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Ncontracts’ Top Lending Compliance Blog Posts of 2022

Lending Compliance

Ncontracts’ Top Lending Compliance Blog Posts of 2022

Posted by Ncontracts on Dec 20, 2022 10:43:09 AM

As 2022 comes to a close, it’s a good time to look back on the year that was.

In this blog post, we offer up our top lending compliance blog posts for 2022. They include:

Post #1: What Does the New Illinois CRA Law Mean for Mortgage Companies & Credit Unions?

Post #2: DOJ & CFPB Follow Up on Promise for “Vigorous” Redlining Enforcement with $24 Million Mortgage Company Settlement

Post #3: 52 HMDA Filing Questions Answered by Compliance Experts

Post #4: The 8 Steps to Scoping a Fair Lending Compliance Exam

Post #5: Lending Compliance Q&A for Lenders

Read on for a quick summary of each.

Post #1: What Does the New Illinois CRA Law Mean for Mortgage Companies & Credit Unions?

The year began with a deep dive into state-level Community Reinvestment Act (CRA) laws as a new Illinois law too affect—and impacting credit unions and mortgage companies in the state for the first time.

The post covered explained: 

  • The purpose of the Illinois CRA law
  • The types of financial institutions covered by the Illinois CRA law 
  • How Illinois will evaluate bank, credit union, and mortgage company CRA performance
  • The impact of CRA on heavily digital institutions
  • Illinois CRA exams
  • Potential consequences of violating the Illinois CRA law
 
The impact of CRA on heavily digital institutions


Illinois CRA exams

Potential consequences of violating the Illinois CRA law 

The takeaway: The best way to comply with CRA requirements under the Illinois law is by having a strong fair lending compliance program that includes CRA. Since credit unions and mortgage companies are already required to comply with state and federal fair lending laws, they should already have a fair lending compliance management system to reduce the risk of fair lending violations. Adding CRA to the mix shouldn’t be too hard, though it may require the addition of fair lending analytics if not already in place.

Post #2: DOJ & CFPB Follow Up on Promise for “Vigorous” Redlining Enforcement with $24 Million Mortgage Company Settlement

The Combatting Redlining Initiative at the Justice Department — and its warning in late 2021 that the Justice Department would “spare no resource” to ensure “vigorous” fair lending enforcement — began to take shape in 2022 with the first-ever DOJ redlining settlement against a non-bank lender and the second largest ever. The joint suit with the Consumer Financial Protection Bureau was settled for $24.4 million.  

The alleged violations were uncovered in a CFPB fair lending exam after an report on the mortgage company by investigative journalists.  

The takeaway: Redlining isn’t just a bank problem. It’s a concern for mortgage companies, too. This is especially true since the DOJ and CFPB are working with the states to enforce fair lending. The best way to uncover redlining is to analyze fair lending data and act on any findings.

Post #3: 52 HMDA Filing Questions Answered by Compliance Experts 

January is the start of HMDA reporting season for many financial institutions as they gather, report and file Home Mortgage Disclosure Act (HMDA) data before the March deadline — while for others it lasts all year long. 

In this post we answer 52 HMDA questions — everything from general question to those covering partial exemptions, legal identity identifiers, and data points/fields.   

Takeaway: While it’s no substitute for legal advice, this post serve as a good FAQ.

Post #4: The 8 Steps to Scoping a Fair Lending Compliance Exam 

All the talk of vigorous fair lending enforcement and how fair lending exams have revealed potential violations of consumer harm has a lot of financial institutions wondering what they need to do to prepare for their fair lending exam. 

In this post, we take you step by step through the Interagency Fair Lending Examination Procedures to show you how examiners scope fair lending exams, including the Equal Credit Opportunity Act (ECOA), the Fair Housing Act (FHA), Reg B, and (CRA), among others. 

The steps include: 

  1. Build an overview of operations and product offerings.
  2. Identify compliance program risk factors.
  3. Review residential loan products.
  4. Identify residential lending risk factors.
  5. Organize and focus risk & disparity analysis.
  6. Identify consumer lending risk factors.
  7. Identify commercial lending risk factors.
  8. Complete the scoping process.
Identify compliance program risk factors. 
Review residential loan products. 
Identify residential lending risk factors. 
Organize and focus risk & disparity analysis. 
Identify consumer lending risk factors. 
Identify commercial lending risk factors.  
Complete the scoping process. 

Takeaway: Fair lending analysis is your friend. It can identify disparities that become exam focal points.

Post #5: Lending Compliance Q&A for Lenders 

Fair lending isn’t just a concern for the compliance department. Lenders play an important role in ensuring fair lending compliance.

Do your lenders know everything they need to know about fair lending? Share this Q&A with them to help them understand their role. This is especially true for commercial lenders with 1071 expected soon.

The Q&A includes:

  • A rundown of fair lending concepts lenders need to know including key fair lending regulations and defining similarly situated individuals.
  • The role lenders play in lending compliance.
  • The importance of complaint management.
  • An explanation of UDAAP.
The role lenders play in lending compliance 
The importance of complaint management 
An explanation of UDAAP 

Takeaway: Lenders should have enough fair lending training and awareness to help the institution make decisions that put borrowers’ needs first while aligning with the institution’s risk tolerance.

Want to learn more about fair lending and compliance risks? Download our whitepaper 7 Key Fair Lending Compliance Risks.

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Topics: Lending Compliance, Risk & Compliance

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