On May 6, 2022, the Consumer Financial Protection Bureau (CFPB) issued its annual Fair Lending Report to Congress, which outlines the work the bureau undertook around fair lending in 2021.
The 43-page report covers myriad fair lending topics, including fair lending enforcement and supervision, rulemaking and guidance, stakeholder engagement, the amicus program and other litigation, and interagency reporting on ECOA and HMDA. The report begins with a message from Fair Lending Director Patrice Alexander Ficklin, who outlines some of the highlights from 2021, such as the Trustmark National Bank enforcement action for redlining, and actions taken to combat appraisal bias after public reports of racist practices were published.
Section 1 of the report outlines the fair lending enforcement and supervision activities that occurred in 2021. The bureau opens this section with a statement of its risk-based prioritization process, which allows it to “focus on areas that present substantial risk of credit discrimination to consumers.” The process includes the identification of emerging developments and trends in key consumer financial markets, as well as tips and leads from whistleblowers, advocacy groups, and government agencies; historical data on supervision and enforcement; complaints from consumers; and HMDA and other data analysis. In 2021, the prioritization process resulted in the CFPB focusing on racial and economic equity, as well as “promoting economic recovery related to the COVID-19 pandemic,” in addition to some other priorities, such as mortgage origination and pricing, small business lending, and use of artificial intelligence (AI) and machine learning models.
As a result of the CFPB’s fair lending enforcement activities in 2021, the bureau announced four enforcement actions, brought under ECOA and other federal consumer financial protection laws. The enforcement actions included Trustmark National Bank, LendUp Loans, LLC, JPay, and Nexus Services. In addition to the four enforcement actions, the bureau referred two discrimination matters to the Department of Justice, regarding mortgage origination and pricing discrimination pursuant to section 706(g) of ECOA.
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