Fair Lending and Home Mortgage Disclosure Act


Jamie Goodson: Good afternoon and welcome. My name is Jamie Goodson. I’m the Director of the Division of
Consumer Compliance Policy and Outreach here in NCUA’s Office of Consumer Protection. And I’m also the moderator for today’s webinar on fair lending and HMDA compliance. Today’s webinar is designed to highlight the importance of fair lending and to help your credit union understand how to comply
with fair lending laws. First, a note: the information contained in this presentation is for informational purposes only and is provided as a public service in an effort to enhance understanding of the statutes and regulations administered by NCUA. It expresses the views and opinions of NCUA staff and is not binding on NCUA or NCUA Board members. Before
we get into the substance of today’s subject, I have a few administrative announcements related to the functionality of the webcast. First, please ensure the volume on your computer is turned up so that you can hear the webcast. If you have trouble viewing a slide, click on the enlarge slides
button on the bottom of the console. Also, please allow pop-ups from the website. Finally, a screen resolution of 1024×768 or higher will let you see the slides appropriately. You can submit a question at any time during the webcast in the submit question box on the lower
left area of the console window. We have set aside time at the end of today’s presentation to address questions. All questions we don’t answer during the live webcast will be compiled and we will post written responses on the fair lending compliance resources page of the Consumer Compliance Regulatory
Resources webpage on NCUA.gov. A link to that webpage is provided later in this presentation. If there is any NCUA staff attending this webinar, you can charge authorized time to participate or review the archived webcast to time code 42. The webcast will be archived for on demand viewing in
approximately two weeks after the live event. A media advisory will be issued when the archive is available. The archive will have the same URL as the live event. Now, to our presenters for today who are Gail Laster, Director of NCUA’s Office of Consumer Protection, and Matt Biliouris, Deputy Director of OCP. To assist with
responding to your questions, we also have Matthew Nixon, Consumer Compliance and Policy Outreach Program Officer, and Heather Murphy, Consumer Compliance Policy and Outreach Analyst. During this webinar, we will discuss the following topics. We’ll give an overview of fair lending and the applicable laws.
We’ll talk about NCUA’s fair lending examination program. Then we’ll talk about some best practices and we’ll also get into home mortgage disclosure reporting requirements and talk about some common HMDA and ECOA errors. At this point, I will turn the presentation over to OCP Director, Gail Laster.
Gail Laster: Thank you Jamie and thank you all for joining us this afternoon. Now I’m going to go over some very basic concepts that should be very familiar to all of you. Mainly, what is fair lending? Fair lending under the Dodd-Frank Wall Street Reform and Consumer Protection Act is defined to mean fair and equitable
and nondiscriminatory access to credit for consumers. Treating certain consumers less favorably than others on a prohibited basis is unlawful. And we will discuss what factors are prohibited basis for discrimination under federal fair lending laws later in the presentation.
Now at the federal level we generally refer to three laws as pertaining to fair lending. They are: The Equal Credit Opportunity Act or ECOA, which is implemented by Regulation B and administered by the Consumer Financial Protection Bureau. The Fair Housing Act, sometimes referred to in this presentation as
FH Act, which is implemented by the regulations issued by the US Department of Housing and Urban Development, or HUD. And the Home Mortgage Disclosure Act or HMDA, which is implemented by CFPB’s Regulation C. Now, ECOA and FHA list factors that you cannot use to discriminate in connection with covered activities. We
will discuss those factors and activities. We will also discuss the requirements of HMDA, which seeks to promote fair lending by requiring public disclosure of certain information about loan applications. As you likely know, CFPB has recently proposed to amend Regulation C to implement
changes to HMDA made by the Dodd-Frank Act and to make other adjustments. Those amendments are not final and this webinar today will discuss the requirements of HMDA and Regulation C as in effect today. Now,
let’s discuss ECOA, the Fair Housing Act, and HMDA in greater detail. ECOA prohibits discrimination in any aspect of a credit transaction on a prohibited basis. Aspects
of a credit transaction include but are not limited to the information you require from applicants, your investigation procedures, your standards of credit worthiness, the terms of credit, how you furnish credit information, how you revoke, alter,
or terminate credit, and your collection procedures. Note that ECOA applies both to consumer credit and business credit. And the prohibited bases for discrimination under ECOA are: as you can see on the slide, race or color, religion, national origin, sex, marital status, age
– provided the applicant has the capacity to contract – the applicant’s receipt of income derived from any public assistance program, and the applicant’s exercise, in good faith, of any right under the Consumer Credit Protection Act. Now, in addition to generally prohibiting
discrimination and discouragement on a prohibited basis, Regulation B contains several technical requirements designed to promote fair lending. These requirements include and are listed on the slide: Notifying applicants of the credit decision within 30 days of receiving a completed application, with some
exceptions. Collecting information about the applicant’s race and other personal characteristics in applications, for certain dwelling-related loans. Providing applicants with copies of appraisals and other valuations developed for first-lien, dwelling-secured credit transactions. And retaining records of credit applications
after notifying the member of its credit decision, for 25 months for consumer credit and 12 months for business credit, again, with some exceptions. Now, let’s discuss the Fair Housing Act, which prohibits discrimination on a prohibited basis in residential real estate-related
transactions. The Fair Housing Act covers a wide range of residential and real estate-related transactions. For credit unions, the most relevant provisions relate to residential real estate-related transactions that involve making or purchasing loans or providing other financial assistance
for purchasing, constructing, improving, repairing, or maintaining a dwelling. Also, making or purchasing loans secured by residential real estate or selling, brokering, or appraising residential real property. Also, the Fair Housing Act prohibits making, printing, or publishing, or causing to be made printed or
published any notice, statement or advertisement about the sale or rental of a dwelling that indicates any preference, limitation, or discrimination because of a prohibited basis, or indicates an intention to make such preference limitation or discrimination. Now, as you know, excuse me, the Fair
Housing Act prohibits discrimination on many of the same bases as ECOA does, such as race, color, national origin, religion, and sex. However, the specifics of the Fair Housing Act in terms of prohibited discrimination are – as listed on the slide
– Race or color, national origin, religion, sex, familial status, which is defined as children under the age of 18 living with a parent or legal custodian, pregnant women, and people securing custody of children under 18, and the handicapped. However, there are some differences between the two laws. The Fair
