/cfpb_revoking-terms-of-existing-credit-arrangement_advisory-opinion_2022-05.pdf">https://files.consumerfinance.gov/f/documents/cfpb_revoking-terms-of-existing-credit-arrangement_advisory-opinion_2022-05.pdf</a>.
\15\ Fralish v. Bank of America, N.A., Brief amicus curiae of
Consumer Fin. Prot. Bureau, Dept. of Justice, Bd. Of Governors of
the Fed. Reserve System, and Fed. Trad Comm'n (Dec. 16, 2021),
<a href="https://files.consumerfinance.gov/f/documents/cfpb_fralish-v-bank-of-america_amicus-brief_2021-12.pdf">https://files.consumerfinance.gov/f/documents/cfpb_fralish-v-bank-of-america_amicus-brief_2021-12.pdf</a>.
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2.2.3. Interpretive Rule on the Limited Applicability of CFPA's ``Time
or Space'' Exception With Respect to Digital Marketing Providers
On August 10, 2022, the CFPB issued an interpretive rule clarifying
when digital marketing providers for financial firms must comply with
Federal consumer financial protection law.\16\ Section 1002 of the CFPA
defines the term ``service provider'' and sets forth two exceptions to
that definition. Under one of those exceptions, a person is not a
service provider solely by virtue of such person offering or providing
to a covered person time or space for an advertisement for a consumer
financial product or service through print, newspaper, or electronic
media. As explained in the interpretive rule, digital marketers that
are involved in the identification or selection of prospective
customers or the selection or placement of content to affect consumer
behavior do not fall under this narrow exception and thus are typically
service providers for purposes of the law. Digital marketers acting as
service providers can be held liable by the CFPB or other law enforcers
for committing unfair, deceptive, or abusive acts or practices as well
as other consumer financial protection violations. The interpretive
rule explains that digital marketers provide material services to
financial firms and that the CFPB, along with other consumer protection
enforcers, can sue digital marketers to stop violations of consumer
financial protection law.
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\16\ CFPB, Interpretive rule on the Limited Applicability of
Consumer Financial Protection Act's ``Time or Space'' Exception with
Respect to Digital Marketing Providers (Aug. 10, 2022), <a href="https://files.consumerfinance.gov/f/documents/cfpb_time-or-space_interpretive-rule_signed_2022-08.pdf">https://files.consumerfinance.gov/f/documents/cfpb_time-or-space_interpretive-rule_signed_2022-08.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 2022, the CFPB
[[Page 43091]]
published three issues of Supervisory Highlights.\17\
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\17\ Issue 26, Spring 2022; Issue 27, Supervisory Highlights
Student Loan Servicing Special Edition, Fall 2022; Issue 28, Fall
2022.
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On May 2, 2022, the CFPB released the 26th edition of Supervisory
Highlights.\18\ The findings included in this report cover examinations
completed between July 2021 and December 2021 in the areas of auto
servicing, consumer reporting, credit card account management, debt
collection, deposits, mortgage origination, prepaid accounts,
remittances, and student loan servicing.\19\ This report also discussed
the publication of the CFPB's updated exam manual for evaluating
UDAAPs, explaining that the updates cover discriminatory practices that
may also be ``unfair'' under the CFPA.
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\18\ CFPB, Issue 26, Spring 2022 (May 2, 2022), <a href="https://files.consumerfinance.gov/f/documents/cfpb_supervisory-highlights_issue-26_2022-04.pdf/">https://files.consumerfinance.gov/f/documents/cfpb_supervisory-highlights_issue-26_2022-04.pdf/</a>.
\19\ Id.
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A special edition of Supervisory Highlights, Issue 27, Student Loan
Servicing Special Edition, Fall 2022, was released on September 29,
2022.\20\ This report focused on specific supervisory findings unique
to the student loan market.
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\20\ CFPB, Issue 27, Student Loan Servicing Special Edition,
Fall 2022 (Sept. 29, 2022), <a href="https://files.consumerfinance.gov/f/documents/cfpb_student-loan-servicing-supervisory-highlights-special-edition_report_2022-09.pdf">https://files.consumerfinance.gov/f/documents/cfpb_student-loan-servicing-supervisory-highlights-special-edition_report_2022-09.pdf</a>.
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The CFPB released the 28th edition of Supervisory Highlights on
November 16, 2022, covering examinations completed between January 2021
and June 2021.\21\ This report included the fair lending enforcement
matter, Trident, which the CFPB's supervisory activities supported. For
more information on the Trident matter, please see section 1.2.1 above.
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\21\ Consumer Fin. Prot. Bureau, Issue 28, Fall 2022 (Nov. 16,
2022), <a href="https://files.consumerfinance.gov/f/documents/cfpb_supervisory-highlights_issue-28_2022-11.pdf">https://files.consumerfinance.gov/f/documents/cfpb_supervisory-highlights_issue-28_2022-11.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; \22\ Small Entity Compliance
Guide; \23\ Key Dates Timeline; \24\ Institutional and Transactional
Coverage Charts; \25\ Reportable HMDA Data Chart; \26\ sample data
collection form; \27\ FAQs,\28\ a new Beginners Guide to Accessing and
Using HMDA Data,\29\ and downloadable webinars,\30\ which provide an
overview of the HMDA rule. In 2022, the CFPB published a summary of the
2021 data on mortgage lending.\31\ 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.\32\
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\22\ CFPB, 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_rule-executive-summary_hmda-2020.pdf">https://files.consumerfinance.gov/f/documents/cfpb_rule-executive-summary_hmda-2020.pdf</a>.
\23\ CFPB, Home Mortgage Disclosure (Regulation C) Small Entity
Compliance Guide (Feb. 2023), <a href="https://files.consumerfinance.gov/f/documents/cfpb_hmda_small-entity-compliance-guide_2023-02.pdf">https://files.consumerfinance.gov/f/documents/cfpb_hmda_small-entity-compliance-guide_2023-02.pdf</a>.
\24\ CFPB, 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>.
\25\ CFPB, HMDA Institutional Coverage Chart, <a href="https://files.consumerfinance.gov/f/documents/cfpb_hmda-institutional-coverage_2023.pdf">https://files.consumerfinance.gov/f/documents/cfpb_hmda-institutional-coverage_2023.pdf</a>; Consumer Fin. Prot. Bureau, HMDA Transactional
Coverage Chart, <a href="https://files.consumerfinance.gov/f/documents/cfpb_hmda-transactional-coverage_2023.pdf">https://files.consumerfinance.gov/f/documents/cfpb_hmda-transactional-coverage_2023.pdf</a>.
\26\ CFPB, Reportable HMDA Data: A Regulatory and Reporting
Overview Reference Chart for HMDA Data Collected in 2023,<a href="https://files.consumerfinance.gov/f/documents/cfpb_reportable-hmda-data_regulatory-and-reporting-overview-reference-chart_2023-02.pdf">https://files.consumerfinance.gov/f/documents/cfpb_reportable-hmda-data_regulatory-and-reporting-overview-reference-chart_2023-02.pdf</a>.
\27\ CFPB, 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>.
\28\ CFPB, 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>.
\29\ CFPB, A Beginner's Guide to Accessing and Using Home
Mortgage Disclosure Act Data (June 13, 2022), <a href="https://files.consumerfinance.gov/f/documents/cfpb_beginners-guide-accessing-using-hmda-data_guide_2022-06.pdf">https://files.consumerfinance.gov/f/documents/cfpb_beginners-guide-accessing-using-hmda-data_guide_2022-06.pdf</a>.
\30\ CFPB, 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>.
