8 Common Fair Lending Compliance Myths - and the Realities!
Editors note: this post was originally published in November 2015 and has been completely updated for comprehensiveness.
Myths are stories with a purpose, often used to justify an approach or belief system. In conversations with clients, friends and prospects, certain compliance myths regularly surface. We’ll share the 8 most common Fair Lending compliance myths and show you the truth!
"The great enemy of truth is very often not the lie — deliberate, contrived and dishonest — but the myth — persistent, persuasive, and unrealistic,” said former President John F. Kennedy in a 1962 commencement address at Yale University. “We enjoy the comfort of opinion without the discomfort of thought. Mythology distracts us everywhere."
These powerful words illustrate exactly why myths are so dangerous and encourage us to seek truth and clarity.
In compliance, believing in myths may lead financial institutions to inaccurately prioritize focal points, or underestimate their Fair Lending risk exposure.
Here are 8 of the most common Fair Lending myths, based on our conversations and experience:
- "Our policies and procedures have us covered."
- "Fair Lending compliance is about underwriting."
- "Our staff fully understands compliance."
- "We don’t have diversity in our market."
- "Fair Lending is primarily about HMDA."
- "Our consultant that manages compliance."
- “The compliance department owns compliance.”
- "Fair lending doesn’t apply to small lenders."
These persistent statements tend to be partial truths, and all the more dangerous for their illusions of reality. If you’ve heard, thought, or said any of these, your financial institution is likely operating with serious compliance vulnerabilities. Don't fall for these myths, which can be detrimental to your Fair Lending.
Ready to learn the realities?
We’ve gathered these 8 myths and their realities into this helpful download. Reduce your risk and improve your compliance!
Click here to get it.
The regulators, including the CFPB, OCC, and NCUA, FDIC, have put a bright spotlight on Fair Lending. For financial institutions, the path to Fair Lending risk management is often cluttered by misinformation. Properly addressing risk starts with a clear understanding of the realities of Fair Lending laws and regulations.
Compliance is already complicated enough. Don’t let these myths further complicate your Fair Lending risk management.
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- Absolutely Everything You Need to Know about Fair Lending Risk Assessments