Housing Act prohibits discrimination on the basis of familial status or handicap which are not prohibited bases under ECOA. Also, certainly prohibited bases under ECOA are not prohibited bases under the Fair Housing Act such as marital status and age. Practices
prohibited by the Fair Housing Act include, because of a prohibited basis, and are listed on the slide: failing or refusing to provide information about loan availability, application requirements, procedures or standards; providing information that is inaccurate or different from information
provided to others; providing, failing to provide, or discouraging the receipt of loans; using different policies and procedures in evaluating creditworthiness; and servicing loans in a discriminatory manner. Now, let’s briefly discuss the Home Mortgage Disclosure Act. It requires financial institutions, including
credit unions, to compile and disclose data about home purchase loans, home improvement loans, and refinancings that they originate or purchase, or for which they receive applications. HMDA data can be used to help determine whether financial institutions are serving the housing needs of their
communities, to assist public officials in distributing public-sector investments so as to attract private investment to areas where it is needed, and to assist in identifying possibly discriminatory lending patterns and enforcing anti-discrimination statutes. HMDA is not intended
to encourage unsound lending practices or the allocation of credit. Now, under HMDA, coverage provisions differ based on whether a financial institution is a credit union, bank, or savings association, or a for profit mortgage lending institution that is not a credit union, bank, or
savings association. Now, for credit unions, other criteria apply in determining coverage. In this webinar, we will focus on federally insured credit unions. And the coverage provisions are as noted in the slide. A federally insured credit union is exempt from HMDA reporting for a given
calendar year if on the preceding December 31st: one, it had neither a home office nor a branch office in a metropolitan statistical area; two, total assets were at or below the threshold established by the CFPB; or, three, it made no first-lien home purchase loans,
including refinancings of home purchase loans, on one-to-four family dwellings in the preceding calendar year. And we note that the CFPB adjusts the assets threshold based on the year-to-year change in the average of the consumer price index for urban
wage earners and clerical workers. So, for 2015, the threshold amount is $44 million in assets as of December 31, 2014. Now, when you report HMDA data, currently done through the Federal Reserve Board, the Federal Financial
Institutions Examination Council, or FFIEC, generates a disclosure statement for each institution and posts it on its website. You must make your disclosure statement available to the public at your home office within three business days after
it is posted on the FFIEC website. Also, you must either, one, make the disclosure statement available to the public in at least one branch office in each metropolitan statistical area, or metropolitan division where you have offices within ten business days of
posting on the FFIEC website, or, two, post the address or request in each branch office in each additional MSA or MD where you have offices and send the disclosure statement within 15 calendar days after receiving a written request. Also, you must make your loan
application register available to the public after deleting certain fields to protect the privacy of applicants and borrowers. The modified HMDA LAR” for a given year must be publicly available by March 31 of the following year, for requests received on or before March 1, and within
30 days for requests received after March 1. In addition, institutions must post a notice at their home office and at each branch in a MSA that disclosure statements are available. Please note that the disclosure statement is required even if the requester is not a
credit union member. And I know that was a lot of data that we provided, but these provisions regarding these requirements are found in 12 CFR 1003.5. Now, I’ll turn the presentation over to Jamie to discuss NCUA’s nondiscrimination regulations for federal credit
unions. Jamie Goodson: Thanks Gail. In addition to the federal fair lending laws we’ve discussed, NCUA’s nondiscrimination regulation in 12 CFR Section 701.31 contains additional requirements for real estate-related loans made by federal credit unions that
are secured by a dwelling. These requirements relate to nondiscrimination in lending, appraisals, and advertising. As with the Fair Housing Act, the factors you cannot use to discriminate under NCUA’s regulation are race, color, national origin,
religion, sex, handicap, and familial status. Prohibited practices include, on the basis of a prohibited factor: denying a real estate related loan; discriminating in exercising your right pursuant to the terms of the loan; and discouraging an application. This list is not exhaustive. These
are just examples of some prohibited practices. Also note that under NCUA’s nondiscrimination regulations, a federal credit union making a real estate-related loan generally can’t consider certain factors that are not directly prohibited bases, although some exceptions apply. These factors include the age or location of a dwelling, the
zip code of the applicant’s current residence, previous home ownership, the age or location of dwellings in the neighborhood, and the income level of residence in the neighborhood. Federal credit unions also cannot advertise in a way that discriminates on a prohibited basis. Ads can’t contain any words, symbols,
models, or other forms of communication that suggest a discriminatory preference or policy of exclusion on a prohibited basis. Any federal credit union that advertises real estate-related loans must prominently indicate that the credit union makes such loans without regard to race, color, religion, national origin, sex, handicap, or familial status.
For written and visual advertisements, a federal credit union may satisfy this requirement by including an Equal Housing Lender logo or an Equal Housing Opportunity logo. And how you do this is described in the regulation. For oral advertisements, a federal credit union may make a spoken statement that the credit union is an Equal Housing Lender or an Equal Opportunity Lender.
Also, a federal credit union that engages in real estate-related lending must display a notice of nondiscrimination in the public lobby of the credit union and in the public area of each office where such loans are made. This notice has to be clearly visible to the general public and has to include the logo and text specified
in the regulations. Now that we’ve discussed fair lending laws in general, let’s discuss those specific practices credit unions should avoid. A credit union cannot require a spouse to cosign a loan when the borrower qualifies for the loan based on his or her own creditworthiness.
Also, where a cosigner is needed to approve a loan, a credit union cannot require that the cosigner is the applicant’s spouse, rather than a person with a non-spousal relationship to the applicant. A credit union also cannot deny an applicant access to a particular credit product because that person cannot or will not
use a spouse as a cosigner. Spouses can be required to cosign loans in certain circumstances. For example, if the property securing the loans is owned jointly by the borrower and spouse, then the credit union can require the spouse’s signature on the instruments necessary to enable the credit union to reach the property in case of death or default.