\31\ CFPB, Summary of 2021 Data on Mortgage Lending (June 16,
2022), <a href="https://www.consumerfinance.gov/data-research/hmda/summary-of-2021-data-on-mortgage-lending/">https://www.consumerfinance.gov/data-research/hmda/summary-of-2021-data-on-mortgage-lending/</a>.
\32\ 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),\33\ 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 September 2022, the CFPB released the 2023
Filing Instructions Guide \34\ and the 2023 Supplemental Guide for
Quarterly Filers.\35\ Together with the FFIEC, in February 2022, the
CFPB also published the 2022 edition of the HMDA Getting it Right
Guide.\36\ 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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\33\ 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 May 15, 2023).
\34\ CFPB, Filing instructions guide for HMDA data collected in
2023 (Sept. 2, 2022), <a href="https://s3.amazonaws.com/cfpb-hmda-public/prod/help/2023-hmda-fig.pdf">https://s3.amazonaws.com/cfpb-hmda-public/prod/help/2023-hmda-fig.pdf</a>.
\35\ CFPB, Supplemental Guide for Quarterly Filers for 2023
(Sept. 2, 2022), <a href="https://s3.amazonaws.com/cfpb-hmda-public/prod/help/supplemental-guide-for-quarterly-filers-for-2023.pdf">https://s3.amazonaws.com/cfpb-hmda-public/prod/help/supplemental-guide-for-quarterly-filers-for-2023.pdf</a>.
\36\ Federal Fin. Instit. Examination Council, A Guide to HMDA
Reporting, Getting it Right! (Feb. 28, 2022), <a href="https://www.ffiec.gov/hmda/pdf/2022Guide.pdf">https://www.ffiec.gov/hmda/pdf/2022Guide.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#652d2821242d00091525060315074b020a13"><span class="__cf_email__" data-cfemail="155d5851545d70796555767365773b727a63">[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 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, press releases, or speeches; and reaching out
directly to advocates and consumers through website updates and social
media. The CFPB also regularly issues 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, and Other Communications
The CFPB regularly uses blog posts, statements, press releases,
guides, brochures, social media, and other tools to timely and
effectively communicate
[[Page 43092]]
with stakeholders. These tools are targeted to individuals, advocates,
civil rights organizations, government agencies, tribal entities, 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 2022, the CFPB published 12 blog posts related to fair lending
topics including: examination findings that some financial companies
are unlawfully considering religion when making decisions on financial
products; \37\ a joint letter sent to The Appraisal Foundation
regarding appraisal discrimination; \38\ a new initiative to focus on
financial issues facing rural communities; \39\ announcing efforts to
further crack down on discrimination in the financial sector; \40\
announcing the publication of the 2021 Fair Lending Annual Report to
Congress; \41\ providing Spanish-speaking customers with Spanish-
language disclosures; \42\ announcing the publication of the Beginner's
Guide to Accessing and Using Home Mortgage Disclosure Act Data; \43\
identifying and addressing the financial needs of immigrants; \44\ the
Interagency Statement on Special Purpose Credit Programs Under ECOA and
Regulation B; \45\ challenging inaccurate appraisals through the
reconsideration of value process; \46\ research about higher interest
rates leading to higher debt burdens for mortgage borrowers; \47\ and
changes relating to HMDA's closed-end loan reporting threshold.\48\
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\37\ Lorelei Salas, It's illegal to penalize borrowers for being
religious (Jan. 14, 2022), <a href="https://www.consumerfinance.gov/about-us/blog/its-illegal-penalize-borrowers-being-religious/">https://www.consumerfinance.gov/about-us/blog/its-illegal-penalize-borrowers-being-religious/</a>.
\38\ Patrice Alexander Ficklin, Appraisal discrimination is
illegal under federal law (Feb. 4, 2022), <a href="https://www.consumerfinance.gov/about-us/blog/appraisal-discrimination-illegal-under-federal-law/">https://www.consumerfinance.gov/about-us/blog/appraisal-discrimination-illegal-under-federal-law/</a>.
\39\ Shawn Sebastian, New effort focused on financial issues
facing rural communities (Mar. 10, 2022), <a href="https://www.consumerfinance.gov/about-us/blog/new-effort-focused-on-financial-issues-facing-rural-communities/">https://www.consumerfinance.gov/about-us/blog/new-effort-focused-on-financial-issues-facing-rural-communities/</a>.
\40\ Eric Halperin, Lorelei Salas, Cracking down on
discrimination in the financial sector (Mar. 16, 2022), <a href="https://www.consumerfinance.gov/about-us/blog/cracking-down-on-discrimination-in-the-financial-sector/">https://www.consumerfinance.gov/about-us/blog/cracking-down-on-discrimination-in-the-financial-sector/</a>.
\41\ Rohit Chopra, The CFPB's 2021 Fair Lending Annual Report to
Congress (May 6, 2022), <a href="https://www.consumerfinance.gov/about-us/blog/the-cfpbs-2021-fair-lending-annual-report-to-congress/">https://www.consumerfinance.gov/about-us/blog/the-cfpbs-2021-fair-lending-annual-report-to-congress/</a>.
\42\ CFPB, Support Spanish-speaking customers with Spanish-
language disclosures (May 11, 2022), <a href="https://www.consumerfinance.gov/about-us/blog/support-spanish-speaking-customers-with-spanish-language-disclosures/">https://www.consumerfinance.gov/about-us/blog/support-spanish-speaking-customers-with-spanish-language-disclosures/</a>.
\43\ Hallie Ryan, CFPB publishes Beginner's Guide to Accessing
and Using Home Mortgage Disclosure Act Data (June 13, 2022), <a href="https://www.consumerfinance.gov/about-us/blog/cfpb-publishes-beginners-guide-to-accessing-and-using-home-mortgage-disclosure-act-data/">https://www.consumerfinance.gov/about-us/blog/cfpb-publishes-beginners-guide-to-accessing-and-using-home-mortgage-disclosure-act-data/</a>.
\44\ Sonia Lin, Identifying and addressing the financial needs
of immigrants (June 27, 2022), <a href="https://www.consumerfinance.gov/about-us/blog/identifying-and-addressing-the-financial-needs-of-immigrants/">https://www.consumerfinance.gov/about-us/blog/identifying-and-addressing-the-financial-needs-of-immigrants/</a>.
\45\ Tim Lambert, Using special purpose credit programs to serve
unmet credit needs (July 19, 2022), <a href="https://www.consumerfinance.gov/about-us/blog/using-special-purpose-credit-programs-to-serve-unmet-credit-needs/">https://www.consumerfinance.gov/about-us/blog/using-special-purpose-credit-programs-to-serve-unmet-credit-needs/</a>.
\46\ Patrice Alexander Ficklin, Makalia Griffith, and Tim
Lambert, Mortgage Borrowers Can Challenge Inaccurate Appraisals
Through the Reconsideration of Value Process (Oct. 6, 2022), <a href="https://www.consumerfinance.gov/about-us/blog/mortgage-borrowers-can-challenge-inaccurate-appraisals-through-the-reconsideration-of-value-process/">https://www.consumerfinance.gov/about-us/blog/mortgage-borrowers-can-challenge-inaccurate-appraisals-through-the-reconsideration-of-value-process/</a>.
\47\ Feng Liu, Office of Research blog: Higher interest rates
leading to higher debt burdens for mortgage borrowers (Nov. 30,
2022), <a href="https://www.consumerfinance.gov/about-us/blog/higher-interest-rates-leading-to-higher-debt-burdens-for-mortgage-borrowers/">https://www.consumerfinance.gov/about-us/blog/higher-interest-rates-leading-to-higher-debt-burdens-for-mortgage-borrowers/</a>.
