Fair Lending Report of the Bureau of Consumer Financial Protection, April 2020, 27395-27407 [2020-09890]

Download as PDF Federal Register / Vol. 85, No. 90 / Friday, May 8, 2020 / Notices BUREAU OF CONSUMER FINANCIAL PROTECTION Fair Lending Report of the Bureau of Consumer Financial Protection, April 2020 Bureau of Consumer Financial Protection. ACTION: Fair Lending Report of the Bureau of Consumer Financial Protection. AGENCY: The Bureau of Consumer Financial Protection (Bureau) is issuing its eighth Fair Lending Report of the Bureau of Consumer Financial Protection (Fair Lending Report) to Congress. The Bureau is committed to ensuring fair, equitable, and nondiscriminatory access to credit for both individuals and communities. This report describes our fair lending activities in innovation, outreach, prioritization, guidance and rulemaking, supervision, and enforcement for calendar year 2019. DATES: The Bureau released the April 2020 Fair Lending Report on its website on April 30, 2020. FOR FURTHER INFORMATION CONTACT: Bobby Conner, Senior Policy Counsel, Fair Lending, at 1–855–411–2372. If you require this document in an alternative electronic format, please contact CFPB_ Accessibility@cfpb.gov. SUPPLEMENTARY INFORMATION: SUMMARY: 1. Fair Lending Report of the Bureau of Consumer Financial Protection, April 2020 Message From Kathleen L. Kraninger, Director I am pleased to present this Fair Lending Annual Report to Congress reflecting the Consumer Financial Protection Bureau’s fair lending efforts in 2019. During the past year, we’ve worked hard to enhance our fair lending efforts by leveraging the authorities provided by Congress and the Bureau’s resources to be more effective and comprehensively utilized. From supervision and enforcement to rulemaking, guidance and education, the Bureau is dedicated to using all the tools at its disposal to achieve our mission: Fair, equitable, and nondiscriminatory access to credit markets for consumers and their communities. Through our supervision and enforcement work, we strive to foster a culture of institutional compliance and prevention of consumer harm. As part of these important efforts, the Bureau continues to vigorously enforce fair VerDate Sep<11>2014 17:46 May 07, 2020 Jkt 250001 lending laws, including the Equal Credit Opportunity Act and the Home Mortgage Disclosure Act. Through our rulemaking and guidance, we articulate to regulated entities clear rules of the road that protect consumers while promoting competition, transparency, and fair markets for financial products and services. Through our outreach, we continue to educate and empower consumers to make informed decisions that secure their financial well-being. In addition, the Bureau continues to focus on consumer beneficial innovation—one of my key priorities— including innovation that provides fair, equitable, and non-discriminatory access to credit. In 2019, the Bureau issued three new policies to help promote innovation and facilitate compliance: A revised No-Action Letter Policy, a revised Trial Disclosure Program Policy, and the Compliance Assistance Sandbox Policy. We encourage innovators to consider these tools to develop new financial products and services to better serve consumers. One particular fair lending issue ripe for innovative solutions is making financial products and services more accessible to consumers who are unbanked and underbanked, including those who are Limited English Proficient (LEP). By working on these complex issues together, I am confident that we can find ways to overcome obstacles and provide greater access to credit markets, including to LEP consumers. In 2019, we issued a Request for Information regarding ‘‘Tech Sprints.’’ Tech Sprints gather regulators, technologists, financial institutions, and subject matter experts from key stakeholders to collaboratively develop innovative solutions to clearly identified challenges. We are excited to explore the use of Tech Sprints to encourage regulatory innovation and collaborate with stakeholders in developing viable solutions to regulatory compliance challenges. I hope to announce more about these efforts in the near future. Finally, in light of recent events concerning the COVID–19 pandemic, I am mindful of the need for additional innovative solutions that protect America’s consumers. I am proud of the work that is highlighted in this report and grateful to the Bureau staff who have been instrumental in leading these efforts. Going forward, we will continue to work on expanding responsible access to credit and helping to ensure that all consumers are protected from discrimination. PO 00000 Frm 00044 Fmt 4703 Sfmt 4703 27395 Sincerely, Kathleen L. Kraninger Message From Patrice Alexander Ficklin, Director, Office of Fair Lending and Equal Opportunity As we reflect on another year and look ahead to the next, the Bureau continues to make progress in ensuring fair, equitable, and nondiscriminatory access to credit for all consumers in America. To that end, I am honored to share our achievements in this, our eighth Fair Lending Report. During the past year, the Office of Fair Lending and Equal Opportunity (OFLEO) continued to coordinate the Bureau’s fair lending work both internally, and with other governmental agencies, civil rights organizations, consumer groups, and industry to encourage consumer-friendly innovation to expand access to credit, especially for unbanked and underbanked consumers. Through our work on innovation, we also aim to provide meaningful guidance to institutions on fair lending compliance in the age of innovation. In this vein, in 2019, along with four other financial regulators, the Bureau issued a joint statement about the use of alternative data in underwriting, seeking to expand fair, equitable, and nondiscriminatory access to credit. The use of alternative data such as cash-flow data may improve the speed and accuracy of credit decisions and expand access to fair and affordable credit to consumers who currently may not obtain credit in the mainstream credit system, and the Bureau encourages responsible use of such data to expand access to credit. We are particularly excited by our role in launching the Bureau’s first Tech Sprints, which we hope will facilitate the use of innovative technologies to address challenges experienced by consumers, industry and regulators. I look forward to continuing to work with all stakeholders in protecting America’s consumers and expanding access to credit. When navigating complex fair lending issues, stakeholders should consider OFLEO as a resource. Sincerely, Patrice Alexander Ficklin 1. Innovations in Access to Credit 1.1 Collaboration Between the Office of Fair Lending and Equal Opportunity and the Office of Innovation The Dodd-Frank Wall Street Reform and Consumer Protection Act (DoddFrank Act) established the Bureau’s mission to include both fair lending and E:\FR\FM\08MYN1.SGM 08MYN1 27396 Federal Register / Vol. 85, No. 90 / Friday, May 8, 2020 / Notices innovation components. Specifically, the Dodd-Frank Act makes clear that ‘‘[t]he Bureau is authorized to exercise its authorities under [F]ederal consumer financial law for the purposes of ensuring that, with respect to consumer financial products and services . . . (2) consumers are protected from unfair, deceptive, or abusive acts and practices and from discrimination . . . and (5) markets for consumer financial products and services operate transparently and efficiently to facilitate access and innovation.’’ 1 The Bureau is also responsible for providing oversight and enforcement of Federal fair lending laws intended to ensure ‘‘fair, equitable, and nondiscriminatory access to credit for both individuals and communities.’’ 2 The Bureau’s Office of Fair Lending and Equal Opportunity (OFLEO) coordinates fair lending work both internally and externally with Bureau stakeholders, including consumer advocates, civil rights organizations, industry, academia, and other government agencies. OFLEO also works closely with the Office of Innovation (OI) to help encourage innovation in expanding responsible credit access, including fair, equitable, and nondiscriminatory access to credit to underserved populations. On September 10, 2019, the Bureau, through OI, issued three new policies to promote innovation and facilitate compliance: A revised No-Action Letter (NAL) Policy,3 a revised Trial Disclosure Program Policy,4 and the Compliance Assistance Sandbox Policy.5 The Bureau is accepting applications under these policies and, as of this report, has granted two NALs and a NAL template under the revised 2019 NAL Policy.6 As part of its coordination function, OFLEO works with OI regarding applications to the Bureau’s innovation 1 Dodd-Frank Act section 1021(b)(2), (5) (emphasis added). 2 Dodd-Frank Act sections 1002(13), 1013(c). 3 Consumer Fin. Prot. Bureau, No-Action Letter Policy (Sept. 10, 2019), https:// files.consumerfinance.gov/f/documents/cfpb_finalpolicy-on-no-action-letters.pdf; Policy on No-Action Letters, 84 FR 48229, 48229–48246 (Sept. 6, 2019). 4 Consumer Fin. Prot. Bureau, Policy to Encourage Trial Disclosure Programs (Sept. 6, 2019), https:// files.consumerfinance.gov/f/documents/cfpb_finalpolicy-to-encourage-tdp.pdf; Policy to Encourage Trial Disclosure Programs, 84 FR 48260, 48260– 48272 (Sept. 13, 2019). 5 Consumer Fin. Prot. Bureau, Policy on the Compliance Assistance Sandbox (Sept. 6, 2019), https://files.consumerfinance.gov/f/documents/ cfpb_final-policy-on-cas.pdf; Policy on the Compliance Assistance Sandbox, 84 FR 48246, 48246–48260 (Sept. 13, 2019). 6 Consumer Fin. Prot. Bureau, Granted Applications, https://www.consumerfinance.gov/ about-us/innovation/granted-applications/. VerDate Sep<11>2014 17:46 May 07, 2020 Jkt 250001 programs that involve fair lending and access to credit issues. Review of such applications generally includes consideration of the potential fair lending risks associated with the proposed product or service, as well as its potential for expanding access to credit for underserved or underbanked populations. In addition, after an application related to fair lending or access to credit has been granted by the Bureau, the two offices continue to work together, for example, in reviewing data submitted by the recipient relating to fair lending and credit access issues. The Bureau encourages consumerbeneficial innovations, including those that can help serve populations currently underserved by the mainstream credit system. Entities are strongly encouraged to contact the Bureau before applying to any of the innovation programs. 1.2 No-Action Letter Issued to HUD Housing Counseling Agencies In September 2019, the Bureau issued a NAL under the revised 2019 NAL policy in response to a request by the U.S. Department of Housing and Urban Development (HUD) on behalf of more than 1,600 housing counseling agencies (HCAs) that participate in HUD’s housing counseling program.7 The NAL was issued after HUD brought concerns to the Bureau about HCAs and mortgage lenders not entering into agreements that would fund counseling services due to uncertainty about the application of the Real Estate Settlement Procedures Act. The more than 1,600 HUD-certified HCAs serve more than one million households annually. They offer prepurchase homeownership counseling to potential borrowers looking to purchase their first home, providing important information on fair housing, fair lending, and access to credit issues. With this information, potential borrowers may be better able to make informed choices based on their financial circumstances to achieve safe and sustainable homeownership. The NAL is intended to facilitate HCAs entering into such agreements with lenders and will enhance the ability of HCAs to obtain funding from additional sources. At the same time, in response to HUD’s application, the Bureau issued a NAL Template for mortgage lenders under the NAL Policy, providing a 7 Consumer Fin. Prot. Bureau, CFPB Issues Policies to Facilitate Compliance and Promote Innovation (Sept. 10, 2019), https:// www.consumerfinance.gov/about-us/newsroom/ bureau-issues-policies-facilitate-compliancepromote-innovation/. PO 00000 Frm 00045 Fmt 4703 Sfmt 4703 foundation for future NAL applications by mortgage lenders. 1.3 Joint Statement On the Use of Alternative Data in Credit Underwriting In December 2019, the Bureau, the Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the National Credit Union Administration (NCUA) (collectively ‘‘the agencies’’) issued a joint statement on the use of alternative data in underwriting by banks, credit unions, and non-bank financial firms.8 The purpose of the statement was to provide guidance on the use of alternative data in underwriting and, to the extent firms are using or contemplating using alternative data, to encourage responsible use of such data. Alternative data includes information not typically found in consumers’ credit reports or customarily provided by consumers when applying for credit. Alternative data can include cash-flow data derived from consumers’ bank account records. The statement further explains that a well-designed compliance management program provides for a thorough analysis of relevant consumer protection laws and regulations to ensure firms understand the opportunities, risks, and compliance requirements before using alternative data. As reflected in the statement, the agencies recognize that use of alternative data in a manner consistent with applicable consumer protection laws may improve the speed and accuracy of credit decisions and may help firms evaluate the creditworthiness of consumers who currently may not obtain credit in the mainstream credit system. Additionally, the agencies acknowledge that using alternative data may enable consumers to obtain additional products and/or more favorable pricing/terms based on enhanced assessments of repayment capacity. 1.4 Providing Adverse Action Notices When Using Artificial Intelligence and Machine Learning Models As part of our consumer protection mission, Congress tasked the Bureau with ensuring that markets for consumer financial products and services operate transparently and efficiently to facilitate access and innovation. One area of innovation the Bureau is monitoring for 8 Consumer Fin. Prot. Bureau, Federal Regulators Issue Joint Statement on the Use of Alternative Data in Credit Underwriting (Dec. 3, 2019), https:// www.consumerfinance.gov/about-us/newsroom/ federal-regulators-issue-joint-statement-usealternative-data-credit-underwriting/. E:\FR\FM\08MYN1.SGM 08MYN1 Federal Register / Vol. 85, No. 90 / Friday, May 8, 2020 / Notices fair lending and access to credit issues is artificial intelligence (AI), and more specifically, machine learning (ML), a subset of AI. One important issue is how complex AI models address the adverse action notice requirements in ECOA and the Fair Credit Reporting Act (FCRA). ECOA requires creditors to provide consumers with the main reasons for a denial of credit or other adverse action.9 FCRA also includes adverse action notice requirements.10 These notice provisions serve important anti-discrimination, educational, and accuracy purposes. There may be questions about how institutions can comply with these requirements if the reasons driving an AI decision are based on complex interrelationships. The existing regulatory framework has built-in flexibility that can be compatible with AI algorithms. For example, although a creditor must provide the specific reasons for an adverse action, the Official Interpretation to ECOA’s implementing regulation, Regulation B, provides that a creditor need not describe how or why a disclosed factor adversely affected an application,11 or, for credit scoring systems, how the factor relates to creditworthiness.12 Thus, the Official Interpretation provides an example that a creditor may disclose a reason for a denial, even if the relationship of that disclosed factor to predicting creditworthiness may be unclear to the applicant. This flexibility may be useful to creditors when issuing adverse action notices based on AI models where the variables and key reasons are known, but which may rely upon non-intuitive relationships. Another example of this flexibility is that neither ECOA nor Regulation B mandate the use of any particular list of reasons. Indeed, the regulation provides that creditors must accurately describe the factors actually considered and scored by a creditor, even if those reasons are not reflected on the current sample forms.13 This latitude may be useful to creditors when providing reasons that reflect alternative data sources and more complex models. Industry continues to develop tools to accurately explain complex AI decisions, and the Bureau expects more methods will emerge. These developments hold great promise to enhance the ‘‘explainability’’ of AI and U.S.C. 1691(d)(2). U.S.C. 1681m (a). 11 12 CFR pt. 1002, comment 9(b)(2)–3. 12 Id. at 9(b)(2)–4. 13 12 CFR pt. 1002, comment 9(b)(2)–2 and app. C, ¶ 4. In 2017, the Bureau announced a NAL to Upstart Network, Inc. (Upstart), a company that uses alternative data and machine learning in making credit underwriting and pricing decisions.14 Upstart’s underwriting model uses traditional underwriting data and various categories of alternative data, including information related to borrowers’ education and employment history. The NAL, approved under the Bureau’s 2016 NAL policy, references the application of ECOA and Regulation B to Upstart’s use of alternative data and ML for its underwriting and pricing model. This NAL is specific to the facts and circumstances of Upstart and does not serve as an endorsement of the use of any particular variables or modeling techniques in credit underwriting and pricing. In addition, the NAL does not serve as an endorsement of Upstart or the products or services it offers. As a condition for receiving the NAL, Upstart agreed to a model risk management and compliance plan that requires it to analyze and appropriately address risks to consumers, as well as assess the real-world impact of alternative data and ML. Pursuant to the NAL, Upstart provides the Bureau with information comparing outcomes from its underwriting and pricing model (tested model) against outcomes from a hypothetical model that uses traditional application and credit file variables and does not employ ML (traditional model). Upstart independently validated the traditional model through fair lending testing to ensure that it did not violate antidiscrimination laws. Since the issuance of the NAL, Upstart has worked to answer several key questions, including: • Whether the tested model’s use of alternative data and ML expands access to credit, including lower-priced credit, overall and for various applicant segments, compared to the traditional model. • Whether the tested model’s underwriting or pricing outcomes result in greater disparities than the traditional model with respect to race, ethnicity, sex, or age, and if so, whether applicants in different protected class groups with similar model-predicted default risk actually default at the same rate. Upstart agreed to allow the Bureau to share key highlights from simulations and analyses that it conducted pursuant to its model risk management and compliance plan; the simulations and analyses were not separately replicated by the Bureau. The following results provided by Upstart reflect the net effect of both the alternative data and the ML methodology used in the lender’s model as applied to the lender’s applicant pool. The Bureau shared this information in a blog post in August 2019.15 The results provided from the accessto-credit comparisons show that the tested model approves 27% more applicants than the traditional model, and yields 16% lower average APRs for approved loans. This reported expansion of credit access reflected in the results provided occurs across all tested race, ethnicity, and sex segments resulting in the tested model increasing acceptance rates by 23–29% and decreasing average APRs by 15–17%. In many consumer segments, the results provided show that the tested model significantly expands access to credit compared to the traditional model. Under the tested model, the results provided reflect that: • Near prime consumers with FICO scores from 620 to 660 were approved approximately twice as frequently. • Applicants under 25 years of age are 32% more likely to be approved. • Consumers with incomes under $50,000 are 13% more likely to be approved. With regard to fair lending testing, which compared the tested model with the traditional model, the approval rate and APR analysis results provided for minority, female, and 62 and older applicants showed no disparities that require further fair lending analysis under the compliance plan. The Bureau continues to monitor the Upstart NAL. 14 Consumer Fin. Prot. Bureau, CFPB Announces First No-Action Letter to Upstart Network (Sept. 14, 2017), https://www.consumerfinance.gov/about-us/ newsroom/cfpb-announces-first-no-action-letterupstart-network/. 15 Patrice Alexander Ficklin and Paul Watkins, Consumer Fin. Prot. Bureau, An update on credit access and the Bureau’s first No-Action Letter (Aug. 6, 2019), https://www.consumerfinance.gov/aboutus/blog/update-credit-access-and-no-action-letter/. facilitate use of AI for credit underwriting compatible with adverse action notice requirements. Despite this flexibility, there may still be some regulatory uncertainty about how certain aspects of the adverse action requirements apply in the context of AI/ML. Entities are encouraged to consider the Bureau’s new innovation policies as a means to address these potential compliance issues. The Bureau welcomes continued dialogue with institutions and organizations regarding innovative ways to fulfill adverse action notice requirements when using AI. 1.5 Update on Upstart No-Action Letter 9 15 10 15 VerDate Sep<11>2014 17:46 May 07, 2020 Jkt 250001 27397 PO 00000 Frm 00046 Fmt 4703 Sfmt 4703 E:\FR\FM\08MYN1.SGM 08MYN1 27398 Federal Register / Vol. 85, No. 90 / Friday, May 8, 2020 / Notices 1.6 Tech Sprints Request for Information In September 2019, the Bureau, through collaboration between OI, the Office of Technology and Innovation, and OFLEO, issued a Request for Information (RFI) seeking comments and information to identify opportunities to utilize ‘‘Tech Sprints’’ to encourage regulatory innovation.16 Used successfully by the Financial Conduct Authority in the United Kingdom, Tech Sprints gather regulators, technologists, financial institutions, and subject matter experts from key stakeholders for several days to work together to develop innovative solutions to clearly identified challenges. Small teams include participants from both the regulator and a diversity of entities to ensure the inclusion of regulatory, industry, and technology perspectives. The regulator assigns a specific regulatory compliance or market problem to each team and challenges the teams to solve or mitigate the problem using modern technologies and approaches. The most promising ideas can then be further developed either in collaboration with the regulator or by external parties. Specifically, the RFI stated that the Bureau is interested in using Tech Sprints to: • Leverage cloud solutions, machineautomated compliance checks that allow for independent validation by regulators, and other developments that may reduce or modify the need for regulated entities to transfer data to the Bureau. • Continue to innovate HMDA data submission, processing, and publication to help ease burdens, increase flexibility, and resolve compliance challenges, while satisfying all legal requirements. • Identify new technologies and approaches that can be used by the Bureau to provide more cost-effective oversight of supervised entities, effective evaluation of compliance and risk, and closer interface with financial industry systems and technology that may include the use, for example, of analytical tools in the review of mortgage origination data. • Explore other technological approaches to robust and secure data access or exchange between regulated entities and the Bureau. • Reduce unwarranted regulatory compliance burdens. 16 Consumer Fin. Prot. Bureau, Request for Information Regarding Tech Sprints (Sept. 12, 2019), https://files.consumerfinance.gov/f/ documents/cfpb_rfi_tech-sprints.pdf. VerDate Sep<11>2014 17:46 May 07, 2020 Jkt 250001 In the RFI, the Bureau sought responses to questions, including: • What regulatory compliance issues, problems, procedures, or requirements could benefit from innovation through a Bureau Tech Sprint? • What financial technology or other advances hold the most promise for helping modernize regulatory compliance? • Other than organizing Tech Sprints, what else might the Bureau do to encourage innovation in financial products and services? For example, could advances be encouraged by changes to certain Bureau rules or policies? The comment period closed on November 8, 2019, and the Bureau received 19 comments in response to its RFI. The feedback identified an interest in organizing Tech Sprints in the areas of HMDA, supervision data sharing and submission, automated compliance, third-party technology providers/bankfintech partnerships, consumer disclosures, and regulations. The information provided will help the Bureau identify how stakeholders can work together to create a regulatory environment (1) that allows flexible, efficient, and effective innovation to flourish; (2) where new and/or emerging risks can be identified and managed effectively; and (3) where consumers have the appropriate level of protection and suitable access to the benefits of technological advancement. The information may also help identify responsible innovations that can be implemented in a consumer-friendly way to help serve populations currently underserved by the mainstream credit system. The Bureau expects to announce its first Tech Sprints later in 2020. 2. Outreach: Promoting Fair Lending Compliance and Education Pursuant to the Dodd-Frank Act, the Bureau regularly engages in outreach with stakeholders, including civil rights organizations, consumer advocates, industry, academia, and other government agencies, to: (1) Educate them about fair lending compliance and access to credit issues and (2) hear their views on the Bureau’s work to inform its policy decisions.17 Throughout 2019, OFLEO worked closely with other Bureau offices to execute the Bureau’s fair lending outreach and education efforts. 17 Consumer Fin. Prot. Bureau, Fiscal Year 2020: Annual performance plan and report, and budget overview, Performance goal 2.1.1, at 69 (Feb. 2020), https://files.consumerfinance.gov/f/documents/ cfpb_performance-plan-and-report_fy20.pdf. PO 00000 Frm 00047 Fmt 4703 Sfmt 4703 The Bureau is committed to communicating directly with all stakeholders on its policies, compliance expectations, and fair lending priorities, and to receiving valuable input about fair lending issues and how innovation can promote fair, equitable, and nondiscriminatory access to credit. 