And in community property states, a spousal signature on any instrument necessary to make the community property available to satisfy the debt in the event of default is another situation. Another practice to avoid deals with where you have joint applicants. Where there are joint applicants, you can’t evaluate
a credit score differently based on whether or not the applicants are married. For example, you cannot average the credit scores of joint applicants who are married couples but then use the lowest credit score for joint applicants who are not married. Something else to be aware of is that, although
ECOA and Regulation B prohibit discrimination on the basis of age( again, provided somebody has the capacity to contract), they do allow more favorable treatment for the elderly in extending credit or in credit terms. Note that elderly is defined as 62 or older under Regulation B. Be sure that if you favor
the elderly, you define elderly consistently with Regulation B. You cannot set a different threshold such as 55 or older unless you establish a special purpose credit program. Now, I’ll turn the presentation over to Matt Biliouris, Deputy Director of NCUA’s Office of Consumer Protection. Matt Biliouris: Thank you, Jamie, and good
afternoon to everyone listening in. I’m going to spend the next several slides discussing NCUA’s fair lending exams and supervision contacts, which are separate from NCUA’s safety and soundness exams. I’ll touch on the scope of our fair lending reviews, including selection criteria we use. I’ll provide some
examples of concerns we’ve noted during our reviews, and I’ll highlight some best practices of an effective compliance management system. As you know, NCUA supervises and examines federal credit unions with assets of $10 billion or less for compliance with fair lending laws. NCUA enforces
ECOA in federal credit unions and HMDA in all federally insured credit unions. NCUA assesses compliance with the Fair Housing Act in its examinations, but the US Department of Housing and Urban Development, or HUD, and the Department of Justice enforce the Fair Housing Act. The Consumer Financial Protection
Bureau supervises and examines and has primary enforcement authority over credit unions with more than $10 billion in assets through its Office and Supervision and Enforcement and Office of Fair Lending and Equal Opportunity. And the CFPB has exclusive rulemaking authority with respect to ECOA and HMDA. HUD
continues to retain primary responsibility for interpreting and enforcing the Fair Housing Act. Any pattern or practice of lending discrimination must be referred by NCUA, CFPB, and other federal banking agencies to the Department of Justice. In carrying out
its responsibilities, NCUA works collaboratively with DOJ, CFPB, and HUD to enforce federal fair lending laws. Under its fair lending program, NCUA conducts onsite fair lending exams and offsite supervision contacts. This year in
2015 we plan to conduct 25 fair lending exams and 50 offsite supervision contacts. For supervision contacts, federal credit unions are provided an items needed” list at least 30 days before the contact. Our analysts are available to you throughout the process to address questions and provide
you feedback. Our fair lending exams are an extensive review of a credit union’s compliance with fair lending laws. We follow the interagency fair lending examination procedures on a risk basis, which may include extensive transaction testing. Under our offsite supervision contacts, we review a credit union’s
compliance management system elements without any transactional testing. Although ratings are not assigned, both written and oral reports are developed and provided to the credit union to discuss results and recommendations developed during the contact. NCUA considers a
variety of factors in selecting credit unions for fair lending exams and offsite supervision contacts. And as this slide indicates, we would look at any status the credit union has as a HMDA data outlier. For this analysis we typically review HMDA data on application denials and loan pricing. We review
member complaints we may have received from members and consumers. If we see a trend of discrimination at a particular credit union we will consider doing a fair lending exam. We also consider prior regulatory violations, including violations of ECOA and the Fair Housing Act. And even under general compliance risks,
we determine if the credit union has a high compliance risk rating due to lending violations. And if so, we would consider a fair lending exam. We also factor in any whistleblower complaints we may have received. And, lastly, we may receive recommendations from our field
examiners after they complete their exams if they feel ECOA or HMDA compliant issues might need to be investigated further. This slide highlights the goals of our fair lending program. Our contacts focus on reviewing for potential discrimination whether intentional or not, by reviewing a credit union’s
compliance management system and conducting transactional testing we can ascertain compliance with fair lending laws. We also aim to educate credit unions to help them improve compliance with fair lending laws. Through our fair lending reviews, there are some concerns we have identified and are worthy of
mentioning to you this afternoon. One is a weak overall compliance management system. And we will discuss compliance management systems later in this presentation. But basically we are looking for fair lending policies that include compliance monitoring, training, and a high degree of management oversight. We
also see errors relating to HMDA loan application registers and we’re going to discuss HMDA reporting errors later in this presentation also. And, lastly, regarding adverse action notices, we do see adverse action notices with inaccurate statements of the action being taken such as a denial or counter offer and the
reason why such action was taken. We also see issues with the correct address and contact information for NCUA under the ECOA section of these notices. So now that we’ve provided you a general overview of our fair lending program, let’s look at some best practices in
fair lending compliance and what constitutes an effective compliance management system. Fair lending best practices include a variety of things, including making fair lending compliance part of the day-to-day responsibilities of credit union management and employees, self-identifying
potential issues, and when identified, taking corrective action. And, again, these best practices can be accomplished with an effective compliance management system. And what makes up an effective compliance management system? This slide highlights some of the key elements, namely board of directors
and management oversight, policies and procedures, training, monitoring, testing, and correction action, and compliance audit. We’re going to spend a few minutes talking about each of these over the next few slides. On the previous slide, I mentioned
policies and procures as an important element of an effective compliance management system. So, let’s touch on that a bit more. The credit union’s fair lending policies and procedures should be documented and sufficiently detailed to address compliance with fair lending laws. They should be
designed to prevent violations and to detect and prevent harm to consumers. Written policies and procedures are a credit union’s primary reference tool for managing fair lending compliance. As such, policies and procedures should be reviewed frequently and kept current. Your written policies and procedures may also
include regulatory citations and definitions, sample forms with instructions, and other instructions as you see fit. Fair lending policies and procedures provide standards by which the business operations may be measured to adhere to compliance requirements. They should cover all loan products in phases such
as advertising, marketing, underwriting, servicing, loss mitigation, and even third party oversight. And, lastly, a credit union’s fair lending procedures should address requirements for conducting reviews prior to introducing new lending products or modifying existing products, including evaluating
documents and disclosures, conducting system testing, and appropriately training staff prior to product rollout. Moving on to board oversight, it’s important to note the effectiveness of an institution’s fair lending compliance management system is grounded in the actions taken by its board and senior management.