\48\ Woody Anglade, Patrice Alexander Ficklin, and Timothy
Lambert, Changes to HMDA's closed-end loan reporting threshold (Dec.
6, 2022), <a href="https://www.consumerfinance.gov/about-us/blog/changes-to-hmda-closed-end-loan-reporting-threshold/">https://www.consumerfinance.gov/about-us/blog/changes-to-hmda-closed-end-loan-reporting-threshold/</a>.
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In 2022, the CFPB also issued 16 press releases related to fair
lending and access to credit issues, including the announcement of: the
publication of the CFPB's Justice-Involved Individuals and the Consumer
Financial Marketplace Report; \49\ the publication of the SBREFA
outline for the AVM rulemaking; \50\ the updated UDAAP exam guidance;
\51\ Director Chopra's statement on the Interagency Task Force on
Property Appraisal and Valuation Equity (PAVE) taskforce's report; \52\
the availability of 2021 HMDA data; \53\ a report on financial
challenges facing rural communities; \54\ the issuance of an advisory
opinion on the coverage of fair lending laws; \55\ the publication of a
report on mortgage servicing metrics; \56\ the issuance of a CFPB
Circular related to adverse action notice requirements under ECOA; \57\
the availability of the 2021 HMDA data; \58\ the Trident enforcement
action; \59\ issuance of an interpretive rule laying out when digital
marketing providers for financial firms must comply with Federal
consumer financial protection law; \60\ a report detailing family
finances and debt in rural Appalachia; \61\ the CFPB's Annual Report of
Mortgage Market Activity; \62\ the CFPB's effort to spur opportunities
for homeowners in the mortgage market; \63\ and publication of data
from the National Survey of Mortgage Originations.\64\
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\49\ CFPB, CFPB Report Shows Criminal Justice Financial
Ecosystem Exploits Families at Every Stage (Jan. 31, 2022), <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-report-shows-criminal-justice-financial-ecosystem-exploits-families-at-every-stage/">https://www.consumerfinance.gov/about-us/newsroom/cfpb-report-shows-criminal-justice-financial-ecosystem-exploits-families-at-every-stage/</a>.
\50\ CFPB, Consumer Financial Protection Bureau Outlines Options
To Prevent Algorithmic Bias In Home Valuations (Feb. 23, 2022),
<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>.
\51\ CFPB, CFPB Targets Unfair Discrimination in Consumer
Finance (Mar. 16, 2022), <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-targets-unfair-discrimination-in-consumer-finance/">https://www.consumerfinance.gov/about-us/newsroom/cfpb-targets-unfair-discrimination-in-consumer-finance/</a>.
\52\ CFPB, CFPB Director Chopra Statement on Appraisal Task
Force Report (Mar. 23, 2022), <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-director-chopra-statement-on-appraisal-task-force-report/">https://www.consumerfinance.gov/about-us/newsroom/cfpb-director-chopra-statement-on-appraisal-task-force-report/</a>.
\53\ CFPB, 2021 HMDA Data on Mortgage Lending Now Available
(Mar. 24, 2022), <a href="https://www.consumerfinance.gov/about-us/newsroom/2021-hmda-data-on-mortgage-lending-now-available/">https://www.consumerfinance.gov/about-us/newsroom/2021-hmda-data-on-mortgage-lending-now-available/</a>.
\54\ CFPB, CFPB Releases Report on Financial Challenges Facing
Rural Communities (Apr. 19, 2022), <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-releases-report-on-financial-challenges-facing-rural-communities/">https://www.consumerfinance.gov/about-us/newsroom/cfpb-releases-report-on-financial-challenges-facing-rural-communities/</a>.
\55\ CFPB, CFPB Issues Advisory Opinion on Coverage of Fair
Lending Laws (May 9, 2022), <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-issues-advisory-opinion-on-coverage-of-fair-lending-laws/">https://www.consumerfinance.gov/about-us/newsroom/cfpb-issues-advisory-opinion-on-coverage-of-fair-lending-laws/</a>.
\56\ CFPB, CFPB Releases Report on Mortgage Servicing Metrics
(May 16, 2022), <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-releases-report-on-mortgage-servicing-metrics/">https://www.consumerfinance.gov/about-us/newsroom/cfpb-releases-report-on-mortgage-servicing-metrics/</a>.
\57\ CFPB, CFPB Acts to Protect the Public from Black-Box Credit
Models Using Complex Algorithms (May 26, 2022), <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-acts-to-protect-the-public-from-black-box-credit-models-using-complex-algorithms/">https://www.consumerfinance.gov/about-us/newsroom/cfpb-acts-to-protect-the-public-from-black-box-credit-models-using-complex-algorithms/</a>.
\58\ CFPB, FFIEC Announces Availability of 2021 Data on Mortgage
Lending (June 16, 2022), <a href="https://www.consumerfinance.gov/about-us/newsroom/ffiec-announces-availability-of-2021-data-on-mortgage-lending/">https://www.consumerfinance.gov/about-us/newsroom/ffiec-announces-availability-of-2021-data-on-mortgage-lending/</a>.
\59\ CFPB, CFPB, DOJ Order Trident Mortgage Company to Pay More
Than $22 Million for Deliberate Discrimination Against Minority
Families (July 27, 2022), <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-doj-order-trident-mortgage-company-to-pay-more-than-22-million-for-deliberate-discrimination-against-minority-families/">https://www.consumerfinance.gov/about-us/newsroom/cfpb-doj-order-trident-mortgage-company-to-pay-more-than-22-million-for-deliberate-discrimination-against-minority-families/</a>.
\60\ CFPB, CFPB Warns that Digital Marketing Providers Must
Comply with Federal Consumer Finance Protections (Aug. 10, 2022),
<a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-warns-that-digital-marketing-providers-must-comply-with-federal-consumer-finance-">https://www.consumerfinance.gov/about-us/newsroom/cfpb-warns-that-digital-marketing-providers-must-comply-with-federal-consumer-finance-</a> protections/.
\61\ CFPB, CFPB Report Details Family Finances and Debt in Rural
Appalachia (Sept. 1, 2022), <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-report-details-family-finances-and-debt-in-rural-appalachia/">https://www.consumerfinance.gov/about-us/newsroom/cfpb-report-details-family-finances-and-debt-in-rural-appalachia/</a>.
\62\ CFPB, CFPB Annual Report of 2021 Mortgage Market Activity
Reveals an End to the Refinancing Boom and an Increase in Home
Purchase Loans (Sept. 19, 2022), <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-annual-report-2021-mortgage-market-activity-end-to-refinancing-boom/">https://www.consumerfinance.gov/about-us/newsroom/cfpb-annual-report-2021-mortgage-market-activity-end-to-refinancing-boom/</a>.
\63\ CFPB, CFPB Launches Effort to Spur New Opportunities for
Homeowners in the Mortgage Market (Sept. 22, 2022), <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-launches-effort-to-spur-new-opportunities-for-homeowners-in-the-mortgage-market/">https://www.consumerfinance.gov/about-us/newsroom/cfpb-launches-effort-to-spur-new-opportunities-for-homeowners-in-the-mortgage-market/</a>.
\64\ CFPB, CFPB and FHFA Publish Updated Data from the National
Survey of Mortgage Originations for Public Use (Dec. 13, 2022),
<a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-fhfa-publication-of-loan-level-data-for-public-use-collected-through-the-nsmo/">https://www.consumerfinance.gov/about-us/newsroom/cfpb-fhfa-publication-of-loan-level-data-for-public-use-collected-through-the-nsmo/</a>.