2.1 Educating Stakeholders About Fair Lending Compliance and Access to Credit Issues 2.1.1 Bureau Blog Posts, Statements, Reports, and Press Releases The Bureau regularly uses blog posts, statements, reports, and press releases as tools to timely and effectively communicate with consumers and other stakeholders on issues, emerging areas of concern, Bureau initiatives, and more. In 2019, the Bureau published three blog posts related to fair lending including: an update on credit access and the Bureau’s No-Action Letter with Upstart,18 the 2019 report on the Bureau’s Building a Bridge to Credit Visibility symposium,19 and the release of the 2018 Fair Lending Annual Report.20 The Bureau’s blog posts, including those related to fair lending, may be accessed at www.consumerfinance.gov/blog. The Bureau also issued two statements related to fair lending in 2019: a Statement on Collection of Demographic Information by Community Development Financial Institutions,21 and a Joint Statement with Federal Regulators on the Use of Alternative Data in Credit Underwriting.22 In 2019, the Bureau also issued six press releases related to fair lending 18 Patrice Alexander Ficklin and Paul Watkins, Consumer Fin. Prot. Bureau, An update on credit access and the Bureau’s first No-Action Letter (Aug. 6, 2019), https://www.consumerfinance.gov/aboutus/blog/update-credit-access-and-no-action-letter/. 19 Patrice Alexander Ficklin and J. Frank VespaPapaleo, Consumer Fin. Prot. Bureau, A report on the Bureau’s Building a Bridge to Credit Visibility Symposium (July 19, 2019), https:// www.consumerfinance.gov/about-us/blog/reportcredit-visibility-symposium/. 20 Patrice Alexander Ficklin, Encouraging innovation in expanding credit access: 2018 Fair Lending Report to Congress, Consumer Fin. Prot. Bureau (June 28, 2019), https:// www.consumerfinance.gov/about-us/blog/2018-fairlending-report-congress/. 21 Consumer Fin. Prot. Bureau, Statement on Collection of Demographic Information by Community Development Financial Institutions (June. 27, 2019), https://www.consumerfinance.gov/ policy-compliance/guidance/supervisory-guidance/ statement-collection-demographic-informationcommunity-development-financial-institutions/. 22 Consumer Fin. Prot. Bureau, Federal Regulators Issue Joint Statement on the Use of Alternative Data in Credit Underwriting (Dec. 3, 2019), https:// www.consumerfinance.gov/about-us/newsroom/ federal-regulators-issue-joint-statement-usealternative-data-credit-underwriting/. E:\FR\FM\08MYN1.SGM 08MYN1 Federal Register / Vol. 85, No. 90 / Friday, May 8, 2020 / Notices topics including: the Bureau’s announcement regarding its symposia series,23 the release of certain 2018 HMDA data,24 25 the extension of the public comment period for the Advance Notice of Proposed Rulemaking (ANPR) regarding HMDA data points,26 the issuance of a final HMDA Rule,27 the issuance of the Interagency Statement on the Use of Alternative Data in Credit Underwriting,28 and a public enforcement action against Freedom Mortgage Corporation.29 The Bureau’s statements and press releases, including those related to fair lending, may be accessed at www.consumerfinance.gov/ about-us/newsroom. 2.1.2 Bureau Outreach Engagements With Stakeholders Bureau staff participated in 63 outreach engagements throughout 2019 to educate external stakeholders about fair lending compliance and access to credit issues. In most of those engagements, Bureau personnel also received information and feedback on the Bureau’s policy decisions. Specifically, in 2019, the Bureau communicated directly with fair lending, civil rights, consumer and community advocates, and with industry through speeches, panel remarks, presentations, roundtables, a webinar, an onsite HMDA Help Desk, and smaller meetings on issues pertaining to fair, equitable, and nondiscriminatory access to credit. The Bureau also engaged with stakeholders 23 Consumer Fin. Prot. Bureau Announces Symposia Series (Apr. 8, 2019), https:// www.consumerfinance.gov/about-us/newsroom/ bureau-announces-symposia-series/. 24 Consumer Fin. Prot. Bureau, FFIEC Announces Availability of 2018 Data on Mortgage Lending (Aug. 30, 2019), https://www.consumerfinance.gov/ about-us/newsroom/ffiec-announces-availability2018-data-mortgage-lending/. 25 Consumer Fin. Prot. Bureau, HMDA Modified Loan Application Registers Released (Mar. 29, 2019), https://www.consumerfinance.gov/about-us/ newsroom/hmda-modified-loan-applicationregisters-released/. 26 Consumer Fin. Prot. Bureau, CFPB Extends Comment Period for ANPR on HMDA Data Points (Jun. 27, 2019), https://www.consumerfinance.gov/ about-us/newsroom/bureau-extends-commentperiod-anpr-hmda-data-points/. 27 Consumer Fin. Prot. Bureau, Consumer Financial Protection Bureau Issues Final HMDA Rule to Provide Relief to Smaller Institutions (Oct. 10, 2019), https://www.consumerfinance.gov/aboutus/newsroom/bureau-issues-final-hmda-ruleprovide-relief-smaller-institutions/. 28 Federal Regulators Issue Joint Statement on the Use of Alternative Data in Credit Underwriting (Dec. 3, 2019), https://www.consumerfinance.gov/ about-us/newsroom/federal-regulators-issue-jointstatement-use-alternative-data-credit-underwriting/. 29 Consumer Fin. Prot. Bureau, Consumer Financial Protection Bureau Settles with Freedom Mortgage Corporation (Jun. 5, 2019), https:// www.consumerfinance.gov/about-us/newsroom/ bureau-settles-freedom-mortgage-corporation/. VerDate Sep<11>2014 17:46 May 07, 2020 Jkt 250001 through the Bureau’s website, consumerfinance.gov. Some examples of the topics covered include: fair lending supervision and enforcement priorities, innovations in lending, HMDA and Regulation C, small business lending, the Bureau’s Tech Sprints RFI, access to credit for LEP consumers, providing adverse action notices when using ML models, and the use of alternative data. 2.1.3 2019 HMDA Warning Letters In 2019, the Bureau issued warning letters to mortgage-lending institutions indicating that they may be required to collect, record, and report data about their mortgage-lending activity under HMDA and Regulation C, and that they may be in violation of those requirements.30 The letters urged recipients to review their practices to ensure their compliance with all relevant laws. The recipients were encouraged to respond to the Bureau to advise if they have taken, or will take, steps to ensure compliance with the law, or to tell the Bureau if they if they think their activities do not trigger HMDA reporting thresholds. Through these letters the Bureau seeks to increase compliance with HMDA through enhanced education efforts and direct outreach to potentially non-compliant mortgage lenders, and to increase HMDA data quality and completeness through accurate reporting. Since commencing the issuance of the HMDA warning letters more than 140,000 new mortgage loan application registers (LARs) that previously went unreported by the entities have now been reported. The Bureau will follow up on these letters to ensure compliance, as appropriate. 2.1.4 Supervisory Highlights Supervisory Highlights has long been a report that anchors the Bureau’s efforts to communicate about the Bureau’s supervisory activity. In March 2019, the Winter 2019 Supervisory Highlights noted the updates made to HMDA Small Entity Compliance Guide from October 30, 2018.31 At that time, the Bureau updated the HMDA Small Entity Compliance Guide to reflect changes made to the HMDA by section 104(a) of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA). 30 On October 27, 2016, the Bureau issued the first round of HMDA warning letters, https:// www.consumerfinance.gov/about-us/newsroom/ cfpb-warns-financial-institutions-about-potentialmortgage-lending-reporting-failures/. 31 Consumer Fin. Prot. Bureau, Supervisory Highlights Winter 2019 at 19 (March 2019), https:// files.consumerfinance.gov/f/documents/cfpb_ supervisory-highlights_issue-18_032019.pdf. PO 00000 Frm 00048 Fmt 4703 Sfmt 4703 27399 All editions of Supervisory Highlights are available at www.consumerfinance.gov/reports. 2.2 Listening to Stakeholders To Inform the Bureau’s Policy Decisions 2.2.1 Bureau Outreach Engagements With Stakeholders As described above in section 2.1.2, Bureau outreach engagements serve as a vehicle to hear the views of external stakeholders in order to inform the Bureau’s policy decisions. In these events, Bureau staff received feedback from stakeholders on issues pertaining to discrimination and fair, equitable, and nondiscriminatory access to credit. 2.2.2 Bureau Outreach Follow-Up From 2018 Building a Bridge Symposium In follow-up to the Bureau’s September 17, 2018 Building a Bridge to Credit Visibility symposium, and to increase the Bureau’s knowledge base about innovations in small business lending, the Offices of Fair Lending and Small Business Lending Markets held two Fair Lending Roundtables with Minneapolis/St. Paul-area (Twin Cities) stakeholders involved in small business lending. The event was held on May 8, 2019, in Minneapolis, Minnesota. Participants at the Roundtables represented both industry and consumer groups, including community banks, credit unions, and Community Development Financial Institutions (CDFIs) that provide small business credit in the Twin Cities area. Also in attendance were representatives from the Minnesota Credit Union League and Credit Union National Association. Aside from collecting invaluable information that will inform the Bureau’s work and future policymaking, the event introduced the Bureau to certain local organizations in the Twin Cities area that were previously unaware of the Bureau’s work and resources. The event also served as a conduit for bringing together local organizations involved in providing small business microlending in the Twin Cities area that had not previously connected. The Bureau anticipates that these groups will continue to benefit from working together to help small businesses and their communities in the Twin Cities area. 2.2.3 1071 Bureau Symposium on Section In April 2019, the Bureau announced a symposia series exploring consumer protections in today’s dynamic financial E:\FR\FM\08MYN1.SGM 08MYN1 27400 Federal Register / Vol. 85, No. 90 / Friday, May 8, 2020 / Notices services marketplace.32 The series is aimed at stimulating a proactive and transparent dialogue to assist the Bureau in its policy development process, including possible future rulemakings. During each symposium, the Bureau hosts a discussion panel of experts with a variety of viewpoints on the topic. On November 6, 2019, the Bureau held a symposium on section 1071 of the Dodd-Frank Act.33 Section 1071 amended ECOA to require, subject to rules prescribed by the Bureau, financial institutions to collect, report, and make public certain information concerning credit applications made by womenowned, minority-owned, and small businesses. The symposium provided a public forum for the Bureau and the public to hear various perspectives on the small business lending marketplace and the Bureau’s upcoming implementation of section 1071. The event featured remarks by Director Kraninger. The symposium also consisted of two panels of experts. The first panel focused on the current state of, and future outlook for, the small business lending marketplace. The second panel included a discussion of the implementation of section 1071. Additional information regarding this symposium, including the agenda, the panelists’ written statements, and a video of the event is available on the Bureau’s website.34 Information about the Bureau’s efforts to implement section 1071 can be found in section 4.2.2 of this Report. 3. Interagency Coordination and Engagement Throughout 2019, the Bureau coordinated its fair lending regulatory, supervisory, and enforcement activities with other Federal agencies and State regulators to promote consistent, efficient, and effective enforcement of Federal fair lending laws. This interagency engagement sought to address current and emerging fair lending risks. Interagency engagement occurs in numerous ways, including through several interagency organizations. The Federal Financial Institutions Examination Council (FFIEC) is currently chaired by Director 32 Consumer Fin. Prot. Bureau, Consumer Financial Protection Bureau Announces Symposia Series (Apr. 8, 2019), https:// www.consumerfinance.gov/about-us/newsroom/ bureau-announces-symposia-series/. 33 Consumer Fin. Prot. Bureau, CFPB Symposium: Section 1071 of the Dodd-Frank Act (Nov. 6, 2019), https://www.consumerfinance.gov/about-us/events/ archive-past-events/cfpb-symposium-section-1071dodd-frank-act/. 34 Id. VerDate Sep<11>2014 17:46 May 07, 2020 Jkt 250001 Kraninger.35 Through the FFIEC, the Bureau has robust engagement with other partner agencies that focus on fair lending issues. For example, the Bureau currently chairs the FFIEC HMDA/Community Reinvestment Act Data Collection Subcommittee of the FFIEC Task Force on Consumer Compliance (Task Force). The Task Force oversees FFIEC projects and programs involving HMDA data collection and dissemination, the preparation of the annual FFIEC budget for processing services, and the development and implementation of other related HMDA processing projects as directed by the Task Force. Additionally, the Bureau, the Federal Trade Commission (FTC), HUD, FDIC, FRB, NCUA, OCC, DOJ, and the Federal Housing Finance Agency (FHFA), comprise the Interagency Task Force on Fair Lending (Fair Lending Task Force). Currently, the Bureau chairs the Fair Lending Task Force, which meets regularly to discuss fair lending enforcement efforts, share current methods of conducting supervisory and enforcement fair lending activities, and coordinate fair lending policies. Further, the Bureau also participates in the Interagency Working Group on Fair Lending Enforcement, a standing working group of Federal agencies— DOJ, HUD, and FTC—that meets regularly to discuss issues specifically relating to fair lending enforcement. The agencies use these meetings to discuss fair lending developments and trends, methodologies for evaluating fair lending risks and violations, and coordination of fair lending enforcement efforts. In addition to these established interagency working groups, Bureau personnel meet periodically and on an ad hoc basis with DOJ, HUD, and the prudential regulators to coordinate the Bureau’s fair lending work. 4. Guidance and Rulemaking 4.1 HMDA and Regulation C Rulemaking and Guidance 4.1.1 Regulation C 2019 Notice of Proposed Rulemaking and Final Rule In May 2019, the Bureau issued a Notice of Proposed Rulemaking 35 Collectively, the FRB, FDIC, NCUA, OCC, and the Bureau comprise the FFIEC. The FFIEC is a ‘‘formal interagency body empowered to prescribe uniform principles, standards, and report forms for the [F]ederal examination of financial institutions’’ by the member agencies listed above and the State Liaison Committee ‘‘and to make recommendations to promote uniformity in the supervision of financial institutions.’’ Fed. Fin. Inst. Examination Council, http://www.ffiec.gov (last visited March 30, 2020). The State Liaison Committee was added to FFIEC in 2006 as a voting member. PO 00000 Frm 00049 Fmt 4703 Sfmt 4703 (NPRM) 36 proposing two alternatives to amend Regulation C to increase the threshold for reporting data about closed-end mortgage loans. The proposed amendments would increase the threshold so that institutions originating fewer than either 50 closedend mortgage loans, or alternatively, 100 closed-end mortgage loans, in either of the two preceding calendar years would not have to report such data as of January 1, 2020. The proposed rule also proposed to adjust the threshold for reporting data about open-end lines of credit by extending to January 1, 2022, the current temporary threshold of 500 open-end lines of credit and setting a threshold at 200 open-end lines of credit upon the expiration of the proposed extension of the temporary threshold. In October 2019, the Bureau issued a Final Rule 37 amending Regulation C to adjust the threshold for reporting data about open-end lines of credit by extending to January 1, 2022, the current temporary threshold of 500 open-end lines of credit. The Final Rule announced that any change to the closed-end mortgage loan reporting threshold and permanent open-end threshold to take effect upon expiration of the temporary threshold would be addressed in a later rule. The Final Rule also further implements the partial exemptions from HMDA’s requirements that EGRRCPA recently added to HMDA. In August 2018, the Bureau issued an interpretive and procedural rule to implement and clarify the EGRRCPA amendments to HMDA (2018 HMDA Rule).38 The 2018 HMDA Rule clarifies that insured depository institutions and insured credit unions covered by a partial exemption have the option of reporting exempt data fields as long as they report all data fields within any exempt data point for which they report data; clarifies that only loans and lines of credit that are otherwise HMDA reportable count toward the thresholds for the partial exemptions; clarifies which of the data points in Regulation C are covered by the partial exemptions; designates a non-universal loan identifier for partially exempt transactions for institutions that choose not to report a universal loan identifier; and clarifies the exception to the partial exemptions for insured depository 36 Home Mortgage Disclosure (Regulation C), 84 FR 20972 (May 13, 2019). 37 Home Mortgage Disclosure (Regulation C), 84 FR 57946 (Oct. 29, 2019). 38 Partial Exemptions from the Requirements of the Home Mortgage Disclosure Act Under the Economic Growth, Regulatory Relief, and Consumer Protection Act (Regulation C), 83 FR 45325 (Sept. 7, 2018). E:\FR\FM\08MYN1.SGM 08MYN1 Federal Register / Vol. 85, No. 90 / Friday, May 8, 2020 / Notices institutions with less than satisfactory examination histories under the Community Reinvestment Act of 1977. This final rule incorporates into Regulation C these interpretations and procedures, with minor adjustments, by adding new § 1003.3(d) relating to the partial exemptions and making various amendments to the data compilation requirements in § 1003.4. The Final Rule further implements EGRRCPA by addressing certain additional interpretive issues relating to the partial exemptions that the 2018 HMDA Rule did not specifically address, such as how to determine whether a partial exemption applies to a transaction after a merger or acquisition. The provisions in the final rule implementing the EGRRCPA took effect on January 1, 2020. 4.1.2 Regulation C Data Points and Coverage 2019 Advance Notice of Proposed Rulemaking In May 2019, the Bureau issued an ANPR relating to the data points that the Bureau’s 2015 HMDA Rule added to Regulation C or revised to require additional information.39 Additionally, the ANPR relates to the requirement that institutions report certain business- or commercial-purpose transactions under Regulation C. The Bureau currently is reviewing the comments received and expects to issue a Notice of Proposed Rulemaking (NPRM) later in 2020. 4.1.3 HMDA Public Data Disclosure Guidance The Bureau has decided to commence a new notice-and-comment rulemaking to govern HMDA data disclosure. In its 2015 final rule to implement the DoddFrank Act amendments to HMDA, the Bureau adopted a balancing test to determine whether and how HMDA data should be modified prior to its disclosure to the public in order to protect applicant and borrower privacy while also fulfilling HMDA’s public disclosure purposes.40 The Bureau sought comment in 2017 on its proposed application of the balancing test to the 2018 data,41 and issued final policy guidance in late 2018.42 In consideration of stakeholder comments urging that determinations concerning the disclosure of loan-level HMDA data be effectuated through more formal processes, the Bureau has decided to commence a new notice-andcomment rulemaking to govern HMDA 39 Home Mortgage Disclosure (Regulation C), 84 FR 20049 (May 8, 2019). 40 80 FR 66128, 66134 (Oct. 28, 2015). 41 Disclosure of Loan-Level HMDA Data, 82 FR 44586 (Sept. 25, 2017). 42 84 FR 649 (Jan. 31, 2019). VerDate Sep<11>2014 17:46 May 07, 2020 Jkt 250001 data disclosure. The Bureau expects to issue a NPRM later in 2020. The Bureau plans to consider the HMDA data points and public disclosure proposed rules concurrently. 4.1.4 2018 HMDA Data Release In August 2019, on behalf of the FFIEC, the Bureau released data on mortgage lending transactions at U.S. financial institutions covered by HMDA.43 Covered institutions include banks, savings associations, credit unions, and mortgage companies. The HMDA data covers 2018 lending activity. Many of the data points were available for the first time in the 2018 HMDA data. Certain smaller-volume financial institutions are not required to report all these data, pursuant to the EGRRCPA, as described above in section 4.1.1 With the data, the Bureau released two Data Point articles. The first describes the historical data points in the 2018 HMDA data, as well as recent trends in mortgage and housing markets.44 The second introduces the new and revised data points in the 2018 HMDA data and provides some initial observations about the nation’s mortgage market in 2018 based on those new or revised data points.45 Earlier, in March 2019, Modified LARs data were published for approximately 5,400 financial institutions.46 The Modified LARs contain loan-level information for 2018 on individual HMDA filers, modified to protect privacy. 4.1.5 HMDA Guidance and Resources The Bureau created many resources to help facilitate compliance with Regulation C, including an Executive Summary of HMDA rule changes; Small Entity Compliance Guide; Key Dates Timeline, Institutional and Transactional Coverage Charts; Reportable HMDA Data Chart; sample 43 Consumer Fin. Prot. Bureau, FFIEC Announces Availability of 2018 Data on Mortgage Lending (Aug. 30, 2019), https://www.consumerfinance.gov/ about-us/newsroom/ffiec-announces-availability2018-data-mortgage-lending/. 44 Consumer Fin. Prot. Bureau, Data point: 2018 mortgage market activity and trends, (Aug. 30, 2019), https://www.consumerfinance.gov/dataresearch/research-reports/data-point-2018mortgage-market-activity-and-trends/. 45 Consumer Fin. Prot. Bureau, Data Point: Introducing New and Revised Data Points in HMDA (Aug. 30, 2019), https://www.consumerfinance.gov/ data-research/research-reports/introducing-newrevised-data-points-hmda/. 46 Consumer Fin. Prot. Bureau, HMDA Modified Loan Application Registers Released (Mar. 29, 2019), https://www.consumerfinance.gov/about-us/ newsroom/hmda-modified-loan-applicationregisters-released/. PO 00000 Frm 00050 Fmt 4703 Sfmt 4703 27401 data collection form, and Frequently Asked Questions (FAQs), in addition to downloadable Webinars that provide an overview of the HMDA rule. The Bureau also provides on its website an Interactive Bureau Regulations version of Regulation C. HMDA resources are routinely updated throughout the year to ensure HMDA reporters have the most up-todate information. For example, in September 2019, the Bureau released the 2020 Filing Instructions Guide (FIG) and the Supplemental Guide for Quarterly Filers. Together with the FFIEC, in March 2019, the Bureau also published the 2019 edition of the HMDA Getting it Right Guide. The Bureau also worked with the FFIEC to publish data submission resources for HMDA filers and vendors on its Resources for HMDA Filers website. 4.2 ECOA and Regulation B Rulemaking and Guidance 4.2.1 Statement on Collection of Demographic Information by Community Development Financial Institutions In July 2019, the Bureau issued a statement regarding the collection of demographic information by financial institutions that are Community Development Financial Institutions (CDFIs) receiving assistance from the U.S. Department of the Treasury’s Community Development Financial Institutions Fund (CDFI Fund).47 The Bureau became aware that some financial institutions that are certified CDFIs receiving assistance from the CDFI Fund have inquired whether they are subject to ECOA and Regulation B’s general prohibition on a creditor collecting certain information about an applicant for credit, such as the applicant’s race or ethnicity. The statement explains that CDFIs receiving Federal financial assistance from the CDFI Fund may collect demographic information on the individuals the CDFI serves, consistent with the ECOA and its implementing Regulation B, provided the collection of the information is for the purpose of complying with the regulatory requirements of the CDFI Fund. 4.2.2 Small Business Data Collection As described earlier in this report, section 1071 of the Dodd-Frank Act amends ECOA to require, subject to 47 Consumer Fin. Prot. Bureau, Statement on Collection of Demographic Information by Community Development Financial Institutions (July 29, 2019), https://www.consumerfinance.gov/ policy-compliance/guidance/supervisory-guidance/ statement-collection-demographic-informationcommunity-development-financial-institutions/. E:\FR\FM\08MYN1.SGM 08MYN1 27402 Federal Register / Vol. 85, No. 90 / Friday, May 8, 2020 / Notices rules prescribed by the Bureau, financial institutions to collect, report, and make public certain information concerning credit applications made by womenowned, minority-owned, and small businesses. The amendments to ECOA made by the Dodd-Frank Act require that specific data be collected, maintained, and reported, including but not limited to: the type of loan applied for, the amount of credit applied for, the type of action taken with regard to each application, the census tract of the principal place of business of the loan applicant, and the race, sex, and ethnicity of the principal owners of the business. The Dodd-Frank Act also provides authority for the Bureau to require any additional data that the Bureau determines would aid in fulfilling the purposes of section 1071. The Bureau may adopt exceptions to any requirement of section 1071 and may exempt any financial institution from its requirements, as the Bureau deems necessary or appropriate to carry out section 1071’s purposes. The Bureau issued an RFI in 2017 seeking public comment on, among other things, the types of credit products offered, and the types of data currently collected by lenders in this market, and the potential complexity, cost of, and privacy issues related to, small business data collection. In connection with its Spring 2019 rulemaking agenda,48 the Bureau announced its intention to recommence work to develop rules to implement section 1071 of the Dodd-Frank Act. In November 2019, the Bureau hosted a symposium on small business data collection. The information received in response to the 2017 RFI and the symposium will help the Bureau determine how to implement the statute efficiently while minimizing burdens on lenders. In addition, the Bureau is working to conduct a survey of lenders to obtain estimates of one-time costs lenders of varying sizes would incur to collect and report data pursuant to section 1071. The Bureau anticipates that its next step will be the release of materials in advance of convening a panel under the Small Business Regulatory Enforcement Fairness Act (SBREFA), in conjunction with the Office of Management and Budget and the Small Business Administration’s Chief Counsel for Advocacy, to consult with representatives of small businesses that may be affected by the rulemaking.49 48 Consumer Fin. Prot. Bureau, Regulatory Agenda, https://www.consumerfinance.gov/policycompliance/rulemaking/regulatory-agenda/ (Last visited Apr. 29, 2020). 49 Id. VerDate Sep<11>2014 17:46 May 07, 2020 Jkt 250001 Also, during 2019, the Bureau was involved in litigation regarding the implementation of section 1071 of the Dodd-Frank Act. Information concerning the litigation can be found in section 5 of this Report. 