To effectively manage a fair lending program, the credit union’s board and senior management should demonstrate clear expectations about fair lending compliance within the credit union and by third party service providers. They should adopt clear policy statements about fair lending compliance. They should also define clear responsibilities
for fair lending compliance management and allocate resources appropriate for the credit union’s size and complexity. And, lastly, the board should implement a fair lending audit function appropriate for the credit union’s size and complexity. And sometimes overlooked but as equally important as other
elements of an effective compliance management system is training. Education of an institution’s board of directors, management, and staff is essential to maintain an effective fair lending compliance management system. Board members should receive sufficient information to enable them to understand their responsibilities
and the commensurate resource requirements to carry out those responsibilities. Management and staff should receive specific and comprehensive training to reinforce and help implement fair lending policies and procedures. Your credit union’s training program should also address new and existing employee training requirements. The
training schedule should be fluid and appropriate incorporate technology advances in training to cover regulatory changes or when monitoring, testing, audits, or examinations reveal weaknesses or noncompliance. Moving onto monitoring, testing, and corrective action, these generally are preformed
more frequently and less formally than a compliance audit which I’m going to discuss in a bit. Monitoring does not require the same level of independence from the business function that an audit function does. Monitoring and testing should be appropriately scheduled and completed. It should determine whether all aspects
of credit transactions are handled according to the credit union’s policies and procedures. Monitoring and testing should consider the results of internal or external audits, risk assessments, or other guidelines. Credit unions should document what is monitored and tested, by whom, and how frequently it is conducted. In addition,
findings should be escalated to management and to the board of directors if appropriate. You should take prompt corrective actions where appropriate to address any issues identified during testing. Monitoring and testing are critical when discretion is permitted in loan underwriting or pricing. Examples
of discretionary underwriting or pricing practices include competitor rate matching, policy or underwriting guideline exceptions, adjusting loan rates to a more favorable or less favorable risk-based pricing tier, and indirect lending programs that give dealers the ability to subjectively increase the buy
rate. Effective monitoring and testing practices may include reviewing underwriting and pricing exceptions, reviewing other exception and override reports and performing a secondary view of denied applications. And, with that, let’s move onto compliance audit functions. A credit union’s audit functions should review
compliance with fair lending laws and adherence to internal policies and procedures. It also should be independent of both the credit union’s compliance program and its business functions to the extent possible given the credit union’s size and complexity. Important components of an effective compliance
audit function include: a fair lending risk assessment; comparative file reviews; analysis of HMDA data; an evaluation of underwriting and pricing parameters; and demographic analysis. You should also review exception and override reports, fair lending policies
and procedures, your fair lending training program, and your marketing and advertising practices. So the previous slides have gotten into a key point in maintaining an effective compliance management system. And that’s responding to consumer or member complaints. And while no credit union should be expected
to never see any complaints, we typically see credit unions with an effective compliance management system are both responsive and responsible when handling complaints and inquiries. These credit unions in particular organize, retain, and use the information gathered as part of its compliance management system. And with that I’ll turn the
presentation back over to Jamie Goodson to discuss requirements of the Home Mortgage Disclosure Act. Jamie? Jamie Goodson: Thanks Matt. I’m going to discuss some points credit unions should keep in mind when they are reporting HMDA data. Earlier we discussed the general HMDA reporting coverage criteria for federally
insured credit unions. Just to reiterate, federally insured credit unions are required to collect HMDA data in 2015 and submit the data by March 1, 2016 if they meet all three of the following criteria: that is, having total assets as of 12/31/2014 that exceed $44 million; having a home
or branch office in an metropolitan statistical area on 12/31/2014; and, during 2014, having originated at least one home purchase loan or refinancing a home purchase loan that is secured by a first lien on a 1-4 unit family dwelling. Just to be
clear, you report home purchase loans, home improvement loans, and refinancings. And to give some explanation, a home purchase loan is any loan secured by and made for the purpose of purchasing a dwelling. A home improvement loan can be one of several things. One is any dwelling
– secured loan to be used at least in part for repairing, rehabilitating, remodeling, or improving a dwelling, or the real property on which the dwelling is located, or it can be any loan not secured by a lien on a dwelling to be used at least in part for one or more of the purposes that the
institution classifies as a home improvement loan. A refinancing is any dwelling-secured loan that replaces and satisfied another dwelling-secured loan to the same borrower. You may choose to report open-end home equity lines of credit or HELOCs that serve for home purchase or improvement, but you should report only the amount that
is intended for home purchase or home improvement purposes. If you do report HELOC originations, you must also report any applications that do not result in an origination. So we’ve talked about what’s reported. What’s not reported? These include loans made or purchased in a
fiduciary capacity; loans on unimproved land; construction and temporary financing loans; the purchase of interest in a mortgage pool; the purchase of servicing rights; loans acquired as part of a merger or acquisition or as part of the acquisition of all assets and liabilities
of a branch office; participation loans you acquire; prequalification requests, as opposed to preapproval requests, and we’ll talk about prequalifications and preapproval a bit more. And the other category is assumptions not involving a written agreement. For now I will just say that a prequalification request is a
request by a prospective loan applicant, other than a request for a preapproval, that asks for a preliminary determination on whether the prospective applicant would likely qualify for credit under an institution’s standards, or for determination on the amount of credit for which the prospective applicant would likely qualify. Some institutions
evaluate prequalification requests through a procedure that is separate from the institutions normal loan application process. Others use the same process. In either case, Regulation C does not require an institution to report prequalification requests on the HMDA law, even though these requests
may constitute applications under Regulation B for purposes of adverse action notices. Now let’s talk about what gets reported. There are seven categories of data reported. Application or loan information includes: the application or loan number; the date the application was
received; loan type; property type; purpose; whether or not it’s owner-occupied; the loan amount; and information about whether preapproval was requested/not requested, or whether the question is not applicable. Also reported is the action that was taken on the application and the property location. A lot of the
information they are given about the metropolitan statistical area or the metropolitan division, the state, the county code, and the census tract. There is also information about the applicant and the co-applicant, ethnicity, race, sex, and gross annual income. You also report information
about the type of purchaser of the loan, if applicable. And you may report reasons for denial, but that’s optional under Regulation C. There are some other things reported, namely the rate spread, which is the difference between the annual percentage rate and the applicable average prime offer rate
if that difference exceeds 1.5 percentage points if it’s a first-lien loan, or 3.5 percentage points for subordinate-lien loans. You also report if a loan is a HOEPA loan, which also considers the APR but looks at higher thresholds than the general rate spread reporting. Another
thing that’s reported is the lien status. Now, we want to go on to discuss some common HMDA and ECOA errors. The first one we want to talk about is when you can use the application withdrawn code. The
application withdrawn code may not be used when you communicate a credit decision to the applicant, ask if the applicant wants to proceed, and then the applicant afterwards withdraws the application. This is discussed in Appendix A to
Regulation C. So, some examples of when a credit decision has been made include a determination that the applicant does not qualify due to his or her credit score, credit history, or debt-to-income ratio. Or the appraisal comes in lower than expected, aAnd based on the loan-to-value ratio,
the credit union is not willing to lend the amount requested. If an application is closed for incompleteness or it’s approved and not accepted, you can’t report that application as withdrawn. This is because the action to withdraw is viewed from the perspective of the applicant, not the credit union. If a credit union makes
a counteroffer to lend on terms different from the applicant’s initial request, for example, for a shorter loan maturity or in a different amount, and the applicant does not accept the counteroffer or doesn’t respond, the credit union reports the action taken as a denial on the original terms