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[[Page 43093]]
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 2022, CFPB staff participated in 124 stakeholder engagements
related to fair lending and access to credit issues. Through speeches,
presentations, podcasts, roundtables, webinars, and other smaller
discussions on fair lending topics, the CFPB strives to keep abreast of
economic and market realities that impact the lives of individuals,
small businesses, and communities the CFPB is charged with protecting.
Throughout 2022, numerous other engagements centered around
traditional and digital redlining, to include appraisal bias issues;
algorithmic bias issues; special purpose credit programs; the
rulemaking governing small business lending data collection and
reporting under section 1071 of the Dodd-Frank Act; HMDA; agricultural
and rural lending; student lending; and credit reporting.
3.2. Seeking Information: Request for Information
On September 27, 2022, the CFPB issued a Request for Information
(RFI) seeking insights on ways to improve mortgage refinances for
homeowners who would benefit from refinancing, including Black and
Hispanic borrowers. When interest rates decline, many borrowers benefit
from the lower rates by refinancing their loans. Mortgage refinancing
can be harder to access for borrowers with smaller loan balances. Black
and Hispanic borrowers, who on average have smaller loans, have not
participated in recent refinance booms at the same rate as white
borrowers. The RFI sought innovative and timely ideas to address
persistent market failures and to help borrowers access beneficial
refinancing along with short- and long-term loss mitigation assistance.
The comment period for this RFI closed on November 28, 2022.
3.3. Data and Reports
3.3.1. Justice Involved Individuals and the Consumer Financial
Marketplace
On January 31, 2022, the CFPB released a report reviewing the
financial issues facing people and families who come in contact with
the criminal justice system.\65\ The report describes an ecosystem rife
with burdensome fees, lack of choice, and barriers to credit access,
where families are increasingly being forced to shoulder the costs. It
walks through the financial challenges families encounter at every
stage of the criminal justice process, and the ways in which
providers--often for-profit private companies--are leveraging a lack of
consumer choice and the companies' market dominance to impose hefty
fees at families' expense. The report also describes the barriers
people face when reentering society from the criminal justice system,
including some barriers to obtaining consumer and small business credit
that may raise fair lending concerns. The burdens of the criminal
justice system--and its financial impacts--fall most heavily on people
of color, women, and people with lower incomes of all races and
ethnicities. Surveys have repeatedly found women, and specifically
Black women, disproportionately shoulder the costs of staying in touch
with loved ones in prison and paying court-related debt for family
members, sometimes spending up to a third of their income on such costs
and even forgoing basic necessities for themselves.
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\65\ CFPB, Justice Involved Individuals and the Consumer
Financial Marketplace (Jan. 31, 2022), <a href="https://files.consumerfinance.gov/f/documents/cfpb_jic_report_2022-01.pdf">https://files.consumerfinance.gov/f/documents/cfpb_jic_report_2022-01.pdf</a>.
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3.3.2. Medical Debt Burden in the United States
Medical debt is the most common collection tradeline reported on
consumer credit records. Unfortunately, as a result of inequities in
wealth, occupation, income, insurance coverage, and access to care,
people of color are more likely to have medical debt in collections.
People also report being contacted by debt collectors about medical
debt more than any other type of debt. While medical debt has long
played an outsized role on credit reports, concerns about medical debt
collections and reporting are particularly elevated due to the COVID-19
pandemic. Many people have incurred pandemic-related medical debt.
Black, Hispanic, and Native American communities have experienced
higher rates of COVID-19 infection, in part because Black, Hispanic,
and Native American people are more likely to be essential workers.
Frontline workers may be particularly likely to have pandemic-related
medical debt since they have more exposure to the virus but are less
likely to have health insurance than the general population.
On March 1, 2022, the CFPB released a report summarizing key areas
of concern in medical debt collections and reporting.\66\ One such key
finding was that medical debt affects households unevenly, as past-due
medical debt is more prevalent among Black and Hispanic individuals
than white and Asian individuals. Medical debt can have a compounding
impact in reducing future access to credit, housing, and employment for
populations who already face financial exclusion, including communities
of color, low-income individuals, and uninsured or underinsured
individuals.
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\66\ CFPB, Medical Debt Burden in the United States (Mar. 1,
2022), <a href="https://files.consumerfinance.gov/f/documents/cfpb_medical-debt-burden-in-the-united-states_report_2022-03.pdf">https://files.consumerfinance.gov/f/documents/cfpb_medical-debt-burden-in-the-united-states_report_2022-03.pdf</a>.
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3.3.3. Special Issue Brief: New Data on the Characteristics of Mortgage
Borrowers During the COVID-19 Pandemic
On March 23, 2022, the CFPB released a report regarding the
mortgage characteristics and demographics of borrowers who remained in
COVID-19-related forbearance in January 2022.\67\ Utilizing data from
the National Mortgage Database, this report followed up on a previous
report in May of 2021 that analyzed the characteristics of mortgage
borrowers during the COVID-19 pandemic based on the account status of
borrowers reported through March 2021. The 2022 report found that
borrowers had a forbearance rate of 1.3 percent, compared to 4.7
percent in the March 2021 sample used in the previous May 2021 report.
Although the overall forbearance rate decreased, the 2022 report also
found, among other findings, that Black and Hispanic borrowers remained
significantly more likely to be in forbearance compared to white
borrowers. Specifically, Black and Hispanic borrowers were 2.8 times
and 1.6 times more likely to end up in forbearance, respectively, than
white borrowers.
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\67\ CFPB, New Data on the Characteristics of Mortgage Borrowers
During the COVID-19 Pandemic (Mar. 23, 2022), <a href="https://files.consumerfinance.gov/f/documents/cfpb_characteristics-of-mortgage-borrowers-during-covid-19-pandemic_report_2022-03.pdf">https://files.consumerfinance.gov/f/documents/cfpb_characteristics-of-mortgage-borrowers-during-covid-19-pandemic_report_2022-03.pdf</a>.
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3.3.4. Availability of 2021 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 24, 2022, the CFPB announced the availability of the 2021
HMDA modified loan application register data on the FFIEC's HMDA
Platform for approximately 4,300 HMDA filers.\68\ These published data
[[Page 43094]]
contain loan-level information filed by financial institutions,
modified to protect privacy.
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\68\ CFPB, 2021 HMDA Data on Mortgage Lending Now Available
(Mar. 24, 2022), <a href="https://www.consumerfinance.gov/about-us/newsroom/2021-hmda-data-on-mortgage-lending-now-available/">https://www.consumerfinance.gov/about-us/newsroom/2021-hmda-data-on-mortgage-lending-now-available/</a>.
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On June 16, 2022, the FFIEC announced the availability of
additional data on 2021 mortgage lending transactions at 4,338
financial institutions reported under HMDA.\69\ These data include a
total of 48 data points providing information about the applicants, the
property securing the loan or proposed to secure the loan in the case
of non-originated applications, the transaction, and identifiers.
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\69\ CFPB, FFIEC Announces Availability of 2021 Data on Mortgage
Lending (June 16, 2022), <a href="https://www.consumerfinance.gov/about-us/newsroom/ffiec-announces-availability-of-2021-data-on-mortgage-lending/">https://www.consumerfinance.gov/about-us/newsroom/ffiec-announces-availability-of-2021-data-on-mortgage-lending/</a>.
