The Fair Housing Act makes it illegal to discriminate against someone because of race, color, religion, sex (including gender, gender identity, sexual orientation, and sexual harassment), familial status, national origin or disability at any stage of the mortgage process, including: The Fair Housing Act prohibits discrimination in loans that . steering | Fair Housing, Discrimination, and Ethics in the Real Estate Industry. Steering can be very obvious, like . Your fair lending risk assessments should regularly analyze customer complaints to identify trends such as disparate treatment, discouragement, or steering. Fair Lending Fair Lending Laws and Regulations FDIC Consumer Compliance Examination Manual - March 2021 IV - 1.3 Redlining is a form of illegal disparate treatment in which a lender provides unequal access to credit, or unequal terms of credit, because of the race, color, national origin, Steering is the practice of deliberately guiding applicants toward or away from certain loan products or lending channels on a prohibited basis. the institution's fair lending performance. FHFA's Enterprise fair lendi ng examination program is conducted by the Office of Fair Lending Oversight . Steering involves restricting or attempting to restrict neighborhood choice by word or conduct to perpetuate segregated housing patterns or discourage or obstruct . Fair Lending Fair Lending Laws and Regulations FDIC Consumer Compliance Examination Manual - March 2021 IV - 1.3 Redlining is a form of illegal disparate treatment in which a lender provides unequal access to credit, or unequal terms of credit, because of the race, color, national origin, Fair Lending Fair Lending Scope and Conclusions Memorandum . For more information concerning course content and administration, please contact Anne Gruber at (703) 516-5424 or Sonya Staples at (703) 516-5870. In that sense, it is a "menu" of resources to be considered and selected from, depending on the nature and scope of the examination being conducted. but the fair lending risks associated with the use of targeted marketing strategies have been manifested in a series of private lawsuits and a charge of discrimination filed by hud against facebook, with the concern being that protected characteristics, or close proxies, might be used to exclude consumers from seeing advertisements on bases that There are 3 types of discrimination in fair lending : Overt Discrimination Overt discrimination is the act of openly and/or intentionally discriminating on a prohibited basis, i.e. Find more Fair Lending Training here - https://store.bankerscompliance.com/#?keyword=Fair%20lending&type=You've probably heard about steering by way of the l. By Tammy Butler, Master CMB June 26, 2013 Assessments, Best Practices, Fair Lending Regulation, Pricing. Illegal disparate treatment occurs when a lender bases its lending decision on one or more of the prohibited discriminatory factors covered by the fair lending laws, for example, if a lender offers a credit card with a limit of $750 for applicants age 21 through 30 and $1,500 for applicants over age 30. Illegal disparate treatment occurs when a lender bases its lending decision on one or more of the prohibited discriminatory factors covered by the fair lending laws, for example, if a lender offers a credit card with a limit of $750 for applicants age 21 through 30 and $1,500 for applicants over age 30. 4. We will . Explore the practices of redlining (discrimination), blockbusting (pressuring to sell cheap), and steering (pushing for race-specific neighborhoods).