5. Amicus Program and Other Litigation The Bureau files amicus curiae, or ‘‘friend-of-the-court,’’ briefs in significant court cases concerning Federal consumer financial protection laws, including ECOA. These amicus briefs provide the courts with the Bureau’s views on significant consumer financial protection issues. Information regarding the Bureau’s amicus program, including a description of the amicus briefs it previously filed, is available on the Bureau’s website.50 During 2019, the Bureau was involved in litigation regarding section 1071 of the Dodd-Frank Act. On May 14, 2019, the California Reinvestment Coalition filed a lawsuit in the U.S. District Court for the Northern District of California against the Bureau seeking an order compelling the Bureau to issue rules implementing section 1071 of the DoddFrank Act. On June 27, 2019, an amended complaint was filed adding the National Association for Latino Community Asset Builders and two individuals as plaintiffs in the lawsuit. The Bureau answered and the parties filed cross-motions for summary judgment. Information about the Bureau’s efforts to implement section 1071 can be found in section 4.2.2 of this Report. 6. Fair Lending Supervision And Enforcement 6.1 Risk-Based Prioritization Because Congress charged the Bureau with responsibility for overseeing many lenders and products, the Bureau has long-used a risk-based approach to prioritize supervisory examinations and enforcement activity. This approach helps ensure that the Bureau focuses on areas that present substantial risk of credit discrimination for consumers.51 This same approach continued in 2019. As part of the prioritization process, the Bureau identifies emerging developments and trends by monitoring key consumer financial markets. If this market intelligence identifies fair lending risks in a particular market that 50 https://www.consumerfinance.gov/policycompliance/amicus/. 51 For additional information regarding the Bureau’s risk-based approach in prioritizing supervisory examinations, see section 3.2.3, RiskBased Approach to Examinations, Supervisory Highlights Summer 2013, http:// files.consumerfinance.gov/f/201308_cfpb_ supervisory-highlights_august.pdf. PO 00000 Frm 00051 Fmt 4703 Sfmt 4703 require further attention, that information is incorporated into the prioritization process to determine the type and extent of attention required to address those risks. The prioritization process incorporates a number of additional factors, including: Tips and leads from industry whistleblowers, advocacy groups, and government agencies; supervisory and enforcement history; consumer complaints; and results from analysis of HMDA and other publicly available data. 6.1.1 Fair Lending Supervisory and Enforcement Priorities Through its annual risk-based prioritization process for 2019, the Bureau focused its fair lending supervision efforts on mortgage origination, small business lending, student loan origination, and debt collection and model use. As in previous years, the Bureau’s mortgage origination work continued to focus on: (1) Redlining and whether lenders intentionally discouraged prospective applicants living or seeking credit in minority neighborhoods from applying for credit; (2) assessing whether there is discrimination in underwriting and pricing processes including steering; and (3) HMDA data integrity and validation (which supports ECOA exams) as well as HMDA diagnostic work (monitoring and assessing new rule compliance). The Bureau’s small business lending work focused on assessing whether (1) there is discrimination in the application, underwriting, and pricing processes, (2) creditors are redlining, and (3) there are weaknesses in fair lending related compliance management systems (CMS). The Bureau’s student loan origination work focused on whether there is discrimination in policies and practices governing underwriting and pricing. In the area of debt collection and model use, the Bureau’s work focused on whether there is discrimination in policies and practices governing auto servicing and credit card collections, including the use of models that predict recovery outcomes. The Bureau also continued to enforce Federal fair lending laws, including ECOA and HMDA. One key area on which the Bureau focused its fair lending enforcement efforts was addressing potential discrimination in mortgage lending, including the unlawful practice of redlining. 6.2 Fair Lending Supervision In 2019, the Bureau initiated 26 supervisory events at financial services E:\FR\FM\08MYN1.SGM 08MYN1 Federal Register / Vol. 85, No. 90 / Friday, May 8, 2020 / Notices institutions under the Bureau’s jurisdiction to determine compliance with Federal laws intended to ensure the fair, equitable, and nondiscriminatory access to credit for both individuals and communities, including ECOA and HMDA. Consistent with BCFP Bulletin 2018– 01,52 the Bureau issues Matters Requiring Attention (MRAs) to correct violations of Federal consumer financial law, remediate harmed consumers, and address weaknesses in CMS that examiners found are directly related to violations of Federal consumer financial law. MRAs include timeframes for periodic reporting of efforts taken to address these matters, as well as expected timeframes for implementation. The Bureau also uses Supervisory Recommendations (SRs) to address the Bureau’s supervisory concerns related to financial institutions’ CMS. SRs do not include provisions for periodic reporting nor expected timelines for implementation. In 2019, the Bureau provided MRAs directing entities to take corrective actions that will be monitored by the Bureau through follow-up supervisory events. The Bureau also issued SRs in 2019 relating to supervisory concerns related to weak fair lending CMS, including weak policies and procedures, risk assessments, fair lending testing, and/or fair lending training. 6.3 Fair Lending Supervisory Developments 6.3.1 Updated ECOA Baseline Review Modules and HMDA Examination Procedures In April 2019, the Bureau updated its ECOA Baseline Review Modules 53 and its HMDA Examination Procedures.54 The ECOA Baseline Review Modules consist of five modules that CFPB examination teams use to conduct ECOA Baseline Reviews to evaluate how institutions’ CMS identify and manage fair lending risks under ECOA. In addition, examination teams use Module 2: Fair Lending CMS to review 52 Consumer Fin. Prot. Bureau, BCFP Bulletin 2018–01: Changes to Types of Supervisory Communications (Sept. 25, 2018), https:// files.consumerfinance.gov/f/documents/bcfp_ bulletin-2018-01_changes-to-supervisorycommunications.pdf. 53 Consumer Fin. Prot. Bureau, ECOA Baseline Review Procedures (Apr. 1, 2019), https:// www.consumerfinance.gov/policy-compliance/ guidance/supervision-examinations/equal-creditopportunity-act-ecoa-baseline-review-procedures/. 54 Consumer Fin. Prot. Bureau, HMDA Examination Procedures (Apr. 1, 2019), https:// www.consumerfinance.gov/policy-compliance/ guidance/supervision-examinations/homemortgage-disclosure-act-hmda-examinationprocedures/. VerDate Sep<11>2014 17:46 May 07, 2020 Jkt 250001 27403 a supervised entity’s fair lending CMS as part of an ECOA Targeted Review, supplemented with additional modules from these procedures as necessary. A HMDA review includes transactional testing for HMDA data accuracy conducted using the HMDA Examination Procedures within the CFPB Supervision and Examination Manual. The updated HMDA Examination Procedures include updates to reflect the Bureau’s interpretive and procedural rule, issued in August 2018, which implements and clarifies section 104 of EGRRCPA. reported inaccurate race, ethnicity, and sex information and that much of Freedom’s loan officers’ recording of this incorrect information was intentional. For example, certain loan officers were told by managers or other loan officers that, when applicants did not provide their race or ethnicity, they should select non-Hispanic white regardless of whether that was accurate. Under the terms of the consent order, Freedom must pay a civil money penalty of $1.75 million and take steps to improve its compliance management to prevent future violations. 6.4 Fair Lending Enforcement The Bureau has the statutory authority to bring actions to enforce the requirements of HMDA and ECOA. In this regard, the Bureau has the authority to engage in research, conduct investigations, file administrative complaints, hold hearings, and adjudicate claims through the Bureau’s administrative enforcement process. The Bureau also has independent litigating authority and can file cases in Federal court alleging violations of fair lending laws under the Bureau’s jurisdiction. Like other Federal bank regulators, the Bureau is required to refer matters to DOJ when it has reason to believe that a creditor has engaged in a pattern or practice of lending discrimination.55 6.4.2 ECOA Referrals to the Department of Justice The Bureau must refer to the DOJ a matter when it has reason to believe that a creditor has engaged in a pattern or practice of lending discrimination in violation of ECOA.57 The Bureau also may refer other potential ECOA violations to the DOJ.58 In 2019, the Bureau referred three matters to the DOJ involving discrimination pursuant to section 706(g) of ECOA. The first referral involved discrimination based on a pattern or practice of redlining in mortgage origination based on race. The second referral resulted from discrimination based on receipt of public assistance income in mortgage origination. Lastly, the third referral involved discrimination based on race and national origin in auto origination. 6.4.1 Public Enforcement Actions In 2019, the Bureau filed one fair lending public enforcement action: In the Matter of Freedom Mortgage Corporation (File No. 2019–BCFP– 0007). The Bureau announced the settlement with Freedom Mortgage Corporation (Freedom) on June 5, 2019.56 Freedom is a mortgage lender with its principal place of business in Mount Laurel, New Jersey, and one of the ten largest HMDA reporters nationwide. For each year from 2013 through 2016, it originated more than 50,000 home-purchase loans, including refinancings of home-purchase loans. Freedom is required to collect, record, and report data on HMDA-covered transactions to comply with HMDA and Regulation C. According to the consent order, the Bureau found that Freedom violated HMDA and Regulation C by submitting mortgage-loan data for 2014 to 2017 that contained numerous and intentional errors. The Bureau found that Freedom 55 15 U.S.C. 1691e(h). Fin. Prot. Bureau, Consumer Financial Protection Bureau Settles with Freedom Mortgage Corporation (Jun, 5, 2019), https:// www.consumerfinance.gov/about-us/newsroom/ bureau-settles-freedom-mortgage-corporation/. 56 Consumer PO 00000 Frm 00052 Fmt 4703 Sfmt 4703 6.4.3 Implementing Enforcement Orders When an enforcement action is resolved through a public enforcement order, the Bureau (together with DOJ, when relevant) takes steps to ensure that the respondent or defendant complies with the requirements of the order. Depending on the specific requirements of individual public enforcement orders, the Bureau may take steps to ensure that borrowers who are eligible for compensation receive remuneration and that the defendant has complied with the injunctive provisions of the order, including implementing a comprehensive fair lending compliance management system. Throughout 2019, the Bureau continued to implement and oversee compliance with the two public enforcement orders described below. On June 29, 2016, the Bureau and the DOJ announced a joint action against BancorpSouth Bank (BancorpSouth) for discriminatory mortgage lending practices that harmed African Americans. The consent order, which was entered by the Court on July 25, 57 15 U.S.C. 1691e(g). 58 Id. E:\FR\FM\08MYN1.SGM 08MYN1 27404 Federal Register / Vol. 85, No. 90 / Friday, May 8, 2020 / Notices 2016, required BancorpSouth to pay $4 million in direct loan subsidies in minority neighborhoods in Memphis; 59 at least $800,000 for community programs, advertising, outreach, and credit repair; $2.78 million to African American consumers who were unlawfully denied or overcharged for loans; and a $3 million penalty.60 On June 25, 2018, the Bureau announced that participation materials were mailed to potentially eligible African American borrowers identified as harmed by BancorpSouth’s alleged discrimination in mortgage lending between 2011 and 2015, notifying them how to receive redress. Starting on March 15, 2019, checks were mailed to African American borrowers who were confirmed as eligible to receive a payment. 59 ‘‘Majority-minority neighborhoods’’ or ‘‘minority neighborhoods’’ refers to census tracts with a minority population greater than 50 percent. 60 Consent Order, United States v. BancorpSouth Bank, No. 1:16-cv-00118–GHD–DAS (N.D. Miss. July 25, 2016), ECF No. 8, https:// files.consumerfinance.gov/f/documents/201606_ cfpb_bancorpSouth-consent-order.pdf. VerDate Sep<11>2014 17:46 May 07, 2020 Jkt 250001 On February 2, 2016, working with the DOJ, the Bureau ordered Toyota Motor Credit Corporation (Toyota Motor Credit) to pay up to $21.9 million in damages to harmed African American and Asian and/or Pacific Islander borrowers for unlawful discrimination.61 On December 29, 2017, participation materials were mailed to potentially eligible borrowers whom Toyota Motor Credit overcharged for their auto loans notifying them how to participate in the settlement fund. On February 1, 2019, checks were mailed to eligible, participating consumers. 6.4.4 Pending Fair Lending Investigations In 2019, the Bureau had a number of ongoing and newly opened fair lending investigations of institutions. One of the Bureau’s key areas of focus was potential discrimination in mortgage lending, including the unlawful practice of redlining. 61 Consent Order In re Toyota Motor Credit Corporation, CFPB No. 2016–CFPB–0002 (Feb. 2, 2016), https://files.consumerfinance.gov/f/201602_ cfpb_consent-order-toyota-motor-creditcorporation.pdf. PO 00000 Frm 00053 Fmt 4703 Sfmt 4703 7. Interagency Reporting on ECOA and HMDA The Bureau is statutorily required to file a report to Congress annually describing the administration of its functions under ECOA, summarizing public enforcement actions taken by other agencies with administrative enforcement responsibilities under ECOA, and providing an assessment of the extent to which compliance with ECOA has been achieved.62 In addition, the Bureau’s annual HMDA reporting requirement calls for the Bureau, in consultation with HUD, to report annually on the utility of HMDA’s requirement that covered lenders itemize certain mortgage loan data.63 7.1 Reporting on ECOA Enforcement The enforcement efforts and compliance assessments made by all the agencies assigned enforcement authority under section 704 of ECOA are discussed in this section. BILLING CODE 4810–AM–P 62 15 63 12 E:\FR\FM\08MYN1.SGM U.S.C. 1691f. U.S.C. 2807. 08MYN1 Federal Register / Vol. 85, No. 90 / Friday, May 8, 2020 / Notices 7.1.1 Public Enforcement Actions The eleven agencies charged with administrative enforcement of ECOA under section 704 are as follows: • CFPB; • FDIC; • FRB; • NCUA; 64 15 U.S.C. 1691c. VerDate Sep<11>2014 17:46 May 07, 2020 Jkt 250001 65 Collectively, the Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC), and the Bureau of Consumer Financial Protection (Bureau) comprise the Federal Financial Institutions Examination Council (FFIEC). The FFIEC is a ‘‘formal interagency body empowered to prescribe uniform principles, standards, and report forms for the [F]ederal examination of financial institutions’’ by the member agencies listed above and the State Liaison Committee ‘‘and to make recommendations PO 00000 Frm 00054 Fmt 4703 Sfmt 4703 • Agricultural Marketing Service (AMS) of the U.S. Department of Agriculture (USDA),66 to promote uniformity in the supervision of financial institutions.’’ Federal Financial Institutions Examination Council, http:// www.ffiec.gov (last visited March 30, 2020). The State Liaison Committee was added to FFIEC in 2006 as a voting member. 66 The Grain Inspection, Packers and Stockyards Administration (GIPSA) was eliminated as a standalone agency within USDA in 2017. The functions E:\FR\FM\08MYN1.SGM Continued 08MYN1 EN08MY20.018</GPH> • OCC; 65 BILLING CODE 4810–AM–C 27405 27406 Federal Register / Vol. 85, No. 90 / Friday, May 8, 2020 / Notices • Department of Transportation (DOT); • Farm Credit Administration (FCA); • Federal Trade Commission (FTC); • Securities and Exchange Commission (SEC); and • Small Business Administration (SBA).67 In 2019, none of the 11 ECOA enforcement agencies brought public enforcement actions for violations of ECOA. Below is an overview of the yearto-year combined ECOA enforcement actions at all Federal agencies since 2012: 7.1.2 Violations Cited During ECOA Examinations TABLE 3—ECOA ENFORCEMENT BY ALL FEDERAL AGENCIES Total public enforcement actions Calendar year 2012 2013 2014 2015 2016 2017 2018 2019 68 17 ................................ ................................ ................................ ................................ ................................ ................................ ................................ ................................ 9 2 5 3 1 0 0 Among institutions examined for compliance with ECOA and Regulation B, the FFIEC agencies reported that the most frequently-cited violations were as follows: TABLE 4—REGULATION B VIOLATIONS CITED BY FFIEC AGENCIES, 2019 Regulation B violations: 2019 FFIEC agencies reporting 12 CFR 1002.4(a), (b), 1002.5(b), 1002.6(b), 1002.7(d)(1): Discrimination ...................................................... Discrimination on a prohibited basis in a credit transaction; Discouragement of prospective applicants on a prohibited basis; A creditor shall not inquire about the race, color, religion, national origin, or sex of an applicant or any other person in connection with a credit transaction; Improperly considering receipt of public assistance in a system of evaluating applicant creditworthiness; Improperly requiring the signature of the applicant’s spouse or other person. 12 CFR 1002.9(a)(1), (a)(2), (b)(1), (b)(2), (c): Adverse Action ........................................................................ Failure to provide notice to the applicant 30 days after receiving a completed application concerning the creditor’s approval of, counteroffer or adverse action on the application; failure to provide appropriate notice to the applicant 30 days after taking adverse action on an incomplete application; failure to provide sufficient information in an adverse action notification, including the specific reasons for the action taken. 12 CFR 1002.12(b)(1): Record Retention ......................................................................................................... Failure to preserve application records. Among institutions examined for compliance with ECOA and Regulation B, the Non-FFIEC agencies reported that CFPB,69 FDIC,70 FRB,71 OCC.72 CFPB,73 FDIC,74 FRB,75 NCUA,76 OCC.77 CFPB,78 NCUA,79 OCC.80 the most frequently-cited violations were as follows: TABLE 5—REGULATION B VIOLATIONS CITED BY NON–FFIEC ECOA AGENCIES, 2019 Regulation B violations: 2019 Non–FFIEC agencies reporting 12 CFR 1002.9(a)(1)(i), (a)(2), (c): Adverse Action ........................................................................................... Failure to provide notice to the applicant 30 days after receiving a completed application concerning the creditor’s approval of, counteroffer or adverse action on the application; failure to provide sufficient information in an adverse action notification, including the specific reasons for the action taken; failure to provide ECOA notice. 12 CFR 1002.13: Failure to request and collect information for monitoring purposes ..................................... The AMS, SEC and the SBA reported that they received no complaints based on ECOA or Regulation B in 2019. In 2019, the DOT Office of Aviation Enforcement and Proceedings reported that it may have received a relatively small number of consumer inquiries or complaints concerning credit matters possibly covered by ECOA, which it processed informally. The FTC is an enforcement agency and does not conduct compliance examinations. previously performed by GIPSA have been incorporated into the Agricultural Marketing Service (AMS), and ECOA reporting now comes from the Packers and Stockyards Division, Fair Trade Practices Program, AMS. 67 15 U.S.C. 1691c. 68 This table identifies public enforcement actions by the year they were initiated (when filed and announced publicly). 69 12 CFR 1002.4(a), 1002.4(b), 1002.6(b). 70 12 CFR 1002.5(b). 71 12 CFR 1002.4(a). 72 12 CFR 1002.7(d)(1). 73 12 CFR 1002.9(a)(1), (a)(2), (b)(1), (b)(2), (c)(1). VerDate Sep<11>2014 17:46 May 07, 2020 Jkt 250001 7.2 Referrals to the Department of Justice In 2019, four FFIEC agencies (CFPB, FDIC, FRB, and NCUA) made a total of seven referrals to the DOJ involving discrimination in violation of ECOA. A brief description of those matters follows. PO 00000 Frm 00055 Fmt 4703 Sfmt 4703 FCA FCA As reported in section 6.4.2, in 2019, the Bureau referred three matters to the DOJ. Those referrals involved: Discrimination based on a pattern or practice of redlining in mortgage origination based on race; discrimination based on receipt of public assistance income in mortgage origination; and discrimination based on race and national origin in auto origination. 74 12 CFR 1002.9(a)(2), (b)(2). CFR 1002.9(a)(1)(i), (c)(2). 76 12 CFR 1002.9(a)(1), (a)(2), (b)(2). 77 12 CFR 1002.9(a)(1)(i), (a)(1)(ii), (a)(2). 78 12 CFR 1002.12(b)(1). 79 12 CFR 1002.12(b). 80 12 CFR 1002.12(b)(1). 75 12 E:\FR\FM\08MYN1.SGM 08MYN1 Federal Register / Vol. 85, No. 90 / Friday, May 8, 2020 / Notices In 2019, the FDIC referred two matters to the DOJ. The first referral involved discrimination in auto origination on the prohibited basis of the applicant’s receipt of income derived from a public assistance program. The second referral involved discrimination in the underwriting of commercial loans on the prohibited basis of religion. The FRB referred one matter to the DOJ in 2019. The referral involved pricing discrimination based on national origin, race, and sex. In 2019, the NCUA referred one matter to the DOJ involving 7.3 discrimination on the prohibited basis of age. TABLE 6—COMBINED ECOA REFERRALS TO DOJ Number of referrals to DOJ Calendar year 2012 2013 2014 2015 2016 2017 2018 2019 ................................ ................................ ................................ ................................ ................................ ................................ ................................ ................................ 12 24 18 16 20 11 2 7 27407 Reporting on HMDA The Bureau’s annual HMDA reporting requirement calls for the Bureau, in consultation with HUD, to report annually on the utility of HMDA’s requirement that covered lenders itemize loan data in order to disclose the number and dollar amount of certain mortgage loans and applications, grouped according to various characteristics.81 The Bureau, in consultation with HUD, finds that itemization and tabulation of these data furthers the purposes of HMDA. APPENDIX A: DEFINED TERMS Term Definition AI ............................................................... AMS .......................................................... ANPR ........................................................ Bureau or CFPB ....................................... CDFI .......................................................... CDFI Fund ................................................ CMS .......................................................... Dodd-Frank Act ......................................... DOJ ........................................................... DOT ........................................................... ECOA ........................................................ EGRRCPA ................................................ FCA ........................................................... FCRA ........................................................ FDIC .......................................................... Federal Reserve Board or FRB ................ FFIEC ........................................................ Artificial Intelligence. Agricultural Marketing Service of the U.S. Department of Agriculture. Advance Notice of Proposed Rulemaking. The Bureau of Consumer Financial Protection or Consumer Financial Protection Bureau. Community Development Financial Institutions. Community Development Financial Institutions Fund. Compliance Management System. The Dodd-Frank Wall Street Reform and Consumer Protection Act. U.S. Department of Justice. U.S. Department of Transportation. The Equal Credit Opportunity Act. Economic Growth, Regulatory Relief, and Consumer Protection Act. Farm Credit Administration. Fair Credit Reporting Act. Federal Deposit Insurance Corporation. Board of Governors of the Federal Reserve System. Federal Financial Institutions Examination Council—the FFIEC member agencies are the Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC), and the Bureau of Consumer Financial Protection (Bureau). The State Liaison Committee was added to FFIEC in 2006 as a voting member. Federal Trade Commission. Grain Inspection, Packers and Stockyards Administration of the U.S. Department of Agriculture. Housing counseling agency. The Home Mortgage Disclosure Act. U.S. Department of Housing and Urban Development. Loan Application Registers. Machine Learning. Matters Requiring Attention. No-Action Letter. The National Credit Union Administration. Notice of Proposed Rulemaking. Office of the Comptroller of the Currency. Office of Fair Lending and Equal Opportunity. Office of Innovation. Request for Information. Small Business Administration. Small Business Regulatory Enforcement Fairness Act. Securities and Exchange Commission. Supervisory Recommendations. U.S. Department of Agriculture. FTC ........................................................... GIPSA ....................................................... HCA ........................................................... HMDA ........................................................ HUD .......................................................... LAR ........................................................... ML ............................................................. MRA .......................................................... NAL ........................................................... NCUA ........................................................ NPRM ........................................................ OCC .......................................................... OFLEO ...................................................... OI .............................................................. RFI ............................................................ SBA ........................................................... SBREFA .................................................... SEC ........................................................... SR ............................................................. USDA ........................................................ Signing Authority The Director of the Bureau, having reviewed and approved this document, is delegating the authority to electronically sign this document to Laura Galban, a Bureau Federal Register 81 12 Liaison, for purposes of publication in the Federal Register. Dated: May 5, 2020. Laura Galban, Federal Register Liaison, Bureau of Consumer Financial Protection. [FR Doc. 2020–09890 Filed 5–7–20; 8:45 am] BILLING CODE 4810–AM–P U.S.C. 2807. VerDate Sep<11>2014 17:46 May 07, 2020 Jkt 250001 PO 00000 Frm 00056 Fmt 4703 Sfmt 9990 E:\FR\FM\08MYN1.SGM 08MYN1