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3.3.5. Data Spotlight: Challenges in Rural Banking Access
As part of the CFPB's renewed focus on the specific challenges of
rural consumers and small businesses, on April 19, 2022, the CFPB
released a report highlighting the consumer finance challenges faced by
rural communities.\70\ This report is a starting point for a CFPB
initiative that will include devoted engagement with rural communities
across the country, research into challenges faced by rural
communities, and actions to protect rural consumers and small
businesses from predatory bad actors and repeat offenders in consumer
and small business financial markets.
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\70\ CFPB, Data Spotlight: Challenges in Rural Banking Access
(Apr. 19, 2022), <a href="https://files.consumerfinance.gov/f/documents/cfpb_data-spotlight_challenges-in-rural-banking_2022-04.pdf">https://files.consumerfinance.gov/f/documents/cfpb_data-spotlight_challenges-in-rural-banking_2022-04.pdf</a>.
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3.3.6. Mortgage Servicing COVID-19 Pandemic Response Metrics: New
Observations From Data Reported by Servicers for May-December 2021
On May 16, 2022, the CFPB published a report providing observations
of data obtained from 16 large mortgage servicers to identify areas of
risk in the servicers' COVID-19 pandemic responses.\71\ This report
followed a previous 2021 response metrics report, and addresses similar
topics including call center data, COVID-19 hardship forbearance exits,
delinquency, and borrower profiles for the period May through December
2021. As described in the report, some borrowers were impacted more
than others. While the data on language preference was limited, among
the servicers who provided language preference data, the percentage of
borrowers in delinquency and who had a non-English language preference
increased during the reviewed period. Conversely, the percentage of
borrowers in delinquency and who identified English as their preferred
language decreased.
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\71\ CFPB, Mortgage Servicing COVID-19 Pandemic Response
Metrics: New Observations from Data Reported by Sixteen Servicers
for May-December 2021 (May 16, 2022), <a href="https://files.consumerfinance.gov/f/documents/cfpb_mortgage-servicing-covid-19-pandemic-response-metrics_report_2022-05.pdf">https://files.consumerfinance.gov/f/documents/cfpb_mortgage-servicing-covid-19-pandemic-response-metrics_report_2022-05.pdf</a>.
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3.3.7. Consumer Finances in Rural Appalachia
On September 1, 2022, the CFPB issued a report detailing consumer
finances and debt in rural Appalachia.\72\ The report found that
inhabitants of Appalachia face higher debt burdens and worse credit
conditions compared to people in most other parts of rural America. In
particular, medical debt collections are a much more prevalent issue
among inhabitants of rural Appalachia, and consumers with medical debt
collections often experience difficulties in making ends meet on other
financial obligations.
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\72\ Matthew Liu, Cooper Luce, Michael Orevba, Shawn Sebastian,
and Cortnie Shupe, Consumer Finances in Rural Appalachia (Sept. 1,
2022), <a href="https://files.consumerfinance.gov/f/documents/cfpb_consumer-finances-in-rural-appalachia_report_2022-09.pdf">https://files.consumerfinance.gov/f/documents/cfpb_consumer-finances-in-rural-appalachia_report_2022-09.pdf</a>.
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3.3.8. Data Point: 2021 Mortgage Market Activity and Trends
On September 19, 2022, the CFPB released its annual report on
residential mortgage lending activity and trends for 2021.\73\ The
report shows a shift from refinance loans in 2020 to home purchase
loans in 2021, with a greater share of home purchase loans going to
Asian, Black, and Hispanic white borrowers relative to the share of
home purchase loans for non-Hispanic white borrowers. The top 25
closed-end lenders by loan volume held nearly half of the market share
of residential mortgage lending--a trend that has risen each year since
2018. Other key findings of the report include that an increase in
mortgage originations was driven by home purchase loans as refinance
loans fell; the number of mortgage lending institutions reporting HMDA
data dropped in 2021; and that Asian, Black, and Hispanic white
borrowers' home purchase loan shares increased from 2020 to 2021. The
report also found that Black and Hispanic white borrowers, overall,
continued to qualify for lower median loan amounts, had lower median
credit scores, and had higher denial rates compared to non-Hispanic
white and Asian borrowers. Additionally, Black and Hispanic white
borrowers paid higher median interest rates and higher total loan costs
overall.
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\73\ CFPB, Data Point: 2021 Mortgage Market Activity and Trends
(Sept. 19, 2022), <a href="https://files.consumerfinance.gov/f/documents/cfpb_data-point-mortgage-market-activity-trends_report_2022-09.pdf">https://files.consumerfinance.gov/f/documents/cfpb_data-point-mortgage-market-activity-trends_report_2022-09.pdf</a>.
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3.3.9. Updated Data From National Survey of Mortgage Originations
On December 13, 2022, 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.\74\
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\74\ CFPB, CFPB and FHFA Publish Updated Data from the National
Survey of Mortgage Originations for Public Use (Dec. 13, 2022),
<a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-fhfa-publication-of-loan-level-data-for-public-use-collected-through-the-nsmo/">https://www.consumerfinance.gov/about-us/newsroom/cfpb-fhfa-publication-of-loan-level-data-for-public-use-collected-through-the-nsmo/</a>.
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3.1. 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 2022 fair
lending regulatory, supervisory, and enforcement activities to promote
consistent, efficient, and effective enforcement of Federal fair
lending laws.
The CFPB, along with the Department of Housing and Urban
Development (HUD), FTC, FDIC, FRB, NCUA, OCC, DOJ, and FHFA, constitute
the Interagency Task Force on Fair Lending. This Task Force meets
regularly to discuss fair lending enforcement efforts, share current
methods of conducting supervisory and enforcement fair lending
activities, and coordinate fair lending policies. In 2022, the FDIC was
the Chair of this Task Force.\75\
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\75\ Additional activity has occurred since the close of this
reporting period. In 2023, the NCUA became the Chair of the
Interagency Taskforce on Fair Lending.
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On February 22, 2022, the CFPB, along with HUD, FRB, DOJ, OCC,
FDIC, NCUA, and FHFA, released an Interagency Statement on Special
Purpose Credit Programs Under ECOA and Regulation B. The statement
encourages lenders to explore opportunities available to them to
increase credit access through special purpose credit programs to
better serve historically disadvantaged individuals and
communities.\76\
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\76\ Bd. of Governors of the Fed. Reserve Sys., Fed. Deposit
Ins. Corp., Nat'l Credit Union Admin., Office of the Comptroller of
the Currency, Consumer Fin. Prot. Bureau, the Dep't of Hous. and
Urban Dev., the Dep't of Justice, and the Fed. Hous. Fin. Agency,
Interagency Statement on Special Purpose Credit Programs Under the
Equal Credit Opportunity Act and Regulation B (Feb. 22, 2022),
<a href="https://files.consumerfinance.gov/f/documents/cfpb_spcp_interagency-statement_2022-02.pdf">https://files.consumerfinance.gov/f/documents/cfpb_spcp_interagency-statement_2022-02.pdf</a>.
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[[Page 43095]]
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, the other FFIEC Federal agencies, HUD, and FHFA are the
FFIEC's Appraisal Subcommittee (ASC) member agencies. The ASC's
functions include providing Federal oversight of State appraiser and
appraisal management company regulatory programs, and a monitoring
framework for The Appraisal Foundation.\77\ The ASC has taken steps to
promote fairness and equity in valuations, including by being a member
of the PAVE Task Force.
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\77\ During the reporting period, the CFPB Deputy Director Zixta
Martinez served as Vice Chairperson of the ASC beginning on April 1,
2022, and Regional Director John Schroeder served as Vice
Chairperson of the ASC through February 16, 2022.