requested by the applicant. If the counteroffer is accepted, you report the application as an originated loan. If a credit union issues a loan approval subject to the applicant’s meeting underwriting conditions, other than customary loan commitment or loan-closing conditions, and the applicant does not
meet those conditions, the institution reports the action taken as a denial. So, to give a little bit of context, customer loan commitment or loan closing conditions include clear title requirements, acceptable property or survey, acceptable title insurance binder, getting a clear termite inspection, and if the applicant plans to
use the proceeds from the sale of one home to purchase another, a settlement statement showing that there are adequate proceeds from the sale. If an applicant fails to meet one of those conditions, or a similar condition causes the application to be coded approved but not accepted – customary loan commitment and loan
closing conditions do not include (1) conditions that constitute a counteroffer, such as a demand for a higher down payment; (2) underwriting conditions concerning the borrower’s creditworthiness, including satisfactory debt-to-income and loan-to-value ration; or (3) verification or confirmation, in whatever form the lender ordinarily requires, that the borrower
meets underwriting conditions concerning borrower creditworthiness. For example, if approval is condition on a satisfactory appraisal, and the applicant obtains an appraisal but the appraisal does not support the assumed loan-to-value ratio, and the credit union is therefore not willing to extend the loan amount sought, then the lender must
use the code for application denied. So as mentioned, Regulation C does not require reporting prequalification requests on the HMDA LAR. Under Regulation C, the definition of an application does not include prequalification requests. By contrast, Regulation C does require reporting of requests for
preapproval. A request for preapproval for a home purchase loan is an application if the request is reviewed under a program in which you, after a comprehensive analysis of the applicant’s creditworthiness, issue a written commitment to the applicant that’s valid for a designated period of time to extend a home
purchase loan up to a specified amount. Now, to be a preapproval, the commitment cannot be subject to conditions, other than conditions that require the identification of a suitable property; conditions that require no material change has occurred in the applicant’s financial condition, or creditworthiness prior to closing; and
limited conditions that are not related to the financial condition or creditworthiness of the application that the lender ordinarily attaches to a traditional home mortgage application. An example of this is a certification of a clear termite inspection. Let’s talk about reporting sales. If you sell
a loan in the same calendar year in which it was originated or purchased, you must identify the type of purchaser to whom it was sold. If it is sold to more than one purchaser, you use the code for the entity that purchased the greatest interest. Another thing to note is that you only report
loans that are underwritten with Desktop Underwriter as being sold to Fannie Mae when Fannie Mae purchases them. That’s the same for Loan Prospector and Freddie Mac. For example, if you sell a loan to a federal home loan bank, don’t report it as sold to Fannie Mae or Freddie Mac simply because you underwrote with Desktop Underwriter
or Loan Prospector. Now let’s discuss some differences in government monitoring information, or GMI, that’s collected under ECOA and Reg B and that’s reported under HMDA and Reg C. Under Regulation B, the requirement to collect GMI applies to applications for credit that’s primarily to purchase or refinance a dwelling
occupied or to be occupied by the applicant as a principal residence. You have to ask as part of the application information about the applicant’s ethnicity, race, sex, marital status, and age. You also have to ask – you have to ask but the applicant is not required to supply the requested information.
Note that you request this information even if you are not a HMDA reporter, because this is under ECOA and Regulation B. Note that we talked about a bunch of things that are collected under ECOA. By contrast, HMDA and its implementing regulation, Regulation C, address the collection of
GMI as it pertains to race, ethnicity, and sex. So, that’s fewer categories than under ECOA. Although a credit union doesn’t request age or marital status under Regulation C, it has to request this information under Regulation B. So continuing to talk about collecting government monitoring
information under Regulation B and ECOA, note that you have to inform the applicant that the information regarding ethnicity, race, sex, marital status, and age is requested by the federal government to monitor compliance with federal statutes that prohibit creditors from discriminating against applicants on
those bases. You also have to inform the applicant that if he or she chooses not to provide the information, you’re required to note the ethnicity, race, and sex on the basis of visual observation or surname. If the applicant does not want to provide the information or any part of it, note that fact on
the form. Now that we’ve talked about GMI under ECOA and Regulation B, let’s discuss GMI under HMDA and Regulation C. For mail, internet, or telephone applications, if an applicant does not provide GMI, use the code for information not provided by applicant in mail, internet, or telephone
application. ” Also, you should permit an applicant to fill in only one or two of the three fields; that is, they can fill in ethnicity and race, but not sex, or any combination. For example, if you use a web-based application, you should not force the applicant to choose between making selections in each of the three fields and not making
any selections at all. Unless the applicant clearly indicates that he or she declines to supply any information, give the applicant the opportunity to supply any part of the information the applicant chooses. To continue with talking about GMI under Regulation C, if an applicant marks a box
indicating that he or she does not wish to furnish GMI, but actually goes ahead and supplies some or all of the information, you have to report the information that was supplied. You also have to let the applicant select more than one race category and report all of the
race categories that are selected. And the final point we want to make about things we notice and want to make sure you’re aware of has to do with adverse action notices that list the incorrect federal regulatory or an incorrect address for the regulator. Some notices reflect outdated information
such as NCUA regional offices. Some even reflect incorrect regulators such as the OCC. So, the address to be used is printed on this slide. The address was changed in a way that maybe went under the radar for some institutions, but it is in Appendix A to Part
1002 and it’s listed here. We’ve covered a lot of material today, but we’ve given only a basic overview of how to comply with fair lending laws. For additional information, NCUA provides fair lending compliance resources on its consumer compliance regulatory resources webpage on NCUA.gov.
And these resources include a fair lending guide, materials discussing best practices and frequently asked questions. They also include HMDA regulatory alerts and webinars. This presentation and answers to questions not answered during this webinar will be posted on this page. And once
posted, you’ll be able to use the hyperlink to reach that webpage. We’re going to cover some questions now, but if you have other questions you think of after the presentation, feel free to contact us. Our email address and office phone are shown. The email is
[email protected] gov. So, I want to thank you for providing – those of you who have provided questions in advance. I’m actually going to present some questions to Matt Nixon and Heather Murphy
to discuss some of those questions received in advance. So the first question received in advance has to do with whether you’re required to report modifications, extension, or
consolidation agreements under HMDA. I’ll repeat that. So are applications for modification, extension, or consolidation agreements HMDA reportable? Heather, do you want to take that? Heather Murphy: Sure. The acronym for these loans are called MECAs or CEMAs. And they’re not
reportable under HMDA because they do not meet the definition of refinancing, which would be satisfaction and replacement of an existing mortgage loan. Therefore, these applications, whether or not originated are not reportable. So, purchases of these loans would also not be reportable. And the FFIEC website has
a FAQ section on HMDA questions and this is also further explained there. Jamie Goodson: Thanks Heather. The next question is for Matt. And it’s about correspondent or brokered loans. And the question is under HMDA, who reports correspondent or brokered loans? Matt
Nixon: Thanks Jamie. This is addressed in the staff commentary to Regulation C Section 1003.1(c). With correspondent or brokered loans, the party making the credit decision has responsibility to report that decision. So, for example, if the correspondent
or broker makes a credit decision, it reports that decision; if it does not make the credit decision, it does not report. If the investor reviews an application and makes a credit decision prior to closing, the investor reports that decision. If the investor
does not review the application prior to closing, it reports only loans that it purchases, not the loans that it does not purchase. If the correspondent or broker makes a credit decision based on underwriting criteria set by the investor, but without the investor’s
review prior to closing, the correspondent or broker has made the credit decision. An institution that makes a credit decision on an application prior to closing reports that decision regardless of whose name the loan closes in. Jamie Goodson: Thanks Matt. I have another question for you.
