- Regulators Expect Continued Focus on Fair Lending
- January 16, 2015 | Author: H. Gary Pannell
- Law Firm: Jones Walker LLP - Atlanta Office
Compliance with fair lending requirements continues to rank as a high priority among federal financial regulators. A panel discussion at a meeting of the Mortgage Bankers Association in late September featured representatives of the U.S. Department of Justice, the Consumer Financial Protection Bureau, and the Office of the Comptroller of the Currency. Among other things, these representatives discussed areas targeted for future enforcement, which they said include the ways in which mortgages are priced, serviced, and modified, by the originator or the servicer, over the life of the loan.
The Justice Department representative, Steven Rosenbaum, Chief of the Housing & Civil Enforcement Section of the Department's Civil Rights Division, said one of the Department's particular concerns is redlining, even in the absence of any indication that it may have been intentional. He also observed that, over the past three years, there has been an increase in the numbers of referrals that the Department has received from other agencies, reflecting a broader interest in enforcement on the part of regulators, which he said the Department expects will continue.
Peggy Twohig, Assistant Director of the Office of Supervision Policy for the CFPB, and Kristen Donoghue, the bureau's Acting Deputy Enforcement Director of Policy and Strategy, said the bureau seeks to assess potential risks to consumers by evaluating product markets with respect to the numbers of consumers affected, and the magnitude of the potential harm that could result from violations in those markets.
Both of them said the conduct of mortgage servicers, including how servicers respond to borrowers seeking modifications, is a matter of continuing interest to the bureau.
Grovetta Gardineer, Deputy Comptroller for Compliance Operations and Policy, said the OCC also is looking closely at how the banks and thrifts subject to the OCC's supervision are responding to mortgage borrowers who seek modifications, including whether the terms and conditions of modifications offered to minority borrowers are consistent with those that the institutions offer to other borrowers similarly situated.
It is important for financial institutions that are scheduled for compliance examinations in the current cycle to carefully examine and reevaluate both their internal control procedures, and their internal audit schedules, to ensure that their programs, and the institutions' administration and application of those programs, are in accord with current standards, including the CFPB's new mortgage-servicing rules that became effective in January of this year.