Compliance Blog

Written by Michael Coleman, Regulatory Compliance Counsel

Consumer Compliance Outlook. One more time. Last week my colleagues Bernadette and JiJi blogged about the Second Quarter 2013 issue of the Philadelphia Federal Reserve’s Consumer Compliance Outlook. I’d like to highlight another article from the publication featuring Fair Lending Webinar Questions and Answers stemming from the Federal Reserve Board’s webinar “Fair Lending Hot Topics,” held October 17, 2012.

There are a number of interesting Q&A’s in the article, here is one on the review of loan pricing during an examination:

“PRICING

5. What factors does the Federal Reserve consider in a pricing review?

Consistent with the Procedures, the Federal Reserve considers several risk factors in a pricing review for mortgage and nonmortgage products, including:

• Pricing Criteria:
  • Pricing policies that treat applicants differently on a prohibited basis or are likely to have a disparate impact
  •  Presence of broad discretion in loan pricing (e.g., interest rates, fees, and points), including discretion in granting exceptions to pricing policies
  •  Use of risk-based pricing that is not based on objective criteria or applied consistently
• Loan Originator Compensation: Financial incentives for loan originators to charge higher prices
• Documentation: Lack of clear documentation of the reasons for pricing decisions, including exceptions
• Complaints: Complaints by consumers or community advocates alleging discrimination in loan pricing

Since 2009, the DOJ has settled four pricing cases based on referrals from the Federal Reserve: United States v. Nara Bank; United States v. PrimeLending; United States v. SunTrust Mortgage, Inc.; and United States v. Countrywide Financial Corp. These cases are available at: www.justice.gov/crt/about/hce/caselist.php#lending.”

In addition to the Consumer Compliance Outlook, you also might want to check out the Federal Reserve’s Outlook Live, which contains the Federal Reserve webinars on consumer compliance topics.

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NCUA Fair Lending Resources. The Q&A above references the Federal Financial Institutions Examination Council (FFIEC) 2009 Interagency Fair Lending Examination Procedures and the associated Appendix. NCUA conducts its fair lending compliance program in accordance with the Procedures (which it adopted in 1999), and provided the 2009 Procedures to credit unions in Regulatory Alert 09-RA-09.

NCUA released Letter to Federal Credit Unions 13-FCU-02, which outlines NCUA's Fair Lending Examination Program. The letter also included a new Fair Lending Guide for federal credit unions. NCUA also issued a best practices document and a frequently asked questions (FAQ) document on NCUA's fair lending compliance program.

NAFCU Members. NAFCU’s  June 2013 Compliance Monitor featured an article on NCUA’s Focus on Fair Lending (log-in required) which summarizes the recent guidance from NCUA.