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Fair Lending in the Time of COVID: Trends from the CFPB & OCC

2 min read
May 5, 2020

We may be weary from living it and reading about it, but COVID-19 continues to impact every aspect of everyday life—including fair lending. Here’s the latest on what the regulatory agencies are saying about it.

OCC Working to Issue Final CRA Rule by End of Q2 

The world may be a very different place since the OCC and FDIC released their Community Reinvestment Act (CRA) modernization proposal in December, but that hasn’t stopped the OCC from gathering comments and moving forward. 

With the comment period over, the OCC will be reviewing the 7,400 submitted comments. The agency notes that COVID-19 has only heightened the need for communities to be able to access lending, capital, and banking services.  

The OCC is working to issue its final rule “during the first half of this year.” The agency notes that “Further delay would only prevent these valuable resources from reaching those who need them most in this time of national emergency.” 

CFPB Issues Reminder on Payment Protection Program (PPP) and Fair Lending 

The CFPB is encouraging small business owners who think they were discriminated against when applying for Payment Protection Program loans to submit a lending discrimination complaint online to the CFPB. 

In a blog post, the Bureau cites the following examples of discrimination against race, sex, or other protected category: 

  • Refusal of available loan or workout option even though you qualify for it based on advertised requirements 
  • Offers of credit or workout options with a higher rate or worse terms than the one you applied for, even though you qualify for the lower rate 
  • Discouragement from applying for credit by the lender because of a protected characteristic 
  • Denial of credit, but are not given a reason why or told how to find out why 
  • Negative comments about race, national origin, sex, or other protected statuses 

The CFPB’s blog is a reminder that despite the frustrations experienced by both lenders and small business customers and the need to quickly submit applications to access a limited pool of resources, regulatory agencies are still paying attention to fair lending. 

Regulators aren’t the only ones keeping an eye on who gets PPP funding. After many large publicly traded companies ended up with funds intended for small businesses, expect even more attention on PPP fund distribution. Several members of Congress have already asked the Treasury Department to collect racial data on PPP loan recipients to ensure equitable access.   

Ncontracts VIEWPOINT: While exams and data reporting have been adjusted in many cases, don’t expect to get a pass on fair lending, even in a time of crisis. If anything, the problems with the launch and execution of the PPP program will result in heightened scrutiny in the disbursement of funds. Meanwhile, the OCC shows no signs of stopping its efforts to reimagine CRA. 

Make sure your financial institution is staying on top of its fair lending analytics to identify and correct any disparities. An oversight in this area can result in severe compliance, financial, and reputation risk.   

To learn more about the impact on COVID-19 on fair lending, tune into our webinar Fair Lending & COVID-19: Strategies for Maintaining Fair Lending Compliance on May 13 at 2 p.m. CT. 



Related: How to Build a Strong Fair Lending & Redlining Compliance Management System

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