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The CFPB engaged with other agencies on issues of bias in home
appraisals through the PAVE Task Force. 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.\78\ This Task Force also includes cabinet-level leaders
from executive departments and additional members from independent
agencies, including the CFPB. On March 23, 2022, the PAVE Task Force
issued a report, Action Plan to Advance Property Appraisal and
Valuation Equity: Closing the Racial Wealth Gap by Addressing Mis-
valuations for Families and Communities of Color.<SUP>79</SUP> The
report outlines the historical role of racism in the valuation of
property, examines the various forms of bias that can appear in
residential property valuation practices, and describes how government
and industry stakeholders will advance equity through concrete actions
and recommendations. Aside from its involvement in PAVE, the CFPB is
also actively working with its interagency partners on issues of bias
in home appraisals.
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\78\ Since the close of this reporting period, Ambassador Susan
Rice left her position as Assistant to the President for Domestic
Policy and Director of the Domestic Policy Council. It was announced
on May 5, 2023, that Neera Tanden would replace Ambassador Rice as
Assistant to the President for Domestic Policy and Director of the
Domestic Policy Council. Ms. Tanden now also serves as co-chair of
the PAVE Task Force.
\79\ Interagency Task Force on Property Appraisal and Valuation
Equity (PAVE), Action Plan to Advance Property Appraisal and
Valuation Equity (Mar. 2022), <a href="https://pave.hud.gov/actionplan">https://pave.hud.gov/actionplan</a>.
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In February 2022, senior staff from the CFPB, along with HUD, FRB,
DOJ, OCC, FDIC, NCUA, and FHFA submitted a letter to the Appraisal
Standards Board regarding proposed changes to the 2023 Edition of the
Uniform Standards of Professional Appraisal Practice.\80\
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\80\ Patrice Alexander Ficklin, Consumer Fin. Prot. Bureau; Amy
Frisk, Dep't of Hous. and Urban Dev.; Arthur Lindo, Bd. of Governors
of the Fed. Reserve Sys.; Sameena Shina Majeed, Dep't of Justice;
Donna Murphy, Office of the Comptroller of the Currency; Mark
Pearce, Fed. Deposit Ins. Corp.; Timothy Segerson, Nat'l Credit
Union Admin.; James Wylie, Fed. Hous. Fin. Agency, Letter to
Michelle Czekalski Bradley (Feb. 4, 2022), <a href="https://files.consumerfinance.gov/f/documents/cfpb_appraisal-discrimination_federal-interagency_comment_letter_2022-02.pdf">https://files.consumerfinance.gov/f/documents/cfpb_appraisal-discrimination_federal-interagency_comment_letter_2022-02.pdf</a>.
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As required by section 1022 of the Dodd-Frank Act, the CFPB also
consults with other agencies as part of its rulemaking process. For
example, in 2022, while developing its small business lending data
collection final rule, the CFPB consulted or offered to consult with
the FRB, FDIC, NCUA, OCC, HUD, DOJ, FTC, the Department of Agriculture,
the Department of the Treasury, the Economic Development
Administration, the Farm Credit Administration (FCA), the Financial
Crimes Enforcement Network, and the Small Business Administration (SBA)
including, among other things, on consistency with any prudential,
market, or systemic objectives administered by such agencies.
In addition to the 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
2022, no fair lending-related amicus briefs were filed. Information
regarding the CFPB's amicus program, including a description of the
amicus briefs it has filed, is available on the CFPB's website.\81\
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\81\ See generally, <a href="https://www.consumerfinance.gov/policy-compliance/amicus/">https://www.consumerfinance.gov/policy-compliance/amicus/</a>.
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In September of 2022, the CFPB was sued in the U.S. District Court
for the Eastern District of Texas by the U.S. Chamber of Commerce, et
al., challenging the CFPB's update to the UDAAP section of its
examination manual relating to the CFPA's prohibition on unfair
practices. Litigation is currently ongoing.
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 the 2020 HMDA Final Rule. On September 23, 2022,
the District Court vacated the 2020 HMDA Final Rule's closed-end loan
reporting threshold but upheld the rule's open-end reporting threshold.
The decision means that the threshold for reporting data on closed-end
mortgage loans is 25 loans in each of the two preceding calendar years,
which is the threshold established by the 2015 HMDA Final Rule, rather
than the 100-loan threshold set by the 2020 HMDA Final Rule.
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.
Following the timely issuance of a notice of proposed rulemaking, the
comment period for the rulemaking closed on January 6, 2022.\82\ For a
more
[[Page 43096]]
comprehensive update on 1071 activity, see section 2.1.1 of this
report.
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\82\ Additional activity has occurred since the close of this
reporting period. On March 30, 2023, the CFPB released its final
rule implementing section 1071. See <a href="https://www.consumerfinance.gov/rules-policy/final-rules/small-business-lending-under-the-equal-credit-opportunity-act-regulation-b/">https://www.consumerfinance.gov/rules-policy/final-rules/small-business-lending-under-the-equal-credit-opportunity-act-regulation-b/</a>.
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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.\83\ In addition, the CFPB's annual HMDA reporting requirement
calls for the CFPB, in consultation with HUD, to report annually on the
utility of HMDA's requirement that covered lenders itemize certain
mortgage loan data.\84\
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\83\ 15 U.S.C. 1691f.
\84\ 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.
BILLING CODE 4810-AM-P
[[Page 43097]]
[GRAPHIC] [TIFF OMITTED] TN06JY23.000
BILLING CODE 4810-AM-C
5.1.1. Public Enforcement Actions
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\85\ 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. Federeal
Financial Institutions Examination Council, <a href="http://www.ffiec.gov">http://www.ffiec.gov</a>
(last visited Mar. 30, 2021).
\86\ 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.
\87\ 15 U.S.C. 1691c.
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In 2022, of the Federal agencies with ECOA enforcement authority,
the CFPB, together with DOJ, brought one public enforcement action for
violations of ECOA and the FTC brought two enforcement actions for
violations of ECOA.
On July 27, 2022, the CFPB, together with DOJ, brought a public
enforcement action in Federal district court in the Eastern District of
Pennsylvania against Trident Mortgage Company for unlawful
discrimination against individuals and families living in majority-
minority neighborhoods in the greater Philadelphia area. For more
information on the Trident enforcement action, see section 1.2.1 of
this report.
[[Page 43098]]
The FTC also brought enforcement actions for violations of ECOA. In
2022, the FTC and the State of Illinois brought an enforcement action
against Napleton, a large multistate auto group based in Illinois,
alleging, among other things, that defendants violated the ECOA and
Regulation B by discriminating against Black consumers, charging them
more in financing for interest rate markups, and illegal junk fees for
unwanted ``add-ons'' that they sneaked onto customers' bills.\88\
According to the FTC's complaint, among other things, defendants would
often wait until the end of the hours-long negotiation process to slip
junk fees for add-on products and services into consumers' purchase
contracts, which can run as long as 60 pages. Defendants agreed to pay
$10 million to settle all the charges, a record setting monetary
judgment for an FTC auto lending case.\89\ Defendants are also required
to establish a fair lending program that will, among other components,
cap the amount of any additional interest markup they charge consumers.
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\88\ FTC v. North American Automotive Services, Inc., No. 22-cv-
01690 (N.D. Ill., filed Mar. 31, 2022), available at <a href="https://www.ftc.gov/legal-library/browse/cases-proceedings/2023195-napleton-auto">https://www.ftc.gov/legal-library/browse/cases-proceedings/2023195-napleton-auto</a>. Chair Khan and Commissioner Slaughter issued a concurring
statement. See Joint Statement of Chair Lina M. Khan and
Commissioner Rebecca Kelly Slaughter in the Matter of Napleton
Automotive Group (Mar. 31, 2022), available at <a href="https://www.ftc.gov/news-events/news/speeches/joint-statement-chair-lina-m-khan-commissioner-rebecca-kelly-slaughter-matter-napleton-automotive">https://www.ftc.gov/news-events/news/speeches/joint-statement-chair-lina-m-khan-commissioner-rebecca-kelly-slaughter-matter-napleton-automotive</a>.