Agencies

[Federal Register Volume 85, Number 90 (Friday, May 8, 2020)]
[Notices]
[Pages 27395-27407]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-09890]



[[Page 27395]]

=======================================================================
-----------------------------------------------------------------------

BUREAU OF CONSUMER FINANCIAL PROTECTION


Fair Lending Report of the Bureau of Consumer Financial 
Protection, April 2020

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Fair Lending Report of the Bureau of Consumer Financial 
Protection.

-----------------------------------------------------------------------

SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is 
issuing its eighth Fair Lending Report of the Bureau of Consumer 
Financial Protection (Fair Lending Report) to Congress. The Bureau is 
committed to ensuring fair, equitable, and nondiscriminatory access to 
credit for both individuals and communities. This report describes our 
fair lending activities in innovation, outreach, prioritization, 
guidance and rulemaking, supervision, and enforcement for calendar year 
2019.

DATES: The Bureau released the April 2020 Fair Lending Report on its 
website on April 30, 2020.

FOR FURTHER INFORMATION CONTACT: Bobby Conner, Senior Policy Counsel, 
Fair Lending, at 1-855-411-2372. If you require this document in an 
alternative electronic format, please contact 
[email protected].

SUPPLEMENTARY INFORMATION: 

1. Fair Lending Report of the Bureau of Consumer Financial Protection, 
April 2020

Message From Kathleen L. Kraninger, Director

    I am pleased to present this Fair Lending Annual Report to Congress 
reflecting the Consumer Financial Protection Bureau's fair lending 
efforts in 2019.
    During the past year, we've worked hard to enhance our fair lending 
efforts by leveraging the authorities provided by Congress and the 
Bureau's resources to be more effective and comprehensively utilized. 
From supervision and enforcement to rulemaking, guidance and education, 
the Bureau is dedicated to using all the tools at its disposal to 
achieve our mission: Fair, equitable, and nondiscriminatory access to 
credit markets for consumers and their communities.
    Through our supervision and enforcement work, we strive to foster a 
culture of institutional compliance and prevention of consumer harm. As 
part of these important efforts, the Bureau continues to vigorously 
enforce fair lending laws, including the Equal Credit Opportunity Act 
and the Home Mortgage Disclosure Act. Through our rulemaking and 
guidance, we articulate to regulated entities clear rules of the road 
that protect consumers while promoting competition, transparency, and 
fair markets for financial products and services. Through our outreach, 
we continue to educate and empower consumers to make informed decisions 
that secure their financial well-being.
    In addition, the Bureau continues to focus on consumer beneficial 
innovation--one of my key priorities--including innovation that 
provides fair, equitable, and non-discriminatory access to credit. In 
2019, the Bureau issued three new policies to help promote innovation 
and facilitate compliance: A revised No-Action Letter Policy, a revised 
Trial Disclosure Program Policy, and the Compliance Assistance Sandbox 
Policy. We encourage innovators to consider these tools to develop new 
financial products and services to better serve consumers.
    One particular fair lending issue ripe for innovative solutions is 
making financial products and services more accessible to consumers who 
are unbanked and underbanked, including those who are Limited English 
Proficient (LEP). By working on these complex issues together, I am 
confident that we can find ways to overcome obstacles and provide 
greater access to credit markets, including to LEP consumers.
    In 2019, we issued a Request for Information regarding ``Tech 
Sprints.'' Tech Sprints gather regulators, technologists, financial 
institutions, and subject matter experts from key stakeholders to 
collaboratively develop innovative solutions to clearly identified 
challenges. We are excited to explore the use of Tech Sprints to 
encourage regulatory innovation and collaborate with stakeholders in 
developing viable solutions to regulatory compliance challenges. I hope 
to announce more about these efforts in the near future.
    Finally, in light of recent events concerning the COVID-19 
pandemic, I am mindful of the need for additional innovative solutions 
that protect America's consumers.
    I am proud of the work that is highlighted in this report and 
grateful to the Bureau staff who have been instrumental in leading 
these efforts. Going forward, we will continue to work on expanding 
responsible access to credit and helping to ensure that all consumers 
are protected from discrimination.