We’ve been asked for clarification of who must report under HMDA. We’ve given two slides, one that showed how you can be excluded and one that shows how you are included. And that may have confused some people. Can you just go through the standards? Matt Nixon:
Certainly. So, in order to be HMDA reportable, you have to meet all three criteria listed in the slides. You have to meet the asset coverage threshold. You also have to have a home or branch office
located in a metropolitan statistical area. And, finally, in the preceding calendar year you would have had to originate at least one home purchase loan or refinancing of a home purchase loan secured by a first-lien
on a 1-4 family dwelling. Jamie Goodson: Thanks Matt. I have another question for you. It’s about HELOCs. The question is if our credit union only offers an open-end home equity line of credit, I understand that we do not need to report under
HMDA. Is this statement correct? Matt Nixon: Yes, that is correct. HELOCs are optional reporting under HMDA. However, if a credit union reports one or more HELOC, they are required to report all HELOCs. But, they may choose not to report
HELOCs at all. Jamie Goodson: Okay, thank you, Matt. The next question is for Heather. And the question is what coding is used if the loan is approved but the loan never is actually originated, due to the member just not getting back to you? Is this a denial? Heather Murphy: No. if you
have approved a loan, the loan is approved. If the member does not follow up and accept the loan, then the coding would be approved but not accepted. Jamie Goodson: Thanks Heather. Now, I have another question for Matt. If the member owns the house free and clear, comes to the credit union and wants to use the
house as collateral to do a loan to purchase anything, like a vacation home or a car, are we required to report this as a refinance? Matt Nixon: A refinancing is any dwelling secured loan that replaces and satisfies another dwelling secured
loan to the same borrower. So, if the member owns their home free and clear, and does not have a lien against it, then there would not be a replacement of a mortgage. So, it would not be reportable as a refinancing.
Jamie Goodson: Thank you. Got one more question for you, Matt, and it is: Are unsecured personal loans for home improved HMDA reportable? Matt Nixon: Home improvement loans are reportable
if they meet one of either two criteria. First, if it’s a dwelling secured loan to be used at least in part for repairing, rehabilitating, remodeling, or improving a dwelling (which
would not apply to the question); or, any loan not secured by a lien on a dwelling to be used, at least in part, for one or more of those purposes that is classified as a home improvement loan by the institution and is
used, in whole or in part, for repairing, rehabilitating, remodeling, or improving a dwelling. So, not only would the funds need to be used for home improvement purposes, the credit union would also need to have that loan classified
as a home improvement loan. Jamie Goodson: Thanks Matt. Got yet another question for you. And that question is: Are there any tools available to assist with transactional testing? Matt Nixon: Well, for
our purposes when we conduct a fair lending examination, and we refer to transactional testing, we’re simply talking about work that involves actually reviewing source documents,
application files, things such as adverse action notices. So transactional testing could be considered simply looking at adverse action notices and ensuring that they are submitted
correctly. It could also be conducting comparative file reviews where you have target prohibited basis applicants that were denied, for example, and comparing those against control group
applicants that were approved. This certainly can be done without any special tools. There are various software tools, products available on the market for fair lending or HMDA reviews as well. Jamie Goodson: Thank
you. The next question is for Heather and it’s about adverse action notices. The question is whether NCUA’s name or CFPB’s name and contact information should be put on the notices. And you might want to distinguish based on institution size. Heather Murphy: It would depend on the size of the institution.
If the credit union is greater than $10 billion in assets, then CFPB’s address would be on the adverse action notices. And if your assets are $10 billion or less, then you would use NCUA’s address for the Office of Consumer Protection in Alexandria, Virginia. Matt Nixon: And if I could
jump in and add something. The NCUA address is used for federal credit unions only. If you are a state chartered credit union, I believe Regulation B requires the Federal Trade Commission to be listed. Jamie Goodson: Thanks
Matt and Heather. Heather, I have another question for you. We went pretty quickly over prequalifications and preapprovals, but there is still some confusion about it. Is there anything more you can say to explain the difference between a prequalification and a preapproval?
Heather Murphy: Well, the preapproval, it’s more of, there is a commitment to the applicant that you will finance the loan and that once they select the property and the loan is going to close, there would be no more creditworthiness checking. So, the preapproval means that you’ve done all of our credit analysis and
the person is creditworthy to approve the loan. Whereas the prequalification is saying that you’ve done a quick analysis and this is what you think they could afford. Jamie Goodson: Thanks Heather. Now, Matt, I have a question for you about whether an OCP compliance review”
is considered the same thing as a fair lending exam. And if not, what are the differences? Matt Nixon: Within OCP we conduct two types of fair lending analyses. We perform supervision contacts which
are conducted offsite and generally take approximately three days to complete. They do not involve transactional testing. It’s a review of the credit union’s policies,
procedures, sample documents, things which we assess the structure of the credit union’s fair lending compliance management system. And, that is different from a fair lending examination where
we not only review the credit union’s fair lending compliance management system, we will also target specific focal points and we will drill down on those to review in detail. And, those are based on risk areas that we identify in our scoping process. Jamie
Goodson: Okay, thank you. I have another question for you and this one is about self-evaluations. Is an institution considered more favorably if it performs a self-evaluation of disparate treatment? Matt Nixon:
If we were to suspect or identify information that suggested a credit union had engaged in disparate treatment, there would be a number of factors that we would consider. We would be interested
in if this was an isolated incident, or if there was a pattern or practice of discrimination, but certainly also we would consider a credit union’s ability to self-identify and self-correct that
violation. So, yes, we would consider self-identification and self-correction that was completed through an evaluation completed at the credit union. Jamie Goodson: Thanks Matt. I have something about government
monitoring information and how somebody can find the guidelines for when they collect government monitoring information and when they don’t. Does either Matt or Heather want to speak to – it’s generally specified in the regulations, but if there is anything you want
to add about that here’s your opportunity. I believe GMI is discussed in Reg B under Section 1002.13. I don’t know offhand the section for Reg C. But these things are all spelled out in the regulation and you can find them online using the electronic Code of Federal Regulations.