\89\ FTC v. North Amer. Auto. Servs., Inc., No. 22-cv-01690
(N.D. Ill. Mar. 31, 2022) (stipulated order for permanent
injunction, monetary judgment, and other relief), available at
<a href="https://www.ftc.gov/system/files/ftc_gov/pdf/6-1%20Stipulated%20Order.pdf">https://www.ftc.gov/system/files/ftc_gov/pdf/6-1%20Stipulated%20Order.pdf</a>.
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Also in 2022, the FTC brought an action in Federal court against
Maryland-based Passport Automotive Group, alleging that defendants
violated the ECOA and Regulation B, and also violated the FTC Act, by
engaging in unfair practices, by discriminating against Black and
Latino consumers, charging them higher financing costs and illegal junk
fees.\90\ In its complaint, the FTC alleges, among other things, that
Passport regularly advertised certified, reconditioned, or inspected
cars at specific prices, but then added extra certification,
reconditioning, or inspection fees that it falsely claimed consumers
are required to pay, charging Black and Latino consumers more for the
fees and imposing the fees more often. The FTC also alleges that
Passport charged Black and Latino consumers hundreds of dollars more in
financing costs for interest rate markups than White consumers. Among
other things, Defendants agreed to pay more than $3.3 million to settle
the FTC's lawsuit, which will be used to refund consumers harmed by
Passport's conduct; the order also requires Defendants to establish a
fair lending program to ensure against discrimination going forward,
including requiring each Passport dealership to either charge no
financing markup or charge the same markup rate to all consumers.\91\
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\90\ FTC v. Passport Auto. Grp., Inc., No. 8:22-cv-02670-GLS (D.
Md., filed Oct. 18, 2022), <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/Complaint%20Passport%20Auto%20Group%2C%20Inc.%2C%20et%20al..pdf">https://www.ftc.gov/system/files/ftc_gov/pdf/Complaint%20Passport%20Auto%20Group%2C%20Inc.%2C%20et%20al..pdf</a>.
This is the second FTC action against Passport in recent years. See
<a href="https://www.ftc.gov/news-events/news/press-releases/2018/10/washington-dc-area-car-dealerships-marketing-firm-settle-deceptive-advertising-charges">https://www.ftc.gov/news-events/news/press-releases/2018/10/washington-dc-area-car-dealerships-marketing-firm-settle-deceptive-advertising-charges</a>.
\91\ FTC v. Passport Auto. Grp., Inc., No. 8:22-cv-02670 (D. Md.
Oct. 18, 2022) (stipulated order for permanent injunction, monetary
judgment, and other relief), available at <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/Order%20As%20Filed.pdf">https://www.ftc.gov/system/files/ftc_gov/pdf/Order%20As%20Filed.pdf</a>.
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5.1.2. Number of Institutions Cited for ECOA/Regulation B Violations
In 2022, the Agencies and the CFPB collectively reported citing 174
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:
Table 5--Regulation B Violations Cited by FFIEC Agencies, 2022
------------------------------------------------------------------------
FFIEC Agencies
Regulation B violations: 2022 reporting
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12 CFR 1002.4, 1002.7(d)(1): Discrimination-- NCUA,\92\ FRB,\93\
Discrimination on a prohibited basis in a OCC,\94\ CFPB.\95\
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.
1002.5(d): Inquiring about protected class--
Inquiring about the race, color, religion,
national origin, or sex of an applicant or any
other person in connection with a credit
transaction, except as permitted in Sec.
1002.5(b)(1) and (b)(2), or Sec. 1002.8 in
the case of a special purpose credit program;
requesting any information concerning an
applicant's spouse or former spouse, except as
permitted in Sec. 1002.5(c)(2); requesting
the marital status of a person applying for
individual, unsecured credit, except as
permitted in Sec. 1002.5(d)(1) (for credit
other than individual, unsecured, a creditor
may inquire about the applicant's marital
status, but must only use the terms
``married,'' ``unmarried,'' and ``separated'');
inquiring as to whether income stated in an
application is derived from alimony, child
support, or separate maintenance payments,
except as permitted in Sec. 1002.5(d)(2); or
requesting information about birth control
practices, intentions concerning the bearing or
rearing of children, or capability to bear
children, except as permitted in Sec.
1002.5(d)(3).
12 CFR 1002.6 (b)(2): Specific rules concerning NCUA.
use of information--Improperly evaluating age,
receipt of public assistance in a credit
transaction.
12 CFR 1002.9(a)(1)(i), (a)(2), (b)(1); (b)(2); FDIC,\96\ NCUA,\97\
(c): Adverse Action--Failure to provide notice OCC,\98\ FRB,\99\
to the applicant 30 days after receiving a CFPB.\100\
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 1002.12(b)(1): Record Retention--Failure OCC.
to retain records of the original application
or a copy thereof for 25 months after the data
a creditor notifies an applicant of action
taken on an application or of incompleteness.
12 CFR 1002.14 (a)(1), (a)(2), (a)(3), (a)(4): FDIC,\101\ OCC,\102\
Appraisals and Valuations--Failure to provide FRB.\103\
appraisals and other valuations.
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Among institutions examined for compliance with ECOA and Regulation
[[Page 43099]]
B, the Non-FFIEC agencies reported that the most frequently cited
violations were as follows:
---------------------------------------------------------------------------
\92\ 12 CFR 1002.4(a).
\93\ 12 CFR 1002.7(d)(1).
\94\ 12 CFR 1002.7(d)(1).
\95\ 12 CFR 1002.4(a); 12 CFR 1002.4(b).
\96\ 12 CFR 1002.9(a)(2); (b)(2).
\97\ 12 CFR 1002.9(a)(1); (a)(2);(b)(2).
\98\ 12 CFR 1002.9(a)(1)(i); (a)(2); (b)(1); (b)(2).
\99\ 12 CFR 1002.9(a)(1)(i); (b)(2).
\100\ 12 CFR 1002.9(a)(2).
\101\ 12 CFR 1002.14(a)(1)-(4).
\102\ 12 CFR 1002.14(a)(1); (a)(2).
\103\ 12 CFR 1002.14(a)(2).
Table 6--Regulation B Violations Cited by Non-FFIEC Agencies Enforcing
ECOA, 2022
------------------------------------------------------------------------
Non-FFIEC Agencies
Regulation B violations: 2022 reporting
------------------------------------------------------------------------
12 CFR 1002.9(a)(1)(i): Adverse Action--Failure FCA.
to provide notice to the applicant 30 days
after receiving a completed application
concerning the creditor's approval of,
counteroffer to, or adverse action on the
application; failure to provide sufficient
information in an adverse action notification,
including the specific reasons for the action
taken; failure to provide ECOA notice.
------------------------------------------------------------------------
The AMS, SEC, and the SBA reported that they received no complaints
based on ECOA or Regulation B in 2022. The FTC is an enforcement agency
and does not conduct compliance examinations.
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.\104\ They also may refer other potential ECOA
violations to DOJ.\105\ In 2022, four agencies (FDIC, NCUA, FRB, and
CFPB) collectively made 23 such referrals to DOJ involving
discrimination in violation of ECOA. This is an increase of 91 percent
in such referrals from 12 in 2020. A brief description of those matters
follows.