    Sincerely,

Kathleen L. Kraninger

Message From Patrice Alexander Ficklin, Director, Office of Fair 
Lending and Equal Opportunity

    As we reflect on another year and look ahead to the next, the 
Bureau continues to make progress in ensuring fair, equitable, and 
nondiscriminatory access to credit for all consumers in America. To 
that end, I am honored to share our achievements in this, our eighth 
Fair Lending Report.
    During the past year, the Office of Fair Lending and Equal 
Opportunity (OFLEO) continued to coordinate the Bureau's fair lending 
work both internally, and with other governmental agencies, civil 
rights organizations, consumer groups, and industry to encourage 
consumer-friendly innovation to expand access to credit, especially for 
unbanked and underbanked consumers.
    Through our work on innovation, we also aim to provide meaningful 
guidance to institutions on fair lending compliance in the age of 
innovation. In this vein, in 2019, along with four other financial 
regulators, the Bureau issued a joint statement about the use of 
alternative data in underwriting, seeking to expand fair, equitable, 
and nondiscriminatory access to credit. The use of alternative data 
such as cash-flow data may improve the speed and accuracy of credit 
decisions and expand access to fair and affordable credit to consumers 
who currently may not obtain credit in the mainstream credit system, 
and the Bureau encourages responsible use of such data to expand access 
to credit.
    We are particularly excited by our role in launching the Bureau's 
first Tech Sprints, which we hope will facilitate the use of innovative 
technologies to address challenges experienced by consumers, industry 
and regulators.
    I look forward to continuing to work with all stakeholders in 
protecting America's consumers and expanding access to credit. When 
navigating complex fair lending issues, stakeholders should consider 
OFLEO as a resource.
    Sincerely,

Patrice Alexander Ficklin

1. Innovations in Access to Credit

1.1 Collaboration Between the Office of Fair Lending and Equal 
Opportunity and the Office of Innovation
    The Dodd-Frank Wall Street Reform and Consumer Protection Act 
(Dodd-Frank Act) established the Bureau's mission to include both fair 
lending and

[[Page 27396]]

innovation components. Specifically, the Dodd-Frank Act makes clear 
that ``[t]he Bureau is authorized to exercise its authorities under 
[F]ederal consumer financial law for the purposes of ensuring that, 
with respect to consumer financial products and services . . . (2) 
consumers are protected from unfair, deceptive, or abusive acts and 
practices and from discrimination . . . and (5) markets for consumer 
financial products and services operate transparently and efficiently 
to facilitate access and innovation.'' \1\
---------------------------------------------------------------------------

    \1\ Dodd-Frank Act section 1021(b)(2), (5) (emphasis added).
---------------------------------------------------------------------------

    The Bureau is also responsible for providing oversight and 
enforcement of Federal fair lending laws intended to ensure ``fair, 
equitable, and nondiscriminatory access to credit for both individuals 
and communities.'' \2\ The Bureau's Office of Fair Lending and Equal 
Opportunity (OFLEO) coordinates fair lending work both internally and 
externally with Bureau stakeholders, including consumer advocates, 
civil rights organizations, industry, academia, and other government 
agencies. OFLEO also works closely with the Office of Innovation (OI) 
to help encourage innovation in expanding responsible credit access, 
including fair, equitable, and nondiscriminatory access to credit to 
underserved populations.
---------------------------------------------------------------------------

    \2\ Dodd-Frank Act sections 1002(13), 1013(c).
---------------------------------------------------------------------------

    On September 10, 2019, the Bureau, through OI, issued three new 
policies to promote innovation and facilitate compliance: A revised No-
Action Letter (NAL) Policy,\3\ a revised Trial Disclosure Program 
Policy,\4\ and the Compliance Assistance Sandbox Policy.\5\ The Bureau 
is accepting applications under these policies and, as of this report, 
has granted two NALs and a NAL template under the revised 2019 NAL 
Policy.\6\
---------------------------------------------------------------------------

    \3\ Consumer Fin. Prot. Bureau, No-Action Letter Policy (Sept. 
10, 2019), https://files.consumerfinance.gov/f/documents/cfpb_final-policy-on-no-action-letters.pdf; Policy on No-Action Letters, 84 FR 
48229, 48229-48246 (Sept. 6, 2019).
    \4\ Consumer Fin. Prot. Bureau, Policy to Encourage Trial 
Disclosure Programs (Sept. 6, 2019), https://files.consumerfinance.gov/f/documents/cfpb_final-policy-to-encourage-tdp.pdf; Policy to Encourage Trial Disclosure Programs, 84 
FR 48260, 48260-48272 (Sept. 13, 2019).
    \5\ Consumer Fin. Prot. Bureau, Policy on the Compliance 
Assistance Sandbox (Sept. 6, 2019), https://files.consumerfinance.gov/f/documents/cfpb_final-policy-on-cas.pdf; 
Policy on the Compliance Assistance Sandbox, 84 FR 48246, 48246-
48260 (Sept. 13, 2019).
    \6\ Consumer Fin. Prot. Bureau, Granted Applications, https://www.consumerfinance.gov/about-us/innovation/granted-applications/.
---------------------------------------------------------------------------

    As part of its coordination function, OFLEO works with OI regarding 
applications to the Bureau's innovation programs that involve fair 
lending and access to credit issues.
    Review of such applications generally includes consideration of the 
potential fair lending risks associated with the proposed product or 
service, as well as its potential for expanding access to credit for 
underserved or underbanked populations. In addition, after an 
application related to fair lending or access to credit has been 
granted by the Bureau, the two offices continue to work together, for 
example, in reviewing data submitted by the recipient relating to fair 
lending and credit access issues.
    The Bureau encourages consumer-beneficial innovations, including 
those that can help serve populations currently underserved by the 
mainstream credit system. Entities are strongly encouraged to contact 
the Bureau before applying to any of the innovation programs.
1.2 No-Action Letter Issued to HUD Housing Counseling Agencies
    In September 2019, the Bureau issued a NAL under the revised 2019 
NAL policy in response to a request by the U.S. Department of Housing 
and Urban Development (HUD) on behalf of more than 1,600 housing 
counseling agencies (HCAs) that participate in HUD's housing counseling 
program.\7\ The NAL was issued after HUD brought concerns to the Bureau 
about HCAs and mortgage lenders not entering into agreements that would 
fund counseling services due to uncertainty about the application of 
the Real Estate Settlement Procedures Act.
---------------------------------------------------------------------------

    \7\ Consumer Fin. Prot. Bureau, CFPB Issues Policies to 
Facilitate Compliance and Promote Innovation (Sept. 10, 2019), 
https://www.consumerfinance.gov/about-us/newsroom/bureau-issues-policies-facilitate-compliance-promote-innovation/.
---------------------------------------------------------------------------

    The more than 1,600 HUD-certified HCAs serve more than one million 
households annually. They offer pre-purchase homeownership counseling 
to potential borrowers looking to purchase their first home, providing 
important information on fair housing, fair lending, and access to 
credit issues. With this information, potential borrowers may be better 
able to make informed choices based on their financial circumstances to 
achieve safe and sustainable homeownership. The NAL is intended to 
facilitate HCAs entering into such agreements with lenders and will 
enhance the ability of HCAs to obtain funding from additional sources.
    At the same time, in response to HUD's application, the Bureau 
issued a NAL Template for mortgage lenders under the NAL Policy, 
providing a foundation for future NAL applications by mortgage lenders.
1.3 Joint Statement On the Use of Alternative Data in Credit 
Underwriting
    In December 2019, the Bureau, the Board of Governors of the Federal 
Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), 
the Office of the Comptroller of the Currency (OCC), and the National 
Credit Union Administration (NCUA) (collectively ``the agencies'') 
issued a joint statement on the use of alternative data in underwriting 
by banks, credit unions, and non-bank financial firms.\8\
---------------------------------------------------------------------------

    \8\ Consumer Fin. Prot. Bureau, Federal Regulators Issue Joint 
Statement on the Use of Alternative Data in Credit Underwriting 
(Dec. 3, 2019), https://www.consumerfinance.gov/about-us/newsroom/federal-regulators-issue-joint-statement-use-alternative-data-credit-underwriting/.
---------------------------------------------------------------------------

    The purpose of the statement was to provide guidance on the use of 
alternative data in underwriting and, to the extent firms are using or 
contemplating using alternative data, to encourage responsible use of 
such data.
    Alternative data includes information not typically found in 
consumers' credit reports or customarily provided by consumers when 
applying for credit. Alternative data can include cash-flow data 
derived from consumers' bank account records.
    The statement further explains that a well-designed compliance 
management program provides for a thorough analysis of relevant 
consumer protection laws and regulations to ensure firms understand the 
opportunities, risks, and compliance requirements before using 
alternative data. As reflected in the statement, the agencies recognize 
that use of alternative data in a manner consistent with applicable 
consumer protection laws may improve the speed and accuracy of credit 
decisions and may help firms evaluate the creditworthiness of consumers 
who currently may not obtain credit in the mainstream credit system. 
Additionally, the agencies acknowledge that using alternative data may 
enable consumers to obtain additional products and/or more favorable 
pricing/terms based on enhanced assessments of repayment capacity.
1.4 Providing Adverse Action Notices When Using Artificial Intelligence 
and Machine Learning Models
    As part of our consumer protection mission, Congress tasked the 
Bureau with ensuring that markets for consumer financial products and 
services operate transparently and efficiently to facilitate access and 
innovation. One area of innovation the Bureau is monitoring for

[[Page 27397]]

fair lending and access to credit issues is artificial intelligence 
(AI), and more specifically, machine learning (ML), a subset of AI.
    One important issue is how complex AI models address the adverse 
action notice requirements in ECOA and the Fair Credit Reporting Act 
(FCRA). ECOA requires creditors to provide consumers with the main 
reasons for a denial of credit or other adverse action.\9\ FCRA also 
includes adverse action notice requirements.\10\ These notice 
provisions serve important anti-discrimination, educational, and 
accuracy purposes. There may be questions about how institutions can 
comply with these requirements if the reasons driving an AI decision 
are based on complex interrelationships.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 1691(d)(2).
    \10\ 15 U.S.C. 1681m (a).
---------------------------------------------------------------------------

    The existing regulatory framework has built-in flexibility that can 
be compatible with AI algorithms. For example, although a creditor must 
provide the specific reasons for an adverse action, the Official 
Interpretation to ECOA's implementing regulation, Regulation B, 
provides that a creditor need not describe how or why a disclosed 
factor adversely affected an application,\11\ or, for credit scoring 
systems, how the factor relates to creditworthiness.\12\ Thus, the 
Official Interpretation provides an example that a creditor may 
disclose a reason for a denial, even if the relationship of that 
disclosed factor to predicting creditworthiness may be unclear to the 
applicant. This flexibility may be useful to creditors when issuing 
adverse action notices based on AI models where the variables and key 
reasons are known, but which may rely upon non-intuitive relationships.
---------------------------------------------------------------------------

    \11\ 12 CFR pt. 1002, comment 9(b)(2)-3.
    \12\ Id. at 9(b)(2)-4.
---------------------------------------------------------------------------

    Another example of this flexibility is that neither ECOA nor 
Regulation B mandate the use of any particular list of reasons. Indeed, 
the regulation provides that creditors must accurately describe the 
factors actually considered and scored by a creditor, even if those 
reasons are not reflected on the current sample forms.\13\ This 
latitude may be useful to creditors when providing reasons that reflect 
alternative data sources and more complex models.
---------------------------------------------------------------------------

    \13\ 12 CFR pt. 1002, comment 9(b)(2)-2 and app. C, ] 4.
---------------------------------------------------------------------------

    Industry continues to develop tools to accurately explain complex 
AI decisions, and the Bureau expects more methods will emerge. These 
developments hold great promise to enhance the ``explainability'' of AI 
and facilitate use of AI for credit underwriting compatible with 
adverse action notice requirements.
    Despite this flexibility, there may still be some regulatory 
uncertainty about how certain aspects of the adverse action 
requirements apply in the context of AI/ML. Entities are encouraged to 
consider the Bureau's new innovation policies as a means to address 
these potential compliance issues.
    The Bureau welcomes continued dialogue with institutions and 
organizations regarding innovative ways to fulfill adverse action 
notice requirements when using AI.
1.5 Update on Upstart No-Action Letter
    In 2017, the Bureau announced a NAL to Upstart Network, Inc. 
(Upstart), a company that uses alternative data and machine learning in 
making credit underwriting and pricing decisions.\14\ Upstart's 
underwriting model uses traditional underwriting data and various 
categories of alternative data, including information related to 
borrowers' education and employment history. The NAL, approved under 
the Bureau's 2016 NAL policy, references the application of ECOA and 
Regulation B to Upstart's use of alternative data and ML for its 
underwriting and pricing model. This NAL is specific to the facts and 
circumstances of Upstart and does not serve as an endorsement of the 
use of any particular variables or modeling techniques in credit 
underwriting and pricing. In addition, the NAL does not serve as an 
endorsement of Upstart or the products or services it offers.
---------------------------------------------------------------------------

    \14\ Consumer Fin. Prot. Bureau, CFPB Announces First No-Action 
Letter to Upstart Network (Sept. 14, 2017), https://www.consumerfinance.gov/about-us/newsroom/cfpb-announces-first-no-action-letter-upstart-network/.
---------------------------------------------------------------------------

    As a condition for receiving the NAL, Upstart agreed to a model 
risk management and compliance plan that requires it to analyze and 
appropriately address risks to consumers, as well as assess the real-
world impact of alternative data and ML. Pursuant to the NAL, Upstart 
provides the Bureau with information comparing outcomes from its 
underwriting and pricing model (tested model) against outcomes from a 
hypothetical model that uses traditional application and credit file 
variables and does not employ ML (traditional model). Upstart 
independently validated the traditional model through fair lending 
testing to ensure that it did not violate antidiscrimination laws.
    Since the issuance of the NAL, Upstart has worked to answer several 
key questions, including:
     Whether the tested model's use of alternative data and ML 
expands access to credit, including lower-priced credit, overall and 
for various applicant segments, compared to the traditional model.
     Whether the tested model's underwriting or pricing 
outcomes result in greater disparities than the traditional model with 
respect to race, ethnicity, sex, or age, and if so, whether applicants 
in different protected class groups with similar model-predicted 
default risk actually default at the same rate.
    Upstart agreed to allow the Bureau to share key highlights from 
simulations and analyses that it conducted pursuant to its model risk 
management and compliance plan; the simulations and analyses were not 
separately replicated by the Bureau. The following results provided by 
Upstart reflect the net effect of both the alternative data and the ML 
methodology used in the lender's model as applied to the lender's 
applicant pool. The Bureau shared this information in a blog post in 
August 2019.\15\
---------------------------------------------------------------------------

    \15\ Patrice Alexander Ficklin and Paul Watkins, Consumer Fin. 
Prot. Bureau, An update on credit access and the Bureau's first No-
Action Letter (Aug. 6, 2019), https://www.consumerfinance.gov/about-us/blog/update-credit-access-and-no-action-letter/.
---------------------------------------------------------------------------

    The results provided from the access-to-credit comparisons show 
that the tested model approves 27% more applicants than the traditional 
model, and yields 16% lower average APRs for approved loans.
    This reported expansion of credit access reflected in the results 
provided occurs across all tested race, ethnicity, and sex segments 
resulting in the tested model increasing acceptance rates by 23-29% and 
decreasing average APRs by 15-17%.
    In many consumer segments, the results provided show that the 
tested model significantly expands access to credit compared to the 
traditional model. Under the tested model, the results provided reflect 
that:
     Near prime consumers with FICO scores from 620 to 660 were 
approved approximately twice as frequently.
     Applicants under 25 years of age are 32% more likely to be 
approved.
     Consumers with incomes under $50,000 are 13% more likely 
to be approved.
    With regard to fair lending testing, which compared the tested 
model with the traditional model, the approval rate and APR analysis 
results provided for minority, female, and 62 and older applicants 
showed no disparities that require further fair lending analysis under 
the compliance plan. The Bureau continues to monitor the Upstart NAL.

[[Page 27398]]

1.6 Tech Sprints Request for Information
    In September 2019, the Bureau, through collaboration between OI, 
the Office of Technology and Innovation, and OFLEO, issued a Request 
for Information (RFI) seeking comments and information to identify 
opportunities to utilize ``Tech Sprints'' to encourage regulatory 
innovation.\16\
---------------------------------------------------------------------------

    \16\ Consumer Fin. Prot. Bureau, Request for Information 
Regarding Tech Sprints (Sept. 12, 2019), https://files.consumerfinance.gov/f/documents/cfpb_rfi_tech-sprints.pdf.
---------------------------------------------------------------------------

    Used successfully by the Financial Conduct Authority in the United 
Kingdom, Tech Sprints gather regulators, technologists, financial 
institutions, and subject matter experts from key stakeholders for 
several days to work together to develop innovative solutions to 
clearly identified challenges. Small teams include participants from 
both the regulator and a diversity of entities to ensure the inclusion 
of regulatory, industry, and technology perspectives. The regulator 
assigns a specific regulatory compliance or market problem to each team 
and challenges the teams to solve or mitigate the problem using modern 
technologies and approaches. The most promising ideas can then be 
further developed either in collaboration with the regulator or by 
external parties.
    Specifically, the RFI stated that the Bureau is interested in using 
Tech Sprints to:
     Leverage cloud solutions, machine-automated compliance 
checks that allow for independent validation by regulators, and other 
developments that may reduce or modify the need for regulated entities 
to transfer data to the Bureau.
     Continue to innovate HMDA data submission, processing, and 
publication to help ease burdens, increase flexibility, and resolve 
compliance challenges, while satisfying all legal requirements.
     Identify new technologies and approaches that can be used 
by the Bureau to provide more cost-effective oversight of supervised 
entities, effective evaluation of compliance and risk, and closer 
interface with financial industry systems and technology that may 
include the use, for example, of analytical tools in the review of 
mortgage origination data.
     Explore other technological approaches to robust and 
secure data access or exchange between regulated entities and the 
Bureau.
     Reduce unwarranted regulatory compliance burdens.
    In the RFI, the Bureau sought responses to questions, including:
     What regulatory compliance issues, problems, procedures, 
or requirements could benefit from innovation through a Bureau Tech 
Sprint?
     What financial technology or other advances hold the most 
promise for helping modernize regulatory compliance?
     Other than organizing Tech Sprints, what else might the 
Bureau do to encourage innovation in financial products and services? 
For example, could advances be encouraged by changes to certain Bureau 
rules or policies?
    The comment period closed on November 8, 2019, and the Bureau 
received 19 comments in response to its RFI. The feedback identified an 
interest in organizing Tech Sprints in the areas of HMDA, supervision 
data sharing and submission, automated compliance, third-party 
technology providers/bank-fintech partnerships, consumer disclosures, 
and regulations.
    The information provided will help the Bureau identify how 
stakeholders can work together to create a regulatory environment (1) 
that allows flexible, efficient, and effective innovation to flourish; 
(2) where new and/or emerging risks can be identified and managed 
effectively; and (3) where consumers have the appropriate level of 
protection and suitable access to the benefits of technological 
advancement. The information may also help identify responsible 
innovations that can be implemented in a consumer-friendly way to help 
serve populations currently underserved by the mainstream credit 
system. The Bureau expects to announce its first Tech Sprints later in 
2020.