You can also reach them through NCUA.gov, and our consumer compliance regulatory resources webpage can show you how to find different regulations, etc. I have a question here about home improvement loans. If they’re HMDA reportable, can you explain how this is
kind of distinct from the qualified mortgage rules and underwriting standards? So, as I read the question it’s: What’s the interaction between reporting something under HMDA and deciding whether something is a qualified mortgage. So, I’ll take that
because I’m not sure I’ve clarified the question enough. I think the questioner is correct that these are two completely separate categories of information. One has to do with determining ability to repay. And the other, HMDA is just about giving public disclosure about the loans
you make. As of yet, you do not report qualified mortgage status. That may change in the future, but as of now that’s not reported. Okay, so now I have a question for Heather about how much advanced notice a credit union is given for a fair lending exam. Heather Murphy: Credit unions are
generally given 30 days notice before we would come in for a fair lending exam. There is a first day letter the credit union will receive explaining the contact and the analyst that will be conducting the contact and a list of information that we will need to complete our review. So, you’re usually
given 30 days to get the information to the analyst and then usually a week after the analyst receives all the information is when they come onsite. Jamie Goodson: Thanks Heather. I have a question for Matt about whether a fair lending supervision contact can lead to a
fair lending exam. Matt Nixon: Yes, if significant weaknesses are discovered during a supervision contact, we may perform a follow on fair lending examination to review the concerns identified. But,
keep in mind that our selection process for examinations is risk focused. Just because we identified some issues during a supervision contact, it wouldn’t automatically mean that we
would perform an examination. We would evaluate the risks identified at the supervision contact against the risks for other potential examinations, and, if it met the threshold of one of
our top 25 for that particular year, then we could perform an examination. Also, any findings that we might issue during a supervision
contact are followed up on by our office, so there is also the potential that we could issue examiner’s findings and not do an examination, but we
would still ask the credit union to respond to us once they had addressed those deficiencies. Jamie Goodson: Thank you, Matt. We have a question here that’s actually about some changes that are going to be upcoming due to rules by the Consumer Financial
Protection Bureau that are going to take effect on 8/1/2015, I believe that’s referring to rules under TILA and RESPA. Gail, do you want to address that question? Gail Laster: Sure, as Jamie indicated, we have a question about will we be providing any guidance regarding the rules
that take effect in August of this year. And we believe that question is in reference to the CFPB’s TILA/RESPA Integrated Disclosures Rule. And we have in fact hosted a webinar from last week that will be archived and placed on NCUA.gov,
on our compliance resources pages. We also anticipate issuing a regulatory alert regarding the requirements of the rule as well, but that is a separate and distinct issue from what we’re talking about today in terms of fair lending which as I
indicated earlier covers three laws – Fair Housing Act, ECOA, and HMDA. Thanks. Jamie Goodson: Thank you. We have a question here. I’m going to ask this question to Matt. We talked earlier about using HMDA outliers status to determine whether a credit union should
be examined for fair lending compliance. Matt, can you give a bit of a description of what is a HMDA outlier? Matt Nixon: Yes. So, we analyze credit union HMDA data using tests of statistical significance,
and we will generally apply a 95% confidence interval to our analyses. So, a HMDA outlier is an event that’s materially different than the population average, with at least 95%
certainty that the event could not have occurred randomly. HMDA data is commonly analyzed to identify statistically significant denial and pricing disparities. And, while we use HMDA outlier information
as risk indicators, keep in mind that outlier data would still need to be analyzed in greater detail to determine if any problems existed. Jamie Goodson: Thank you. We have a question here about whether the
fair lending materials available on NCUA’s website kind of give information about how to do a self-assessment. Does anyone want to take that question? So, I will say, as mentioned, there are lots of materials
on the website, including webinars and frequently asked questions, and guides. But the point is well taken. There can be a lot of interest in knowing in more detail about how one would do a self-assessment. I think the
materials we have give good guidance on the basics of the regulations and fair lending compliance, but I think the point is well taken and that’s something we can think about, providing additional information about how you would actually perform a self-assessment.
Does anyone have anything they would like to add on that? Okay. I have a question for Matt Biliouris about information security: And the question is: Is NCUA concerned about the security of information federal credit unions submit in connection with fair lending exams? Matt Biliouris:
Sure, Jamie, I’ll take that one. We are concerned with that information and how that’s passed along. We recommend credit unions submit materials requested for fair lending exams and supervision contacts through some sort of secure email system or electronic system. As a general matter, we use Zixit and can provide instructions
for anyone who wants to know how to use that system. There have been cases where credit unions have asked us to pull information directly from their servers. We’ve established an FTP type relationship with them through a secure user name and password to get that, so that’s another option available. And ultimately our hope is to get
a level of comfort with the credit union that they’re providing the information in a secure way. So, if there are other means a credit union wishes to provide that information securely, they can certainly contact the analyst assigned to work on that exam or supervision contact and they can work out an arrangement to get that information to us securely
and pass it back and forth. Jamie Goodson: Thanks Matt B. I have another question for you and it’s: Does NCUA report information or data to the Consumer Financial Protection Bureau. Matt Biliouris: Yes, we do. I should back up and just kind of tell a little bit about the structure. The CFPB is required by Congress to
report annually on an entity’s compliance with several consumer protection statutes and their implementing regulations. We, in conjunction and collaboration with the CFPB, we provide information that we compile on credit unions to help them facilitate their reporting to Congress. We provide
requested information for this in aggregate form. We do not provide individual credit union information to those reports for Congress. Jamie Goodson: Thanks Matt. Now have a question that I’m going to
toss to Director Gail Laster. And it has to do with disparate impact. So, Gail, the general question is whether NCUA looks for disparate impact in its fair lending exams? Gail Laster: So, actually
it has to do more with the consideration of disparate impact under the Fair Housing Act and the fact that the Supreme Court is considering disparate impact under the Fair Housing Act in a recent case. And I think the question goes to what impact will that decision
have on NCUA’s fair lending exam program. And just by way of background, the question refers to a case in which the US Supreme Court heard oral arguments in January, called Texas Department of Housing and Urban and Community Affairs v. the Inclusive Communities Project. The Supreme Court is considering whether disparate impact
claims can be made under the Fair Housing Act. The court has not yet issued a decision in the case and it’s too soon to predict what the decision will be. And it would be foolhardy also to predict what the decision will be. When the court issues the decision, NCUA and other federal agencies will have to consider the decision’s effect on their fair
lending activities. For example, in performing fair lending exams, NCUA follows the Interagency Fair Lending Examination Procedures adopted by the Federal Financial Institutions Examination Council in 2009, also known as the FFIEC. Under those exam procedures, examiners consider the potential disparate impact of a creditor’s actual policies in