---------------------------------------------------------------------------
\104\ 15 U.S.C. 1691e(g).
\105\ Id.
---------------------------------------------------------------------------
In 2022, the FDIC referred 12 fair lending matters to DOJ. The
referrals included: two matters involving discrimination on the basis
of national origin in auto loan pricing; one matter involving
discrimination on the basis of sex in auto loan pricing; two matters
involving discrimination on the basis of race in mortgage lending
(redlining); one matter involving discrimination in underwriting
consumer loans on the basis of marital status; two matters involving
discrimination in underwriting credit cards on the basis of age; two
matters involving discrimination in underwriting unsecured consumer
loans on the basis of exercising rights under the Consumer Credit
Protection Act; one matter involving discrimination in underwriting
unsecured consumer loans on the basis of receipt of public assistance
income; and one matter involving discrimination in pricing/underwriting
of consumer loans on the basis of marital status.
As reported in section 1.2.2 above, in 2022, the CFPB referred five
fair lending matters to DOJ. The referrals included four matters
involving discrimination on the basis of race and national origin in
mortgage lending (redlining) and one matter involving discrimination in
underwriting mortgage loans on the basis of receipt of public
assistance income.
In 2022, the NCUA referred five matters to DOJ. The referrals all
involved discrimination in underwriting consumer loans on the basis of
age, and one referral also involved discrimination in underwriting
consumer loans on the basis of marital status.
The FRB referred one matter to DOJ during the reporting period,
which involved discouragement of applicants or prospective applicants
in mortgage lending on the basis of marital status.\106\
---------------------------------------------------------------------------
\106\ This referral also involved discrimination on the basis of
familial status in violation of the Fair Housing Act.
---------------------------------------------------------------------------
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.\107\ The
CFPB, in consultation with HUD, finds that itemization and tabulation
of these data furthers the purposes of HMDA.
---------------------------------------------------------------------------
\107\ 12 U.S.C. 2807.
---------------------------------------------------------------------------
6. Looking Forward: the Future of Fair Lending
The ubiquity of advanced technologies throughout the consumer
financial services marketplace calls for vigilance against
discrimination using all of the CFPB's available tools. Advanced
algorithmic technologies, as well as old technology now marketed as
artificial intelligence, are now often used throughout the entire life
cycle of financial services products. Beginning with the sophisticated
digital marketing that targets individual consumers, continuing to the
fraud screens and underwriting models that determine who gets offered
credit and at what price, and finally to the chatbots and behavioral
analytics that increasingly govern consumers' experience post-
origination, consumers increasingly cannot avoid these technologies.
The CFPB has been increasing its expertise in data science and
analytics to ensure that we can identify fair lending violations at
each stage of the credit lifecycle and hold creditors and service
providers accountable for fully complying with fair lending and other
Federal consumer financial laws, regardless of the technology they
choose to use.
The CFPB is keenly focused on the risks that these technologies
present to individual consumers, small businesses, communities, and the
market as a whole. Big tech platforms, with their vast consumer
surveillance and data harvesting infrastructure, have the potential to
undermine fairness and competition. Some of these platforms are
collecting and monetizing highly sensitive consumer data, including the
types of data that are not appropriate to use in the context of a
credit decision. Indeed, vast troves of sensitive data available about
consumers that institutions using more traditional methods would never
have used in a credit decisioning context are now fueling highly
complex, black box algorithms. As affirmed by our Circular, Adverse
Action Notification Requirements in Connection with Credit Decisions
Based on Complex Algorithms, creditors must follow the law and provide
statements of specific reasons to applicants against whom adverse
action is taken, regardless of the technology they use.
[[Page 43100]]
These risks, combined with digital marketing techniques that allow
firms to target consumers with surgical precision and to leverage dark
patterns, can have the potential to create an unfair marketplace that
harms consumers and law-abiding institutions. As described in our
interpretative rule, Limited Applicability of Consumer Financial
Protection Act's ``Time or Space'' Exception to Digital Marketers,
digital marketers acting as service providers can be held liable by the
CFPB or other law enforcers for committing unfair, deceptive, or
abusive acts or practices as well as other consumer financial
protection violations.
The CFPB will remain vigilant against these risks and encourages
innovation that follows the law, promotes competitive markets, and
delivers long-term benefits to consumers and small businesses in the
form of sustainable financial products and services. For example, the
CFPB is considering as part of its personal financial data rights
rulemaking to implement section 1033 of the Dodd-Frank Act, options
that would allow consumers to more easily walk away from companies
offering bad products and poor service and move towards companies
competing for their business with alternate or innovative products and
services. Technology should be used to complement responsible banking,
rather than to undermine it.
The CFPB's work in 2022 underscored that financial service
providers are expected to play by the same rules no matter what
technology they use. In 2023, the CFPB will continue to guard against
violations throughout the entire credit lifecycle. We will continue to
develop our ability to leverage advanced data analytics to identify and
remedy violations. Though some technologies may be billed as new, the
risks of predation and exclusion that they may pose are not. The CFPB
was founded in the wake of the 2008 financial crisis, when products
initially billed as new and innovative resulted in catastrophic harm to
consumers and communities across the country. The CFPB will continue to
heed the lessons learned from that crisis. Product benefits based on
atypical use cases should be questioned and tested to protect consumers
and small businesses from future harm cloaked in vague promises of
innovation and inclusion. The CFPB will continue to dedicate and
develop resources to dive deeply into how financial institutions are
using, understanding, testing, and improving these technologies through
the entirety of the credit lifecycle.
Appendix A: Defined Terms
------------------------------------------------------------------------
Term Definition
------------------------------------------------------------------------
AMS............................... Agricultural Marketing Service of
the U.S. Department of Agriculture.
ASC............................... FFIEC's Appraisal Subcommittee.
AVM............................... Automated Valuation Models.
CFPA.............................. Consumer Financial Protection Act of
2010.
CFPB.............................. Consumer Financial Protection
Bureau.
CRA............................... Community Reinvestment Act.
Dodd-Frank Act.................... Dodd-Frank Wall Street Reform and
Consumer Protection Act.
DOJ............................... U.S. Department of Justice.
DOT............................... U.S. Department of Transportation.
ECOA.............................. Equal Credit Opportunity Act.
FCA............................... Farm Credit Administration.
FDIC.............................. Federal Deposit Insurance
Corporation.
FHA............................... Fair Housing Act.
FHFA.............................. Federal Housing Finance Agency.
Federal Reserve Board or FRB...... Board of Governors of the Federal
Reserve System.
FFIEC............................. Federal Financial Institutions
Examination Council--the FFIEC
member agencies are the Board of
Governors of the Federal Reserve
System (FRB), the Federal Deposit
Insurance Corporation (FDIC), the
National Credit Union
Administration (NCUA), the Office
of the Comptroller of the Currency
(OCC), and the Consumer Financial
Protection Bureau (CFPB). The State
Liaison Committee was added to
FFIEC in 2006 as a voting member.
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.
GAO............................... Government Accountability Office.
HMDA.............................. Home Mortgage Disclosure Act.
HUD............................... U.S. Department of Housing and Urban
Development.
MSA............................... Metropolitan Statistical Area.
NCUA.............................. National Credit Union
Administration.
OCC............................... Office of the Comptroller of the
Currency.
PAVE.............................. Property Appraisal and Valuation
Equity.
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.
[[Page 43101]]
Laura Galban,
Federal Register Liaison, Bureau of Consumer Financial Protection.
[FR Doc. 2023-14197 Filed 7-5-23; 8:45 am]
BILLING CODE 4810-AM-P
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.