2. Outreach: Promoting Fair Lending Compliance and Education

    Pursuant to the Dodd-Frank Act, the Bureau regularly engages in 
outreach with stakeholders, including civil rights organizations, 
consumer advocates, industry, academia, and other government agencies, 
to: (1) Educate them about fair lending compliance and access to credit 
issues and (2) hear their views on the Bureau's work to inform its 
policy decisions.\17\
---------------------------------------------------------------------------

    \17\ Consumer Fin. Prot. Bureau, Fiscal Year 2020: Annual 
performance plan and report, and budget overview, Performance goal 
2.1.1, at 69 (Feb. 2020), https://files.consumerfinance.gov/f/documents/cfpb_performance-plan-and-report_fy20.pdf.
---------------------------------------------------------------------------

    Throughout 2019, OFLEO worked closely with other Bureau offices to 
execute the Bureau's fair lending outreach and education efforts.
    The Bureau is committed to communicating directly with all 
stakeholders on its policies, compliance expectations, and fair lending 
priorities, and to receiving valuable input about fair lending issues 
and how innovation can promote fair, equitable, and nondiscriminatory 
access to credit.
2.1 Educating Stakeholders About Fair Lending Compliance and Access to 
Credit Issues
2.1.1 Bureau Blog Posts, Statements, Reports, and Press Releases
    The Bureau regularly uses blog posts, statements, reports, and 
press releases as tools to timely and effectively communicate with 
consumers and other stakeholders on issues, emerging areas of concern, 
Bureau initiatives, and more. In 2019, the Bureau published three blog 
posts related to fair lending including: an update on credit access and 
the Bureau's No-Action Letter with Upstart,\18\ the 2019 report on the 
Bureau's Building a Bridge to Credit Visibility symposium,\19\ and the 
release of the 2018 Fair Lending Annual Report.\20\ The Bureau's blog 
posts, including those related to fair lending, may be accessed at 
www.consumerfinance.gov/blog.
---------------------------------------------------------------------------

    \18\ Patrice Alexander Ficklin and Paul Watkins, Consumer Fin. 
Prot. Bureau, An update on credit access and the Bureau's first No-
Action Letter (Aug. 6, 2019), https://www.consumerfinance.gov/about-us/blog/update-credit-access-and-no-action-letter/.
    \19\ Patrice Alexander Ficklin and J. Frank Vespa-Papaleo, 
Consumer Fin. Prot. Bureau, A report on the Bureau's Building a 
Bridge to Credit Visibility Symposium (July 19, 2019), https://www.consumerfinance.gov/about-us/blog/report-credit-visibility-symposium/.
    \20\ Patrice Alexander Ficklin, Encouraging innovation in 
expanding credit access: 2018 Fair Lending Report to Congress, 
Consumer Fin. Prot. Bureau (June 28, 2019), https://www.consumerfinance.gov/about-us/blog/2018-fair-lending-report-congress/.
---------------------------------------------------------------------------

    The Bureau also issued two statements related to fair lending in 
2019: a Statement on Collection of Demographic Information by Community 
Development Financial Institutions,\21\ and a Joint Statement with 
Federal Regulators on the Use of Alternative Data in Credit 
Underwriting.\22\
---------------------------------------------------------------------------

    \21\ Consumer Fin. Prot. Bureau, Statement on Collection of 
Demographic Information by Community Development Financial 
Institutions (June. 27, 2019), https://www.consumerfinance.gov/policy-compliance/guidance/supervisory-guidance/statement-collection-demographic-information-community-development-financial-institutions/.
    \22\ Consumer Fin. Prot. Bureau, Federal Regulators Issue Joint 
Statement on the Use of Alternative Data in Credit Underwriting 
(Dec. 3, 2019), https://www.consumerfinance.gov/about-us/newsroom/federal-regulators-issue-joint-statement-use-alternative-data-credit-underwriting/.
---------------------------------------------------------------------------

    In 2019, the Bureau also issued six press releases related to fair 
lending

[[Page 27399]]

topics including: the Bureau's announcement regarding its symposia 
series,\23\ the release of certain 2018 HMDA data,\24\ \25\ the 
extension of the public comment period for the Advance Notice of 
Proposed Rulemaking (ANPR) regarding HMDA data points,\26\ the issuance 
of a final HMDA Rule,\27\ the issuance of the Interagency Statement on 
the Use of Alternative Data in Credit Underwriting,\28\ and a public 
enforcement action against Freedom Mortgage Corporation.\29\ The 
Bureau's statements and press releases, including those related to fair 
lending, may be accessed at www.consumerfinance.gov/about-us/newsroom.
---------------------------------------------------------------------------

    \23\ Consumer Fin. Prot. Bureau Announces Symposia Series (Apr. 
8, 2019), https://www.consumerfinance.gov/about-us/newsroom/bureau-announces-symposia-series/.
    \24\ Consumer Fin. Prot. Bureau, FFIEC Announces Availability of 
2018 Data on Mortgage Lending (Aug. 30, 2019), https://www.consumerfinance.gov/about-us/newsroom/ffiec-announces-availability-2018-data-mortgage-lending/.
    \25\ Consumer Fin. Prot. Bureau, HMDA Modified Loan Application 
Registers Released (Mar. 29, 2019), https://www.consumerfinance.gov/about-us/newsroom/hmda-modified-loan-application-registers-released/.
    \26\ Consumer Fin. Prot. Bureau, CFPB Extends Comment Period for 
ANPR on HMDA Data Points (Jun. 27, 2019), https://www.consumerfinance.gov/about-us/newsroom/bureau-extends-comment-period-anpr-hmda-data-points/.
    \27\ Consumer Fin. Prot. Bureau, Consumer Financial Protection 
Bureau Issues Final HMDA Rule to Provide Relief to Smaller 
Institutions (Oct. 10, 2019), https://www.consumerfinance.gov/about-us/newsroom/bureau-issues-final-hmda-rule-provide-relief-smaller-institutions/.
    \28\ Federal Regulators Issue Joint Statement on the Use of 
Alternative Data in Credit Underwriting (Dec. 3, 2019), https://www.consumerfinance.gov/about-us/newsroom/federal-regulators-issue-joint-statement-use-alternative-data-credit-underwriting/.
    \29\ Consumer Fin. Prot. Bureau, Consumer Financial Protection 
Bureau Settles with Freedom Mortgage Corporation (Jun. 5, 2019), 
https://www.consumerfinance.gov/about-us/newsroom/bureau-settles-freedom-mortgage-corporation/.
---------------------------------------------------------------------------

2.1.2 Bureau Outreach Engagements With Stakeholders
    Bureau staff participated in 63 outreach engagements throughout 
2019 to educate external stakeholders about fair lending compliance and 
access to credit issues. In most of those engagements, Bureau personnel 
also received information and feedback on the Bureau's policy 
decisions.
    Specifically, in 2019, the Bureau communicated directly with fair 
lending, civil rights, consumer and community advocates, and with 
industry through speeches, panel remarks, presentations, roundtables, a 
webinar, an onsite HMDA Help Desk, and smaller meetings on issues 
pertaining to fair, equitable, and nondiscriminatory access to credit. 
The Bureau also engaged with stakeholders through the Bureau's website, 
consumerfinance.gov. Some examples of the topics covered include: fair 
lending supervision and enforcement priorities, innovations in lending, 
HMDA and Regulation C, small business lending, the Bureau's Tech 
Sprints RFI, access to credit for LEP consumers, providing adverse 
action notices when using ML models, and the use of alternative data.
2.1.3 2019 HMDA Warning Letters
    In 2019, the Bureau issued warning letters to mortgage-lending 
institutions indicating that they may be required to collect, record, 
and report data about their mortgage-lending activity under HMDA and 
Regulation C, and that they may be in violation of those 
requirements.\30\ The letters urged recipients to review their 
practices to ensure their compliance with all relevant laws. The 
recipients were encouraged to respond to the Bureau to advise if they 
have taken, or will take, steps to ensure compliance with the law, or 
to tell the Bureau if they if they think their activities do not 
trigger HMDA reporting thresholds.
---------------------------------------------------------------------------

    \30\ On October 27, 2016, the Bureau issued the first round of 
HMDA warning letters, https://www.consumerfinance.gov/about-us/newsroom/cfpb-warns-financial-institutions-about-potential-mortgage-lending-reporting-failures/.
---------------------------------------------------------------------------

    Through these letters the Bureau seeks to increase compliance with 
HMDA through enhanced education efforts and direct outreach to 
potentially non-compliant mortgage lenders, and to increase HMDA data 
quality and completeness through accurate reporting. Since commencing 
the issuance of the HMDA warning letters more than 140,000 new mortgage 
loan application registers (LARs) that previously went unreported by 
the entities have now been reported. The Bureau will follow up on these 
letters to ensure compliance, as appropriate.
2.1.4 Supervisory Highlights
    Supervisory Highlights has long been a report that anchors the 
Bureau's efforts to communicate about the Bureau's supervisory 
activity. In March 2019, the Winter 2019 Supervisory Highlights noted 
the updates made to HMDA Small Entity Compliance Guide from October 30, 
2018.\31\ At that time, the Bureau updated the HMDA Small Entity 
Compliance Guide to reflect changes made to the HMDA by section 104(a) 
of the Economic Growth, Regulatory Relief, and Consumer Protection Act 
(EGRRCPA).
---------------------------------------------------------------------------

    \31\ Consumer Fin. Prot. Bureau, Supervisory Highlights Winter 
2019 at 19 (March 2019), https://files.consumerfinance.gov/f/documents/cfpb_supervisory-highlights_issue-18_032019.pdf.
---------------------------------------------------------------------------

    All editions of Supervisory Highlights are available at 
www.consumerfinance.gov/reports.
2.2 Listening to Stakeholders To Inform the Bureau's Policy Decisions
2.2.1 Bureau Outreach Engagements With Stakeholders
    As described above in section 2.1.2, Bureau outreach engagements 
serve as a vehicle to hear the views of external stakeholders in order 
to inform the Bureau's policy decisions. In these events, Bureau staff 
received feedback from stakeholders on issues pertaining to 
discrimination and fair, equitable, and nondiscriminatory access to 
credit.
2.2.2 Bureau Outreach Follow-Up From 2018 Building a Bridge Symposium
    In follow-up to the Bureau's September 17, 2018 Building a Bridge 
to Credit Visibility symposium, and to increase the Bureau's knowledge 
base about innovations in small business lending, the Offices of Fair 
Lending and Small Business Lending Markets held two Fair Lending 
Roundtables with Minneapolis/St. Paul-area (Twin Cities) stakeholders 
involved in small business lending. The event was held on May 8, 2019, 
in Minneapolis, Minnesota. Participants at the Roundtables represented 
both industry and consumer groups, including community banks, credit 
unions, and Community Development Financial Institutions (CDFIs) that 
provide small business credit in the Twin Cities area. Also in 
attendance were representatives from the Minnesota Credit Union League 
and Credit Union National Association.
    Aside from collecting invaluable information that will inform the 
Bureau's work and future policymaking, the event introduced the Bureau 
to certain local organizations in the Twin Cities area that were 
previously unaware of the Bureau's work and resources. The event also 
served as a conduit for bringing together local organizations involved 
in providing small business microlending in the Twin Cities area that 
had not previously connected. The Bureau anticipates that these groups 
will continue to benefit from working together to help small businesses 
and their communities in the Twin Cities area.
2.2.3 Bureau Symposium on Section 1071
    In April 2019, the Bureau announced a symposia series exploring 
consumer protections in today's dynamic financial

[[Page 27400]]

services marketplace.\32\ The series is aimed at stimulating a 
proactive and transparent dialogue to assist the Bureau in its policy 
development process, including possible future rulemakings. During each 
symposium, the Bureau hosts a discussion panel of experts with a 
variety of viewpoints on the topic.
---------------------------------------------------------------------------

    \32\ Consumer Fin. Prot. Bureau, Consumer Financial Protection 
Bureau Announces Symposia Series (Apr. 8, 2019), https://www.consumerfinance.gov/about-us/newsroom/bureau-announces-symposia-series/.
---------------------------------------------------------------------------

    On November 6, 2019, the Bureau held a symposium on section 1071 of 
the Dodd-Frank Act.\33\ Section 1071 amended ECOA to require, subject 
to rules prescribed by the Bureau, financial institutions to collect, 
report, and make public certain information concerning credit 
applications made by women-owned, minority-owned, and small businesses. 
The symposium provided a public forum for the Bureau and the public to 
hear various perspectives on the small business lending marketplace and 
the Bureau's upcoming implementation of section 1071.
---------------------------------------------------------------------------

    \33\ Consumer Fin. Prot. Bureau, CFPB Symposium: Section 1071 of 
the Dodd-Frank Act (Nov. 6, 2019), https://www.consumerfinance.gov/about-us/events/archive-past-events/cfpb-symposium-section-1071-dodd-frank-act/.
---------------------------------------------------------------------------

    The event featured remarks by Director Kraninger. The symposium 
also consisted of two panels of experts. The first panel focused on the 
current state of, and future outlook for, the small business lending 
marketplace. The second panel included a discussion of the 
implementation of section 1071. Additional information regarding this 
symposium, including the agenda, the panelists' written statements, and 
a video of the event is available on the Bureau's website.\34\ 
Information about the Bureau's efforts to implement section 1071 can be 
found in section 4.2.2 of this Report.
---------------------------------------------------------------------------

    \34\ Id.
---------------------------------------------------------------------------

3. Interagency Coordination and Engagement

    Throughout 2019, the Bureau coordinated its fair lending 
regulatory, supervisory, and enforcement activities with other Federal 
agencies and State regulators to promote consistent, efficient, and 
effective enforcement of Federal fair lending laws. This interagency 
engagement sought to address current and emerging fair lending risks. 
Interagency engagement occurs in numerous ways, including through 
several interagency organizations.
    The Federal Financial Institutions Examination Council (FFIEC) is 
currently chaired by Director Kraninger.\35\ Through the FFIEC, the 
Bureau has robust engagement with other partner agencies that focus on 
fair lending issues.
---------------------------------------------------------------------------

    \35\ Collectively, the FRB, FDIC, NCUA, OCC, and the Bureau 
comprise the FFIEC. The FFIEC is a ``formal interagency body 
empowered to prescribe uniform principles, standards, and report 
forms for the [F]ederal examination of financial institutions'' by 
the member agencies listed above and the State Liaison Committee 
``and to make recommendations to promote uniformity in the 
supervision of financial institutions.'' Fed. Fin. Inst. Examination 
Council, http://www.ffiec.gov (last visited March 30, 2020). The 
State Liaison Committee was added to FFIEC in 2006 as a voting 
member.
---------------------------------------------------------------------------

    For example, the Bureau currently chairs the FFIEC HMDA/Community 
Reinvestment Act Data Collection Subcommittee of the FFIEC Task Force 
on Consumer Compliance (Task Force). The Task Force oversees FFIEC 
projects and programs involving HMDA data collection and dissemination, 
the preparation of the annual FFIEC budget for processing services, and 
the development and implementation of other related HMDA processing 
projects as directed by the Task Force.
    Additionally, the Bureau, the Federal Trade Commission (FTC), HUD, 
FDIC, FRB, NCUA, OCC, DOJ, and the Federal Housing Finance Agency 
(FHFA), comprise the Interagency Task Force on Fair Lending (Fair 
Lending Task Force). Currently, the Bureau chairs the Fair Lending Task 
Force, which meets regularly to discuss fair lending enforcement 
efforts, share current methods of conducting supervisory and 
enforcement fair lending activities, and coordinate fair lending 
policies.
    Further, the Bureau also participates in the Interagency Working 
Group on Fair Lending Enforcement, a standing working group of Federal 
agencies--DOJ, HUD, and FTC--that meets regularly to discuss issues 
specifically relating to fair lending enforcement. The agencies use 
these meetings to discuss fair lending developments and trends, 
methodologies for evaluating fair lending risks and violations, and 
coordination of fair lending enforcement efforts.
    In addition to these established interagency working groups, Bureau 
personnel meet periodically and on an ad hoc basis with DOJ, HUD, and 
the prudential regulators to coordinate the Bureau's fair lending work.