addition to just disparate treatment under both ECOA and the Fair Housing Act. So, the impact of the Supreme Court’s decision on NCUA’s fair lending program will depend on both the court’s decision about whether disparate impact claims can be made under the Fair Housing Act and whether the decision addresses disparate
impact under ECOA. So, again, it would be premature to speculate about the effect of the court’s decisions before in fact the decision is issued. Thanks. Jamie Goodson: Thanks Gail. Now we’ve got some questions about demographic analysis. I’m going to pass them to
Matt Nixon. The first is why is demographic analysis necessary if our field of membership is not based on geography? Matt Nixon: We recognize that credit unions are unique, given that field of memberships may be defined by common bonds other than
geography. But, whether defined by geography or not, credit unions need to understand the demographic makeup of their fields of membership to ensure credit services are applied equitably and credit unions are not discriminating on a prohibited basis. A credit
union may not, because of a prohibited factor, fail to provide information or services or provide different information or services regarding any aspect of a lending process, including credit availability, application procedures, or
lending standards. A credit union with a closed field of membership and not based on geography may not be expected to show or demonstrate lending patterns similar to other financial institutions operating in the same
geography, but they should understand the demographic makeup of their fields of membership and adequately serve all within. Jamie Goodson: Thanks Matt. And I have a question for Heather. If you notice errors that need to be corrected on the HMDA LAR
after it has been submitted, can you resubmit that data? Heather Murphy: Yes. Once you have made all the corrections and checked for errors, you would resubmit the HMDA LAR the same way as you originally submitted it. For a prior year’s data, you need to
resubmit the information by December of the following year. So, for the 2014 LAR, you would have to submit any errors or corrections by November 30, 2016. And the FFIEC FAQ section also has a section on this that tells
you how to re-file and what you need to do. Jamie Goodson: Thanks Heather. I have a question – we have a lot of questions about HELOCs. There is a lot of interest in whether or not you report them. And one of them is – is the reporting of HELOCs optional even
if funds are used for home improvement purposes, or to provide funds for a down payment on a home purchase loan? Matt, do you want to take that? Matt Nixon: Sure. Yes, the reporting of home equity lines of credit is
optional and Section 1003.4(c)(3) specifically states that credit unions may optionally report HELOCs made in whole or in part for the purpose of home improvement
or home purchase. Jamie Goodson: Thanks Matt. We have a question here (they’re both about HELOCs) and it’s: There has been word that HELOCs are not going to be reported optionally going forward, and can we please speak to that. I will just reiterate something that Director
Laster mentioned at the beginning of the presentation which is, yes, the Consumer Financial Protection Bureau is considering new regulations under Regulation C, under HMDA, but those are not yet final. So, for now we’re just treating
HELOCs as optionally reported. Okay. I have a question here about whether we can discuss specific ways that credit unions can provide effective yet appropriately
scaled ways to mitigate fair lending risk in various circumstances. Hold on, let me read this again. Why don’t we try to address this by saying – just speaking to how we consider differences in institutions
in terms of our expectations in our fair lending exam program? Does anyone want to take that question? Okay. I will say that in general we – I think it was Matt Biliouris who spoke earlier about, kind of, compliance
management, and we tried to reiterate that the various expectations relate to the size and complexity of the institution. And we do recognize that not every institution presents the same fair lending risk or has the same resources.
And so these are things that are taken into consideration when we are performing our fair lending exams. We have been asked to repeat the comment about what makes a weak compliance management system, or
put differently some components of a strong compliance management system. So, I will just go back and just touch on a few of those points that we made. So, I’ll focus on policies and procedures, and what we were talking
about there was making sure that your policies and procedures are documented and sufficiently detailed to address compliance. And they are your primary reference tool for managing compliance and need to be reviewed frequently and kept current. And you should make sure
that they cover all loan products in phases, including – from advertising all the way to loss mitigation. And I’ll just reiterate a point that was also made earlier and has to do with product development. Make sure that when you’re introducing a new product or modifying existing products that you keep these
things in mind, that you keep fair lending in mind when you’re making changes or rolling out new products. It may be easy to just want to go to market with something and not think about the fair lending implications. So, it’s good in those cases to evaluate
documents and disclosures, test the systems, and train staff prior to product rollout. Okay. I believe – yes – one second please. We have a question about indirect auto lending
and whether we’ve targeted indirect auto lending as a fair lending focus. Who wants to take that? Gail Laster will take that. Gail Laster: Thanks Jamie. NCUA has not concentrated its fair lending efforts on a single
lending area or product. That being said, however, ECOA’s coverage extends beyond mortgage lending to consumer and business loans. Therefore, any loan product or aspect of a credit transaction may be designated a focal point at a fair lending examination depending on the credit union’s
risk profile. And indeed NCUA has issued guidance on how to conduct due diligence over third party service providers and what NCUA’s expectations are concerning third party oversight, including oversight of indirect lending programs. Thanks. Jamie Goodson: Thank you, Gail. We have a
question about advertising and I’m going to toss it to Matt Nixon. The question is: Do the advertising guidelines apply to images or just language? Matt Nixon: If we’re talking about the advertising requirements that we address
in our NCUA regulations, 701.31, there are specific guidelines addressed concerning images such as the equal housing lender logo. If we’re talking about images other than the
equal housing lender logo, such as print documents, that would also be addressed within 701.31, as would language requirements in advertisements. So, I would reference 701.31 of NCUA’s regulations. Jamie Goodson:
Okay, thanks, Matt. And I have one last question for you, which is: Are there any other regulations reviewed during an NCUA OCP examination besides fair lending, given the myriad of regulations that are currently in place? Matt
Nixon: Within the structure of NCUA’s Office of Consumer Protection, we operate the fair lending examination program. So, we will review at a fair lending examinations ECOA, HMDA, and the Fair Housing
Act. We’ll look at NCUA Regulation Part 701.31. And, we also review compliance with SCRA, the Servicemembers Civil Relief Act. Now, that’s not to say that compliance is
not a component of NCUA’s examination process. Safety and soundness examiners continue to review all compliance areas, including fair lending, at annual examinations. But, they might defer to us if
they had specific concerns related to fair lending. Jamie Goodson: Thank you, Matt. And that concludes the question-and-answer section of our presentation today. I do realize that there were questions we have not been able to address, and as mentioned, we will compile
answers to those questions, to the extent that there are answers readily available from regulations, and post them on NCUA.gov, on the fair lending resources webpage of our Consumer Compliance Regulatory Resources webpage. Once again, our office contact information is provided in this presentation. You can email us at
[email protected] gov if you have additional questions and we will respond to those as well. I want to thank all of you for joining today. I hope this has been helpful. And I want to thank all of the presenters. And thank you for your interest in fair lending.

One comment on “Fair Lending and Home Mortgage Disclosure Act”

  1. Keith Dravo says:

    worst audio I have ever heard. someone should listen to a playback before posting it for the public,

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