CFPB Issues New Fair Lending Report

The Consumer Financial Protection Bureau (CFPB) released its annual Fair Lending Report last week, which covers the agency’s efforts to “fulfill its fair lending mandate” during the 2017 calendar year. Thus, most of the report covers the actions that were taken under Richard Cordray, the former director of the CFPB.

Specifically, the report has several components:

• It describes the administration of its functions under the Equal Credit Opportunity Act (ECOA)
• It summarizes public enforcement actions taken by other agencies with administrative enforcement responsibilities under ECOA
• It provides an assessment of the extent to which compliance with ECOA has been achieved
• It reports the utility of the Home Mortgage Disclosure Act’s (HMDA) requirement that covered lenders itemize certain mortgage loan data.

The report outlined the CFPB’s priorities in fair lending during 2017, which included redlining, mortgage and student loan servicing, small business lending, and discrimination in consumer lending.

Redlining has been a major concern among state and federal regulators. Redlining occurs when banks intentionally charge higher interest rates or deny credit to low and middle-income borrowers, for example, in inner-city neighborhoods. Often, a bank will simply reject all applications within certain zones instead of evaluating a borrower’s creditworthiness.

The Fair Lending Report states that the CFPB “had a number of pending investigations in this and other areas” at the end of 2017, but it is unclear what progress has been made in combating redlining in 2018.

NAFSA has previously looked at state-level activity meant to tackle redlining. Current investigations against this practice are taking place in Delaware, Illinois, Iowa, Pennsylvania, Washington, and Washington, D.C.

The report does not cover the agency’s efforts to ensure fair lending in 2018 and also does not provide any guidance or list agency priorities for 2019. Newly installed CFPB Director, Kathy Kraninger, has announced that she would immediately embark on a listening tour where she will begin to outline her goals for the agency in 2019.