4. Guidance and Rulemaking

4.1 HMDA and Regulation C Rulemaking and Guidance
4.1.1 Regulation C 2019 Notice of Proposed Rulemaking and Final Rule
    In May 2019, the Bureau issued a Notice of Proposed Rulemaking 
(NPRM) \36\ proposing two alternatives to amend Regulation C to 
increase the threshold for reporting data about closed-end mortgage 
loans. The proposed amendments would increase the threshold so that 
institutions originating fewer than either 50 closed-end mortgage 
loans, or alternatively, 100 closed-end mortgage loans, in either of 
the two preceding calendar years would not have to report such data as 
of January 1, 2020. The proposed rule also proposed to adjust the 
threshold for reporting data about open-end lines of credit by 
extending to January 1, 2022, the current temporary threshold of 500 
open-end lines of credit and setting a threshold at 200 open-end lines 
of credit upon the expiration of the proposed extension of the 
temporary threshold.
---------------------------------------------------------------------------

    \36\ Home Mortgage Disclosure (Regulation C), 84 FR 20972 (May 
13, 2019).
---------------------------------------------------------------------------

    In October 2019, the Bureau issued a Final Rule \37\ amending 
Regulation C to adjust the threshold for reporting data about open-end 
lines of credit by extending to January 1, 2022, the current temporary 
threshold of 500 open-end lines of credit. The Final Rule announced 
that any change to the closed-end mortgage loan reporting threshold and 
permanent open-end threshold to take effect upon expiration of the 
temporary threshold would be addressed in a later rule.
---------------------------------------------------------------------------

    \37\ Home Mortgage Disclosure (Regulation C), 84 FR 57946 (Oct. 
29, 2019).
---------------------------------------------------------------------------

    The Final Rule also further implements the partial exemptions from 
HMDA's requirements that EGRRCPA recently added to HMDA. In August 
2018, the Bureau issued an interpretive and procedural rule to 
implement and clarify the EGRRCPA amendments to HMDA (2018 HMDA 
Rule).\38\ The 2018 HMDA Rule clarifies that insured depository 
institutions and insured credit unions covered by a partial exemption 
have the option of reporting exempt data fields as long as they report 
all data fields within any exempt data point for which they report 
data; clarifies that only loans and lines of credit that are otherwise 
HMDA reportable count toward the thresholds for the partial exemptions; 
clarifies which of the data points in Regulation C are covered by the 
partial exemptions; designates a non-universal loan identifier for 
partially exempt transactions for institutions that choose not to 
report a universal loan identifier; and clarifies the exception to the 
partial exemptions for insured depository

[[Page 27401]]

institutions with less than satisfactory examination histories under 
the Community Reinvestment Act of 1977. This final rule incorporates 
into Regulation C these interpretations and procedures, with minor 
adjustments, by adding new Sec.  [thinsp]1003.3(d) relating to the 
partial exemptions and making various amendments to the data 
compilation requirements in Sec.  [thinsp]1003.4. The Final Rule 
further implements EGRRCPA by addressing certain additional 
interpretive issues relating to the partial exemptions that the 2018 
HMDA Rule did not specifically address, such as how to determine 
whether a partial exemption applies to a transaction after a merger or 
acquisition. The provisions in the final rule implementing the EGRRCPA 
took effect on January 1, 2020.
---------------------------------------------------------------------------

    \38\ Partial Exemptions from the Requirements of the Home 
Mortgage Disclosure Act Under the Economic Growth, Regulatory 
Relief, and Consumer Protection Act (Regulation C), 83 FR 45325 
(Sept. 7, 2018).
---------------------------------------------------------------------------

4.1.2 Regulation C Data Points and Coverage 2019 Advance Notice of 
Proposed Rulemaking
    In May 2019, the Bureau issued an ANPR relating to the data points 
that the Bureau's 2015 HMDA Rule added to Regulation C or revised to 
require additional information.\39\ Additionally, the ANPR relates to 
the requirement that institutions report certain business- or 
commercial-purpose transactions under Regulation C. The Bureau 
currently is reviewing the comments received and expects to issue a 
Notice of Proposed Rulemaking (NPRM) later in 2020.
---------------------------------------------------------------------------

    \39\ Home Mortgage Disclosure (Regulation C), 84 FR 20049 (May 
8, 2019).
---------------------------------------------------------------------------

4.1.3 HMDA Public Data Disclosure Guidance
    The Bureau has decided to commence a new notice-and-comment 
rulemaking to govern HMDA data disclosure. In its 2015 final rule to 
implement the Dodd-Frank Act amendments to HMDA, the Bureau adopted a 
balancing test to determine whether and how HMDA data should be 
modified prior to its disclosure to the public in order to protect 
applicant and borrower privacy while also fulfilling HMDA's public 
disclosure purposes.\40\ The Bureau sought comment in 2017 on its 
proposed application of the balancing test to the 2018 data,\41\ and 
issued final policy guidance in late 2018.\42\
---------------------------------------------------------------------------

    \40\ 80 FR 66128, 66134 (Oct. 28, 2015).
    \41\ Disclosure of Loan-Level HMDA Data, 82 FR 44586 (Sept. 25, 
2017).
    \42\ 84 FR 649 (Jan. 31, 2019).
---------------------------------------------------------------------------

    In consideration of stakeholder comments urging that determinations 
concerning the disclosure of loan-level HMDA data be effectuated 
through more formal processes, the Bureau has decided to commence a new 
notice-and-comment rulemaking to govern HMDA data disclosure. The 
Bureau expects to issue a NPRM later in 2020. The Bureau plans to 
consider the HMDA data points and public disclosure proposed rules 
concurrently.
4.1.4 2018 HMDA Data Release
    In August 2019, on behalf of the FFIEC, the Bureau released data on 
mortgage lending transactions at U.S. financial institutions covered by 
HMDA.\43\ Covered institutions include banks, savings associations, 
credit unions, and mortgage companies. The HMDA data covers 2018 
lending activity. Many of the data points were available for the first 
time in the 2018 HMDA data. Certain smaller-volume financial 
institutions are not required to report all these data, pursuant to the 
EGRRCPA, as described above in section 4.1.1
---------------------------------------------------------------------------

    \43\ Consumer Fin. Prot. Bureau, FFIEC Announces Availability of 
2018 Data on Mortgage Lending (Aug. 30, 2019), https://www.consumerfinance.gov/about-us/newsroom/ffiec-announces-availability-2018-data-mortgage-lending/.
---------------------------------------------------------------------------

    With the data, the Bureau released two Data Point articles. The 
first describes the historical data points in the 2018 HMDA data, as 
well as recent trends in mortgage and housing markets.\44\
---------------------------------------------------------------------------

    \44\ Consumer Fin. Prot. Bureau, Data point: 2018 mortgage 
market activity and trends, (Aug. 30, 2019), https://www.consumerfinance.gov/data-research/research-reports/data-point-2018-mortgage-market-activity-and-trends/.
---------------------------------------------------------------------------

    The second introduces the new and revised data points in the 2018 
HMDA data and provides some initial observations about the nation's 
mortgage market in 2018 based on those new or revised data points.\45\
---------------------------------------------------------------------------

    \45\ Consumer Fin. Prot. Bureau, Data Point: Introducing New and 
Revised Data Points in HMDA (Aug. 30, 2019), https://www.consumerfinance.gov/data-research/research-reports/introducing-new-revised-data-points-hmda/.
---------------------------------------------------------------------------

    Earlier, in March 2019, Modified LARs data were published for 
approximately 5,400 financial institutions.\46\ The Modified LARs 
contain loan-level information for 2018 on individual HMDA filers, 
modified to protect privacy.
---------------------------------------------------------------------------

    \46\ Consumer Fin. Prot. Bureau, HMDA Modified Loan Application 
Registers Released (Mar. 29, 2019), https://www.consumerfinance.gov/about-us/newsroom/hmda-modified-loan-application-registers-released/.
---------------------------------------------------------------------------

4.1.5 HMDA Guidance and Resources
    The Bureau created many resources to help facilitate compliance 
with Regulation C, including an Executive Summary of HMDA rule changes; 
Small Entity Compliance Guide; Key Dates Timeline, Institutional and 
Transactional Coverage Charts; Reportable HMDA Data Chart; sample data 
collection form, and Frequently Asked Questions (FAQs), in addition to 
downloadable Webinars that provide an overview of the HMDA rule. The 
Bureau also provides on its website an Interactive Bureau Regulations 
version of Regulation C.
    HMDA resources are routinely updated throughout the year to ensure 
HMDA reporters have the most up-to-date information. For example, in 
September 2019, the Bureau released the 2020 Filing Instructions Guide 
(FIG) and the Supplemental Guide for Quarterly Filers. Together with 
the FFIEC, in March 2019, the Bureau also published the 2019 edition of 
the HMDA Getting it Right Guide. The Bureau also worked with the FFIEC 
to publish data submission resources for HMDA filers and vendors on its 
Resources for HMDA Filers website.
4.2 ECOA and Regulation B Rulemaking and Guidance
4.2.1 Statement on Collection of Demographic Information by Community 
Development Financial Institutions
    In July 2019, the Bureau issued a statement regarding the 
collection of demographic information by financial institutions that 
are Community Development Financial Institutions (CDFIs) receiving 
assistance from the U.S. Department of the Treasury's Community 
Development Financial Institutions Fund (CDFI Fund).\47\
---------------------------------------------------------------------------

    \47\ Consumer Fin. Prot. Bureau, Statement on Collection of 
Demographic Information by Community Development Financial 
Institutions (July 29, 2019), https://www.consumerfinance.gov/policy-compliance/guidance/supervisory-guidance/statement-collection-demographic-information-community-development-financial-institutions/.
---------------------------------------------------------------------------

    The Bureau became aware that some financial institutions that are 
certified CDFIs receiving assistance from the CDFI Fund have inquired 
whether they are subject to ECOA and Regulation B's general prohibition 
on a creditor collecting certain information about an applicant for 
credit, such as the applicant's race or ethnicity.
    The statement explains that CDFIs receiving Federal financial 
assistance from the CDFI Fund may collect demographic information on 
the individuals the CDFI serves, consistent with the ECOA and its 
implementing Regulation B, provided the collection of the information 
is for the purpose of complying with the regulatory requirements of the 
CDFI Fund.
4.2.2 Small Business Data Collection
    As described earlier in this report, section 1071 of the Dodd-Frank 
Act amends ECOA to require, subject to

[[Page 27402]]

rules prescribed by the Bureau, financial institutions to collect, 
report, and make public certain information concerning credit 
applications made by women-owned, minority-owned, and small businesses. 
The amendments to ECOA made by the Dodd-Frank Act require that specific 
data be collected, maintained, and reported, including but not limited 
to: the type of loan applied for, the amount of credit applied for, the 
type of action taken with regard to each application, the census tract 
of the principal place of business of the loan applicant, and the race, 
sex, and ethnicity of the principal owners of the business. The Dodd-
Frank Act also provides authority for the Bureau to require any 
additional data that the Bureau determines would aid in fulfilling the 
purposes of section 1071. The Bureau may adopt exceptions to any 
requirement of section 1071 and may exempt any financial institution 
from its requirements, as the Bureau deems necessary or appropriate to 
carry out section 1071's purposes.
    The Bureau issued an RFI in 2017 seeking public comment on, among 
other things, the types of credit products offered, and the types of 
data currently collected by lenders in this market, and the potential 
complexity, cost of, and privacy issues related to, small business data 
collection.
    In connection with its Spring 2019 rulemaking agenda,\48\ the 
Bureau announced its intention to recommence work to develop rules to 
implement section 1071 of the Dodd-Frank Act.
---------------------------------------------------------------------------

    \48\ Consumer Fin. Prot. Bureau, Regulatory Agenda, https://www.consumerfinance.gov/policy-compliance/rulemaking/regulatory-agenda/ (Last visited Apr. 29, 2020).
---------------------------------------------------------------------------

    In November 2019, the Bureau hosted a symposium on small business 
data collection. The information received in response to the 2017 RFI 
and the symposium will help the Bureau determine how to implement the 
statute efficiently while minimizing burdens on lenders.
    In addition, the Bureau is working to conduct a survey of lenders 
to obtain estimates of one-time costs lenders of varying sizes would 
incur to collect and report data pursuant to section 1071. The Bureau 
anticipates that its next step will be the release of materials in 
advance of convening a panel under the Small Business Regulatory 
Enforcement Fairness Act (SBREFA), in conjunction with the Office of 
Management and Budget and the Small Business Administration's Chief 
Counsel for Advocacy, to consult with representatives of small 
businesses that may be affected by the rulemaking.\49\
---------------------------------------------------------------------------

    \49\ Id.
---------------------------------------------------------------------------

    Also, during 2019, the Bureau was involved in litigation regarding 
the implementation of section 1071 of the Dodd-Frank Act. Information 
concerning the litigation can be found in section 5 of this Report.

5. Amicus Program and Other Litigation

    The Bureau files amicus curiae, or ``friend-of-the-court,'' briefs 
in significant court cases concerning Federal consumer financial 
protection laws, including ECOA. These amicus briefs provide the courts 
with the Bureau's views on significant consumer financial protection 
issues. Information regarding the Bureau's amicus program, including a 
description of the amicus briefs it previously filed, is available on 
the Bureau's website.\50\
---------------------------------------------------------------------------

    \50\ https://www.consumerfinance.gov/policy-compliance/amicus/.
---------------------------------------------------------------------------

    During 2019, the Bureau was involved in litigation regarding 
section 1071 of the Dodd-Frank Act. On May 14, 2019, the California 
Reinvestment Coalition filed a lawsuit in the U.S. District Court for 
the Northern District of California against the Bureau seeking an order 
compelling the Bureau to issue rules implementing section 1071 of the 
Dodd-Frank Act. On June 27, 2019, an amended complaint was filed adding 
the National Association for Latino Community Asset Builders and two 
individuals as plaintiffs in the lawsuit. The Bureau answered and the 
parties filed cross-motions for summary judgment. Information about the 
Bureau's efforts to implement section 1071 can be found in section 
4.2.2 of this Report.

6. Fair Lending Supervision And Enforcement

6.1 Risk-Based Prioritization
    Because Congress charged the Bureau with responsibility for 
overseeing many lenders and products, the Bureau has long-used a risk-
based approach to prioritize supervisory examinations and enforcement 
activity. This approach helps ensure that the Bureau focuses on areas 
that present substantial risk of credit discrimination for 
consumers.\51\ This same approach continued in 2019.
---------------------------------------------------------------------------

    \51\ For additional information regarding the Bureau's risk-
based approach in prioritizing supervisory examinations, see section 
3.2.3, Risk-Based Approach to Examinations, Supervisory Highlights 
Summer 2013, http://files.consumerfinance.gov/f/201308_cfpb_supervisory-highlights_august.pdf.
---------------------------------------------------------------------------

    As part of the prioritization process, the Bureau identifies 
emerging developments and trends by monitoring key consumer financial 
markets. If this market intelligence identifies fair lending risks in a 
particular market that require further attention, that information is 
incorporated into the prioritization process to determine the type and 
extent of attention required to address those risks.
    The prioritization process incorporates a number of additional 
factors, including: Tips and leads from industry whistleblowers, 
advocacy groups, and government agencies; supervisory and enforcement 
history; consumer complaints; and results from analysis of HMDA and 
other publicly available data.
6.1.1 Fair Lending Supervisory and Enforcement Priorities
    Through its annual risk-based prioritization process for 2019, the 
Bureau focused its fair lending supervision efforts on mortgage 
origination, small business lending, student loan origination, and debt 
collection and model use.
    As in previous years, the Bureau's mortgage origination work 
continued to focus on: (1) Redlining and whether lenders intentionally 
discouraged prospective applicants living or seeking credit in minority 
neighborhoods from applying for credit; (2) assessing whether there is 
discrimination in underwriting and pricing processes including 
steering; and (3) HMDA data integrity and validation (which supports 
ECOA exams) as well as HMDA diagnostic work (monitoring and assessing 
new rule compliance).
    The Bureau's small business lending work focused on assessing 
whether (1) there is discrimination in the application, underwriting, 
and pricing processes, (2) creditors are redlining, and (3) there are 
weaknesses in fair lending related compliance management systems (CMS).
    The Bureau's student loan origination work focused on whether there 
is discrimination in policies and practices governing underwriting and 
pricing. In the area of debt collection and model use, the Bureau's 
work focused on whether there is discrimination in policies and 
practices governing auto servicing and credit card collections, 
including the use of models that predict recovery outcomes.
    The Bureau also continued to enforce Federal fair lending laws, 
including ECOA and HMDA. One key area on which the Bureau focused its 
fair lending enforcement efforts was addressing potential 
discrimination in mortgage lending, including the unlawful practice of 
redlining.
6.2 Fair Lending Supervision
    In 2019, the Bureau initiated 26 supervisory events at financial 
services

[[Page 27403]]

institutions under the Bureau's jurisdiction to determine compliance 
with Federal laws intended to ensure the fair, equitable, and 
nondiscriminatory access to credit for both individuals and 
communities, including ECOA and HMDA.
    Consistent with BCFP Bulletin 2018-01,\52\ the Bureau issues 
Matters Requiring Attention (MRAs) to correct violations of Federal 
consumer financial law, remediate harmed consumers, and address 
weaknesses in CMS that examiners found are directly related to 
violations of Federal consumer financial law. MRAs include timeframes 
for periodic reporting of efforts taken to address these matters, as 
well as expected timeframes for implementation. The Bureau also uses 
Supervisory Recommendations (SRs) to address the Bureau's supervisory 
concerns related to financial institutions' CMS. SRs do not include 
provisions for periodic reporting nor expected timelines for 
implementation. In 2019, the Bureau provided MRAs directing entities to 
take corrective actions that will be monitored by the Bureau through 
follow-up supervisory events. The Bureau also issued SRs in 2019 
relating to supervisory concerns related to weak fair lending CMS, 
including weak policies and procedures, risk assessments, fair lending 
testing, and/or fair lending training.
---------------------------------------------------------------------------

    \52\ Consumer Fin. Prot. Bureau, BCFP Bulletin 2018-01: Changes 
to Types of Supervisory Communications (Sept. 25, 2018), https://files.consumerfinance.gov/f/documents/bcfp_bulletin-2018-01_changes-to-supervisory-communications.pdf.
---------------------------------------------------------------------------

6.3 Fair Lending Supervisory Developments
6.3.1 Updated ECOA Baseline Review Modules and HMDA Examination 
Procedures
    In April 2019, the Bureau updated its ECOA Baseline Review Modules 
\53\ and its HMDA Examination Procedures.\54\
---------------------------------------------------------------------------

    \53\ Consumer Fin. Prot. Bureau, ECOA Baseline Review Procedures 
(Apr. 1, 2019), https://www.consumerfinance.gov/policy-compliance/guidance/supervision-examinations/equal-credit-opportunity-act-ecoa-baseline-review-procedures/.
    \54\ Consumer Fin. Prot. Bureau, HMDA Examination Procedures 
(Apr. 1, 2019), https://www.consumerfinance.gov/policy-compliance/guidance/supervision-examinations/home-mortgage-disclosure-act-hmda-examination-procedures/.
---------------------------------------------------------------------------

    The ECOA Baseline Review Modules consist of five modules that CFPB 
examination teams use to conduct ECOA Baseline Reviews to evaluate how 
institutions' CMS identify and manage fair lending risks under ECOA. In 
addition, examination teams use Module 2: Fair Lending CMS to review a 
supervised entity's fair lending CMS as part of an ECOA Targeted 
Review, supplemented with additional modules from these procedures as 
necessary.
    A HMDA review includes transactional testing for HMDA data accuracy 
conducted using the HMDA Examination Procedures within the CFPB 
Supervision and Examination Manual. The updated HMDA Examination 
Procedures include updates to reflect the Bureau's interpretive and 
procedural rule, issued in August 2018, which implements and clarifies 
section 104 of EGRRCPA.
6.4 Fair Lending Enforcement
    The Bureau has the statutory authority to bring actions to enforce 
the requirements of HMDA and ECOA. In this regard, the Bureau has the 
authority to engage in research, conduct investigations, file 
administrative complaints, hold hearings, and adjudicate claims through 
the Bureau's administrative enforcement process. The Bureau also has 
independent litigating authority and can file cases in Federal court 
alleging violations of fair lending laws under the Bureau's 
jurisdiction. Like other Federal bank regulators, the Bureau is 
required to refer matters to DOJ when it has reason to believe that a 
creditor has engaged in a pattern or practice of lending 
discrimination.\55\
---------------------------------------------------------------------------

    \55\ 15 U.S.C. 1691e(h).
---------------------------------------------------------------------------

6.4.1 Public Enforcement Actions
    In 2019, the Bureau filed one fair lending public enforcement 
action: In the Matter of Freedom Mortgage Corporation (File No. 2019-
BCFP-0007). The Bureau announced the settlement with Freedom Mortgage 
Corporation (Freedom) on June 5, 2019.\56\ Freedom is a mortgage lender 
with its principal place of business in Mount Laurel, New Jersey, and 
one of the ten largest HMDA reporters nationwide. For each year from 
2013 through 2016, it originated more than 50,000 home-purchase loans, 
including refinancings of home-purchase loans. Freedom is required to 
collect, record, and report data on HMDA-covered transactions to comply 
with HMDA and Regulation C.
---------------------------------------------------------------------------

