8 avenues to avoid a fair lending exam

Three credit union leaders talk about tactics to keep lending in line with federal regulations.

The Federal Financial Institutions Examination Council (FFIEC) in September released HMDA data for 5,683 U.S. financial institutions on 12.9 million home loan applications in 2018. The report includes 48 data points, including many new ones, that help financial institutions, governments, mortgage experts, and more assess loan practices related to ethnicity, race, sex, and age of borrowers.

The data set contains powerful insights. For example, whereas the number of overall loans rose slightly for African-American borrowers and Hispanic borrowers — 6.7% and 8.9%, respectively — the FFIEC noted these two groups continued to experience higher denial rates for family, owner-occupied conventional home loans.

NCUA regulators use the HMDA data set to determine which federal credit unions might require fair lending exams and off-site supervision contacts over the next year. According to credit union lenders, a sharper focus on a variety of factors — including data quality, fair lending management, and outside vendors — can go a long way toward avoiding the headaches of an NCUA exam.

Here are eight tips and best practices to help credit unions adhere to fair lending guidelines.


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