FAIR LENDING SCOPE AND CONCLUSIONS MEMORANDUM . Introduction . Secondly, you may see the terms redlining and blockbusting associated terms. Along the way, I note some analysis considerations unique to different lending lines of business. Steering Steering is simply a loan applicant being guided into a particular loan product that may have less favorable terms or conditions than an alternative product. For example, the DOJ brought a complaint in 2012 against Wells Fargo Bank, N.A., alleging that the bank's employees . But the fair lending risks associated with the use of targeted marketing strategies have been manifested in a series of private lawsuits and a charge of discrimination filed by HUD against Facebook, with the concern being that protected characteristics, or close proxies, might be used to exclude consumers from seeing advertisements on bases . In this series of posts, we address types of fair lending discrimination that are commonly recognized by the regulatory and enforcement agencies. As a result of this accreditation, the FDIC is accredited to issue the IACET CEU. Last Updated 04/21/2020. New Areas of Analysis The fair lending examination procedures include two new areas of analysis. Not analyzing your loan data for fair lending . According to the FDIC, steering risk may exist if there is a lack of clear, objective, and consistently implemented standards for the following: . The first is a review of the decisionmaking process used when guiding an applicant's choice between loan products often referred to as steering. supervision@fdic.gov. The fair lending laws are also intended to prevent lenders from engaging in steeringthe practice of guiding borrowers toward or away from certain loans because of their race or other protected characteristics. Once you locate areas of potential fair lending risk, your bank will be able to take proactive steps to better serve all its customers. According to the FDIC, steering risk may exist if there is a lack of clear, objective, and consistently implemented standards for: . To learn more about how TRUPOINT can help with your Fair Lending data analysis, click here. IV. Forms of Fair Lending Discrimination: Steering. Underwriting Fair lending statistical analysis of underwriting decisions is conceptually similar across different lending lines of business, but can differ based on the product and business model. Today's entry will cover the unfair practice known as . Updated: 12/01/2021 Create an account When examiners say they expect you to have a fair lending program, what they are looking for is a process and environment that build compliance considerations into product development and delivery - rather than finding them in an audit or examination. terms, redlining, steering and servicing). steering. Fair Lending Policy Page 1 October 2015 Fair Lending/Nondiscrimination Policy and Procedures POLICY STATEMENT The board of directors, management, . "Steering" is a term used in the real estate industry to describe when an agent or broker attempts to steer a client toward or away from a specific location or . Disparate Treatment. Examination Procedures for Setting the Examination Scope 10 BACKGROUND 10 OBJECTIVE: GAIN AN UNDERSTANDING OF CREDIT OPERATIONS 14 OBJECTIVE: CONSIDER THE EFFECT OF LOW . 5. The most important thing to know for the exam is that steering is the illegal practice of guiding someone to purchase or rent a home based on their race, religion, gender, color, familial status, or disability, according to the Fair Housing Act of 1968. Managing Risk Managing risk is making sure that problems don't happen in your institution. . This report covers the Consumer Financial Protection Bureau's (CFPB) fair lending activities during 2021. There are two major problems with fair lending and commercial loans, but lenders should still be prepared for an increase in scrutiny. Steering is not unlawful per se, and in many . COMPENSATION PRACTICES, LOAN PRICING, AND ANTI-STEERING RULES Our credit union will follow the compensation rules for mortgage loan originators set forth in Regulation Z at 12 CFR 1026.36. Steering Risk. Steering is not unlawful per se, and in many . These risks can exist in any stage of the lending process, such as marketing, steering, pricing, or servicing. Mortgage steering arose in the 21st century, when some real estate agents and mortgage brokers began pushing low-income buyers into loans they couldn't afford. Fair Lending data analysis can provide a clear answer to this question. This includes the initial inquiry and loan application process through the servicing and ultimate settlement of the debt. Our goal in this series is simply to draw from our experiences in our fair lending practice and provide information that will assist in reducing risk. "we don't lend to single women." Disparate Treatment Fair Lending Policy Page 1 October 2015 Fair Lending/Nondiscrimination Policy and Procedures POLICY STATEMENT The board of directors, management, . The major federal fair lending laws the Equal Credit Opportunity Act and the Fair Housing Act date to the 1960s and 1970s, but over the past decade federal and state agencies have renewed their focus on enforcing them. The CFPB signaled in December of 2016 that small business lending was one of their priorities for 2017. Laws and Regulations Key laws and regulations that pertain to FDIC-supervised institutions; note that other laws and regulations also may apply. Your Fair Lending Compliance Management Program (CMP), sometimes referred to as a Compliance Management System (CMS), is the word used to describe all the policies and practices you use to manage and mitigate your Fair Lending risk. Steering. the institution's fair lending performance. Fair Lending Appendix Appendices . FHFA's Enterprise fair lendi ng examination program is conducted by the Office of Fair Lending Oversight ("OFLO") within the Division of Housing Mission and Goals. What is steering in property management? Steering is the practice of deliberately guiding applicants toward or away from certain loan products or lending channels on a prohibited basis.