    \56\ Consumer Fin. Prot. Bureau, Consumer Financial Protection 
Bureau Settles with Freedom Mortgage Corporation (Jun, 5, 2019), 
https://www.consumerfinance.gov/about-us/newsroom/bureau-settles-freedom-mortgage-corporation/.
---------------------------------------------------------------------------

    According to the consent order, the Bureau found that Freedom 
violated HMDA and Regulation C by submitting mortgage-loan data for 
2014 to 2017 that contained numerous and intentional errors. The Bureau 
found that Freedom reported inaccurate race, ethnicity, and sex 
information and that much of Freedom's loan officers' recording of this 
incorrect information was intentional. For example, certain loan 
officers were told by managers or other loan officers that, when 
applicants did not provide their race or ethnicity, they should select 
non-Hispanic white regardless of whether that was accurate.
    Under the terms of the consent order, Freedom must pay a civil 
money penalty of $1.75 million and take steps to improve its compliance 
management to prevent future violations.
6.4.2 ECOA Referrals to the Department of Justice
    The Bureau must refer to the DOJ a matter when it has reason to 
believe that a creditor has engaged in a pattern or practice of lending 
discrimination in violation of ECOA.\57\ The Bureau also may refer 
other potential ECOA violations to the DOJ.\58\ In 2019, the Bureau 
referred three matters to the DOJ involving discrimination pursuant to 
section 706(g) of ECOA. The first referral involved discrimination 
based on a pattern or practice of redlining in mortgage origination 
based on race. The second referral resulted from discrimination based 
on receipt of public assistance income in mortgage origination. Lastly, 
the third referral involved discrimination based on race and national 
origin in auto origination.
---------------------------------------------------------------------------

    \57\ 15 U.S.C. 1691e(g).
    \58\ Id.
---------------------------------------------------------------------------

6.4.3 Implementing Enforcement Orders
    When an enforcement action is resolved through a public enforcement 
order, the Bureau (together with DOJ, when relevant) takes steps to 
ensure that the respondent or defendant complies with the requirements 
of the order. Depending on the specific requirements of individual 
public enforcement orders, the Bureau may take steps to ensure that 
borrowers who are eligible for compensation receive remuneration and 
that the defendant has complied with the injunctive provisions of the 
order, including implementing a comprehensive fair lending compliance 
management system. Throughout 2019, the Bureau continued to implement 
and oversee compliance with the two public enforcement orders described 
below.
    On June 29, 2016, the Bureau and the DOJ announced a joint action 
against BancorpSouth Bank (BancorpSouth) for discriminatory mortgage 
lending practices that harmed African Americans. The consent order, 
which was entered by the Court on July 25,

[[Page 27404]]

2016, required BancorpSouth to pay $4 million in direct loan subsidies 
in minority neighborhoods in Memphis; \59\ at least $800,000 for 
community programs, advertising, outreach, and credit repair; $2.78 
million to African American consumers who were unlawfully denied or 
overcharged for loans; and a $3 million penalty.\60\ On June 25, 2018, 
the Bureau announced that participation materials were mailed to 
potentially eligible African American borrowers identified as harmed by 
BancorpSouth's alleged discrimination in mortgage lending between 2011 
and 2015, notifying them how to receive redress. Starting on March 15, 
2019, checks were mailed to African American borrowers who were 
confirmed as eligible to receive a payment.
---------------------------------------------------------------------------

    \59\ ``Majority-minority neighborhoods'' or ``minority 
neighborhoods'' refers to census tracts with a minority population 
greater than 50 percent.
    \60\ Consent Order, United States v. BancorpSouth Bank, No. 
1:16-cv-00118-GHD-DAS (N.D. Miss. July 25, 2016), ECF No. 8, https://files.consumerfinance.gov/f/documents/201606_cfpb_bancorpSouth-consent-order.pdf.
---------------------------------------------------------------------------

    On February 2, 2016, working with the DOJ, the Bureau ordered 
Toyota Motor Credit Corporation (Toyota Motor Credit) to pay up to 
$21.9 million in damages to harmed African American and Asian and/or 
Pacific Islander borrowers for unlawful discrimination.\61\ On December 
29, 2017, participation materials were mailed to potentially eligible 
borrowers whom Toyota Motor Credit overcharged for their auto loans 
notifying them how to participate in the settlement fund. On February 
1, 2019, checks were mailed to eligible, participating consumers.
---------------------------------------------------------------------------

    \61\ Consent Order In re Toyota Motor Credit Corporation, CFPB 
No. 2016-CFPB-0002 (Feb. 2, 2016), https://files.consumerfinance.gov/f/201602_cfpb_consent-order-toyota-motor-credit-corporation.pdf.
---------------------------------------------------------------------------

6.4.4 Pending Fair Lending Investigations
    In 2019, the Bureau had a number of ongoing and newly opened fair 
lending investigations of institutions. One of the Bureau's key areas 
of focus was potential discrimination in mortgage lending, including 
the unlawful practice of redlining.

7. Interagency Reporting on ECOA and HMDA

    The Bureau is statutorily required to file a report to Congress 
annually describing the administration of its functions under ECOA, 
summarizing public enforcement actions taken by other agencies with 
administrative enforcement responsibilities under ECOA, and providing 
an assessment of the extent to which compliance with ECOA has been 
achieved.\62\ In addition, the Bureau's annual HMDA reporting 
requirement calls for the Bureau, in consultation with HUD, to report 
annually on the utility of HMDA's requirement that covered lenders 
itemize certain mortgage loan data.\63\
---------------------------------------------------------------------------

    \62\ 15 U.S.C. 1691f.
    \63\ 12 U.S.C. 2807.
---------------------------------------------------------------------------

7.1 Reporting on ECOA Enforcement
    The enforcement efforts and compliance assessments made by all the 
agencies assigned enforcement authority under section 704 of ECOA are 
discussed in this section.
BILLING CODE 4810-AM-P

[[Page 27405]]

[GRAPHIC] [TIFF OMITTED] TN08MY20.018

BILLING CODE 4810-AM-C
7.1.1 Public Enforcement Actions
    The eleven agencies charged with administrative enforcement of ECOA 
under section 704 are as follows:
---------------------------------------------------------------------------

    \64\ 15 U.S.C. 1691c.
---------------------------------------------------------------------------

     CFPB;
     FDIC;
     FRB;
     NCUA;
     OCC; \65\
---------------------------------------------------------------------------

    \65\ Collectively, the Board of Governors of the Federal Reserve 
System (FRB), the Federal Deposit Insurance Corporation (FDIC), the 
National Credit Union Administration (NCUA), the Office of the 
Comptroller of the Currency (OCC), and the Bureau of Consumer 
Financial Protection (Bureau) comprise the Federal Financial 
Institutions Examination Council (FFIEC). The FFIEC is a ``formal 
interagency body empowered to prescribe uniform principles, 
standards, and report forms for the [F]ederal examination of 
financial institutions'' by the member agencies listed above and the 
State Liaison Committee ``and to make recommendations to promote 
uniformity in the supervision of financial institutions.'' Federal 
Financial Institutions Examination Council, http://www.ffiec.gov 
(last visited March 30, 2020). The State Liaison Committee was added 
to FFIEC in 2006 as a voting member.
---------------------------------------------------------------------------

     Agricultural Marketing Service (AMS) of the U.S. 
Department of Agriculture (USDA),\66\
---------------------------------------------------------------------------

    \66\ The Grain Inspection, Packers and Stockyards Administration 
(GIPSA) was eliminated as a stand-alone agency within USDA in 2017. 
The functions previously performed by GIPSA have been incorporated 
into the Agricultural Marketing Service (AMS), and ECOA reporting 
now comes from the Packers and Stockyards Division, Fair Trade 
Practices Program, AMS.

---------------------------------------------------------------------------

[[Page 27406]]

     Department of Transportation (DOT);
     Farm Credit Administration (FCA);
     Federal Trade Commission (FTC);
     Securities and Exchange Commission (SEC); and
     Small Business Administration (SBA).\67\
---------------------------------------------------------------------------

    \67\ 15 U.S.C. 1691c.
---------------------------------------------------------------------------

    In 2019, none of the 11 ECOA enforcement agencies brought public 
enforcement actions for violations of ECOA. Below is an overview of the 
year-to-year combined ECOA enforcement actions at all Federal agencies 
since 2012:
---------------------------------------------------------------------------

    \68\ This table identifies public enforcement actions by the 
year they were initiated (when filed and announced publicly).

            Table 3--ECOA Enforcement by All Federal Agencies
------------------------------------------------------------------------
                                                          Total public
                    Calendar year                         enforcement
                                                            actions
------------------------------------------------------------------------
2012.................................................            \68\ 17
2013.................................................                  9
2014.................................................                  2
2015.................................................                  5
2016.................................................                  3
2017.................................................                  1
2018.................................................                  0
2019.................................................                  0
------------------------------------------------------------------------

7.1.2 Violations Cited During ECOA Examinations
    Among institutions examined for compliance with ECOA and Regulation 
B, the FFIEC agencies reported that the most frequently-cited 
violations were as follows:
---------------------------------------------------------------------------

    \69\ 12 CFR 1002.4(a), 1002.4(b), 1002.6(b).
    \70\ 12 CFR 1002.5(b).
    \71\ 12 CFR 1002.4(a).
    \72\ 12 CFR 1002.7(d)(1).
    \73\ 12 CFR 1002.9(a)(1), (a)(2), (b)(1), (b)(2), (c)(1).
    \74\ 12 CFR 1002.9(a)(2), (b)(2).
    \75\ 12 CFR 1002.9(a)(1)(i), (c)(2).
    \76\ 12 CFR 1002.9(a)(1), (a)(2), (b)(2).
    \77\ 12 CFR 1002.9(a)(1)(i), (a)(1)(ii), (a)(2).
    \78\ 12 CFR 1002.12(b)(1).
    \79\ 12 CFR 1002.12(b).
    \80\ 12 CFR 1002.12(b)(1).

     Table 4--Regulation B Violations Cited by FFIEC Agencies, 2019
------------------------------------------------------------------------
       Regulation B violations: 2019           FFIEC agencies reporting
------------------------------------------------------------------------
12 CFR 1002.4(a), (b), 1002.5(b),            CFPB,\69\ FDIC,\70\
 1002.6(b), 1002.7(d)(1): Discrimination.     FRB,\71\ OCC.\72\
Discrimination on a prohibited basis in a
 credit transaction; Discouragement of
 prospective applicants on a prohibited
 basis; A creditor shall not inquire about
 the race, color, religion, national
 origin, or sex of an applicant or any
 other person in connection with a credit
 transaction; Improperly considering
 receipt of public assistance in a system
 of evaluating applicant creditworthiness;
 Improperly requiring the signature of the
 applicant's spouse or other person..
12 CFR 1002.9(a)(1), (a)(2), (b)(1),         CFPB,\73\ FDIC,\74\
 (b)(2), (c): Adverse Action.                 FRB,\75\ NCUA,\76\
Failure to provide notice to the applicant    OCC.\77\
 30 days after receiving a completed
 application concerning the creditor's
 approval of, counteroffer or adverse
 action on the application; failure to
 provide appropriate notice to the
 applicant 30 days after taking adverse
 action on an incomplete application;
 failure to provide sufficient information
 in an adverse action notification,
 including the specific reasons for the
 action taken..
12 CFR 1002.12(b)(1): Record Retention.....  CFPB,\78\ NCUA,\79\
                                              OCC.\80\
Failure to preserve application records.     ...........................
------------------------------------------------------------------------

    Among institutions examined for compliance with ECOA and Regulation 
B, the Non-FFIEC agencies reported that the most frequently-cited 
violations were as follows:

 Table 5--Regulation B Violations Cited by Non-FFIEC ECOA Agencies, 2019
------------------------------------------------------------------------
       Regulation B violations: 2019              Non-FFIEC agencies
------------------------------------------------------reporting---------
12 CFR 1002.9(a)(1)(i), (a)(2), (c):         FCA
 Adverse Action.
Failure to provide notice to the applicant   ...........................
 30 days after receiving a completed
 application concerning the creditor's
 approval of, counteroffer or adverse
 action on the application; failure to
 provide sufficient information in an
 adverse action notification, including the
 specific reasons for the action taken;
 failure to provide ECOA notice.
12 CFR 1002.13: Failure to request and       FCA
 collect information for monitoring
 purposes.
------------------------------------------------------------------------

    The AMS, SEC and the SBA reported that they received no complaints 
based on ECOA or Regulation B in 2019. In 2019, the DOT Office of 
Aviation Enforcement and Proceedings reported that it may have received 
a relatively small number of consumer inquiries or complaints 
concerning credit matters possibly covered by ECOA, which it processed 
informally. The FTC is an enforcement agency and does not conduct 
compliance examinations.
7.2 Referrals to the Department of Justice
    In 2019, four FFIEC agencies (CFPB, FDIC, FRB, and NCUA) made a 
total of seven referrals to the DOJ involving discrimination in 
violation of ECOA. A brief description of those matters follows.
    As reported in section 6.4.2, in 2019, the Bureau referred three 
matters to the DOJ. Those referrals involved: Discrimination based on a 
pattern or practice of redlining in mortgage origination based on race; 
discrimination based on receipt of public assistance income in mortgage 
origination; and discrimination based on race and national origin in 
auto origination.

[[Page 27407]]

    In 2019, the FDIC referred two matters to the DOJ. The first 
referral involved discrimination in auto origination on the prohibited 
basis of the applicant's receipt of income derived from a public 
assistance program. The second referral involved discrimination in the 
underwriting of commercial loans on the prohibited basis of religion.
    The FRB referred one matter to the DOJ in 2019. The referral 
involved pricing discrimination based on national origin, race, and 
sex.
    In 2019, the NCUA referred one matter to the DOJ involving 
discrimination on the prohibited basis of age.

                 Table 6--Combined ECOA Referrals to DOJ
------------------------------------------------------------------------
                                                           Number of
                    Calendar year                       referrals to DOJ
------------------------------------------------------------------------
2012.................................................                 12
2013.................................................                 24
2014.................................................                 18
2015.................................................                 16
2016.................................................                 20
2017.................................................                 11
2018.................................................                  2
2019.................................................                  7
------------------------------------------------------------------------

7.3 Reporting on HMDA
    The Bureau's annual HMDA reporting requirement calls for the 
Bureau, in consultation with HUD, to report annually on the utility of 
HMDA's requirement that covered lenders itemize loan data in order to 
disclose the number and dollar amount of certain mortgage loans and 
applications, grouped according to various characteristics.\81\ The 
Bureau, in consultation with HUD, finds that itemization and tabulation 
of these data furthers the purposes of HMDA.
---------------------------------------------------------------------------

    \81\ 12 U.S.C. 2807.

                        Appendix A: Defined Terms
------------------------------------------------------------------------
                       Term                              Definition
------------------------------------------------------------------------
AI................................................  Artificial
                                                     Intelligence.
AMS...............................................  Agricultural
                                                     Marketing Service
                                                     of the U.S.
                                                     Department of
                                                     Agriculture.
ANPR..............................................  Advance Notice of
                                                     Proposed
                                                     Rulemaking.
Bureau or CFPB....................................  The Bureau of
                                                     Consumer Financial
                                                     Protection or
                                                     Consumer Financial
                                                     Protection Bureau.
CDFI..............................................  Community
                                                     Development
                                                     Financial
                                                     Institutions.
CDFI Fund.........................................  Community
                                                     Development
                                                     Financial
                                                     Institutions Fund.
CMS...............................................  Compliance
                                                     Management System.
Dodd-Frank Act....................................  The Dodd-Frank Wall
                                                     Street Reform and
                                                     Consumer Protection
                                                     Act.
DOJ...............................................  U.S. Department of
                                                     Justice.
DOT...............................................  U.S. Department of
                                                     Transportation.
ECOA..............................................  The Equal Credit
                                                     Opportunity Act.
EGRRCPA...........................................  Economic Growth,
                                                     Regulatory Relief,
                                                     and Consumer
                                                     Protection Act.
FCA...............................................  Farm Credit
                                                     Administration.
FCRA..............................................  Fair Credit
                                                     Reporting Act.
FDIC..............................................  Federal Deposit
                                                     Insurance
                                                     Corporation.
Federal Reserve Board or FRB......................  Board of Governors
                                                     of the Federal
                                                     Reserve System.
FFIEC.............................................  Federal Financial
                                                     Institutions
                                                     Examination
                                                     Council--the FFIEC
                                                     member agencies are
                                                     the Board of
                                                     Governors of the
                                                     Federal Reserve
                                                     System (FRB), the
                                                     Federal Deposit
                                                     Insurance
                                                     Corporation (FDIC),
                                                     the National Credit
                                                     Union
                                                     Administration
                                                     (NCUA), the Office
                                                     of the Comptroller
                                                     of the Currency
                                                     (OCC), and the
                                                     Bureau of Consumer
                                                     Financial
                                                     Protection
                                                     (Bureau). The State
                                                     Liaison Committee
                                                     was added to FFIEC
                                                     in 2006 as a voting
                                                     member.
FTC...............................................  Federal Trade
                                                     Commission.
GIPSA.............................................  Grain Inspection,
                                                     Packers and
                                                     Stockyards
                                                     Administration of
                                                     the U.S. Department
                                                     of Agriculture.
HCA...............................................  Housing counseling
                                                     agency.
HMDA..............................................  The Home Mortgage
                                                     Disclosure Act.
HUD...............................................  U.S. Department of
                                                     Housing and Urban
                                                     Development.
LAR...............................................  Loan Application
                                                     Registers.
ML................................................  Machine Learning.
MRA...............................................  Matters Requiring
                                                     Attention.
NAL...............................................  No-Action Letter.
NCUA..............................................  The National Credit
                                                     Union
                                                     Administration.
NPRM..............................................  Notice of Proposed
                                                     Rulemaking.
OCC...............................................  Office of the
                                                     Comptroller of the
                                                     Currency.
OFLEO.............................................  Office of Fair
                                                     Lending and Equal
                                                     Opportunity.
OI................................................  Office of
                                                     Innovation.
RFI...............................................  Request for
                                                     Information.
SBA...............................................  Small Business
                                                     Administration.
SBREFA............................................  Small Business
                                                     Regulatory
                                                     Enforcement
                                                     Fairness Act.
SEC...............................................  Securities and
                                                     Exchange
                                                     Commission.
SR................................................  Supervisory
                                                     Recommendations.
USDA..............................................  U.S. Department of
                                                     Agriculture.
------------------------------------------------------------------------

Signing Authority

    The Director of the Bureau, having reviewed and approved this 
document, is delegating the authority to electronically sign this 
document to Laura Galban, a Bureau Federal Register Liaison, for 
purposes of publication in the Federal Register.

    Dated: May 5, 2020.
Laura Galban,
Federal Register Liaison, Bureau of Consumer Financial Protection.
[FR Doc. 2020-09890 Filed 5-7-20; 8:45 am]
 BILLING CODE 4810-AM-P