The first is a review of the decisionmaking process used when guiding an applicant's choice between loan products often referred to as steering. The purpose of this advisory bulletin is to provide FHFA's supervisory expectations and guidance to Fannie Mae and Freddie Mac (the Enterprises) on fair lending compliance. From redlining and steering allegations to pricing, underwriting, and loan servicing discrimination claims, we have . Steering a borrower to a loan with less favorable terms because of his or her race, color, religion, sex (including gender, gender identity, sexual orientation, and sexual harassment), familial status, national origin or disability Targeting a minority community for fraudulent home loan modification assistance Disparate treatment may be . The federal fair lending laws the Equal Credit Opportunity Act and the Fair Housing Act prohibit discrimination in credit transactions, including transactions related to residential real estate. The points covered are risk areas that are often examined in the course of regulatory reviews.

is known as affirmative action lending. This Appendix offers a full range of information that might conceivably be brought to bear in an examination. When a lender applies a racially or otherwise neutral policy or practice equally to all credit applicants, but the policy or practice disproportionately excludes or burdens certain persons on a prohibited basis, the policy or practice is described as having a "disparate impact." Once you locate areas of potential fair lending risk, your bank will be able to take proactive steps to better serve all its customers. We will . Conducting fair lending and fair servicing risk assessments for financial institutions, including entities offering mortgages, auto loans, credit cards, student loans, and personal loans Representing bank and nonbank indirect auto creditors in both public and nonpublic settlements with the CFPB and the DOJ over alleged fair lending violations Fair lending laws and regulations are broad and cover every phase of the lending transaction. General Instructions . IV. Fair Lending Table of Contents . Steering is defined as guiding a client to a specific product or feature on a prohibited basis versus considering their needs or other legitimate factors. As you assess steering risk - or any Fair Lending risk - you will be looking to determine if similarly situated individuals are treated similarly. 5. New Areas of Analysis The fair lending examination procedures include two new areas of analysis. Your CMP will likely include monitoring, data analysis, risk assessments, training and more. The basic goal of mortgage steering was to encourage buyers to take on subprime, high interest rate, loans from various mortgage companies. This video provides an overview of steering discrimination risk and discusses how a bank's compliance management system can help address such risk. Steering is defined as guiding a client to a specific product or feature on a prohibited basis versus considering their needs or other legitimate factors. The mission of fair lending is to break these discriminatory patterns and practices and to promote access to credit to create fairer markets for all. In establishing the CFPB, Congress expressed concern that women-owned ad minority-owned businesses may . This video provides an overview of steering discrimination risk and discusses how a bank's compliance management system can help address such risk. COMPENSATION PRACTICES, LOAN PRICING, AND ANTI-STEERING RULES Our credit union will follow the compensation rules for mortgage loan originators set forth in Regulation Z at 12 CFR 1026.36. Your fair lending risk assessments should regularly analyze customer complaints to identify trends such as disparate treatment, discouragement, or steering. Best Practices-Fair Lending Workflow-Steering! Introduction 1 GENERAL GUIDELINES 1 OVERVIEW OF FAIR LENDING LAWS AND REGULATIONS 3 TYPES OF LENDING DISCRIMINATION 6 Disparate Treatment 6 Disparate Impact 8 REFERRAL TO THE DOJ OR HUD 9. Unlawful steering also constitutes a violation of the Fair Housing Act.

Disparate treatment applies to a wide range of issues such as pricing, underwriting, or steering. Steering can be very obvious, like sending a client to a product for which the loan originator receives more income. During a fair lending review, examiners evaluate a financial institution's compliance with the anti-discriminatory provisions of the Equal Credit Opportunity Act (ECOA) and the Federal Housing Act (FHA) In the report's discussion of its risk-based approach for prioritizing fair lending supervisory and enforcement activity, the CFPB indicates that much of its enforcement and supervision efforts were focused on advancing its priorities of advancing racial and economic equity and promoting economic recovery related to the COVID-19 pandemic. .