On June 25, the CFPB issued its annual fair lending report covering its fair lending activity in 2023. The Bureau noted that in 2023 it undertook 28 fair lending examinations and announced four enforcement actions. It separately referred 18 matters to the Department of Justice. Continue Reading Key Takeaways from the CFPB’s 2023 Fair Lending Report
On May 3, a California resident filed a class action lawsuit in federal court accusing a Los Angeles-based credit union of discriminatory practices, and raised a civil rights claim under 42 U.S.C. § 1981, and violations of the California’s Unruh Civil Rights Act. In the complaint, the plaintiff alleges his automobile loan application was unfairly denied because of his immigration status as a Deferred Action for Childhood Arrivals (DACA) recipient.Continue Reading DACA Recipient Accuses California Credit Union of ECOA Violations
On February 5, the DOJ and North Carolina’s attorney general announced a $13.5 million settlement deal with a large regional bank over redlining allegations.Continue Reading DOJ and North Carolina Attorney General Reach $13.5M Settlement in Discriminatory Lending Case
On February 5, several trade groups, including the American Bankers Association, the Independent Community Bankers of America, and the U.S. Chamber of Commerce, filed suit against the Federal Reserve Board, the FDIC, and the OCC accusing the regulators of exceeding their authority under federal law when promulgating new rules under the Community Reinvestment Act (CRA). Continue Reading Bank Groups Sue to Overturn New Community Lending Rules
On November 2, the CFPB issued a new report on state Community Reinvestment Act laws. The report found that many states adopted Community Reinvestment Acts (CRAs) similar to the federal Community Reinvestment Act of 1977. The report showed that state CRAs differ from the federal CRA to account for unique reinvestment priorities of individual states. The report also showed that nonbank mortgage companies’ increasing market share has influenced how states have developed their CRAs.Continue Reading CFPB Publishes New Report on State Community Reinvestment Laws
Ten years after the US Department of Housing and Urban Development (HUD) first promulgated its disparate impact rule (the Rule), on September 19, the US District Court for the District of Columbia granted HUD’s motion for summary judgment upholding the Rule. Continue Reading US District Court Grants HUD’s Summary Judgment Motion in Disparate Impact Case
On July 31, the U.S. District Court for the Southern District of Texas enjoined the CFPB from implementing and enforcing the small business lending rule (Section 1071) requirements pending the Supreme Court’s decision in Community Financial Services Association of America Ltd. v. CFPB, a challenge to the constitutionality of the CFPB’s funding structure (we previously discussed Section 1071 rulemaking in prior blog posts here and here, and the Texas lawsuit here). In particular, the court enjoined the CFPB from implementing and enforcing the final rule against the plaintiffs and their members, but denied the plaintiffs’ request for a nationwide injunction. Continue Reading Texas Court Enjoins CFPB’s Enforcement of Small Business Lending Rule
On April 26, an association of Texas state banking organizations and a Texas minority depository institution filed a joint complaint against the CFPB in Texas federal court seeking to invalidate a recently finalized agency rule requiring lenders to gather and report data on loan applications from minority, LGBTQ+, and women-owned small businesses (see previous blog post detailing this rule here). The CFPB rule requires that small business lenders must collect and report on the following data points:Continue Reading Lawsuit Challenges CFPB Reporting Rule for Small Business Lending
On April 25, the CFPB, FTC, EEOC, and Civil Rights Division of the DOJ issued a joint statement outlining the agencies’ collective commitment to monitor the development and use of automated systems and artificial intelligence and enforce their respective authorities where such systems produce outcomes that result in unlawful discrimination. The joint statement explains that potential discrimination in automated systems can come from different sources, including:Continue Reading Federal Regulators Remain Focused on AI-based Discrimination
Today, the CFPB has issued the small business lending final rule to implement changes to the Equal Credit Opportunity Act made by Section 1071 of the Dodd-Frank Act to require financial institutions to compile data regarding certain business credit applications and report that data to the CFPB (we previously discussed Section 1071 rulemaking in prior blog posts here and here). According to the CFPB, Section 1071’s purposes are “facilitating enforcement of fair lending laws and enabling the identification of business and community development needs and opportunities for women-owned, minority-owned, and small businesses.” While the final rule includes almost 900 pages of rulemaking, highlights include the following:Continue Reading CFPB Issues Small Business Lending Rule
On February 3, the U.S. District Court for the Northern District of Illinois issued an opinion and order dismissing with prejudice the CFPB’s complaint for violations of the ECOA against a mortgage lender and its owner violated for engaging in discriminatory marketing and applicant outreach practices. In particular, the CFPB alleged fair lending violations based on comments made by the company on a local radio station that the CFPB alleged discouraged prospective minority applicants from submitting mortgage loan applications to the lender. The Bureau’s allegations relied on the ECOA’s implementing regulation, Regulation B, which prohibits creditors from making any statements “to applicants or prospective applicants that would discourage on a prohibited basis a reasonable person from making or pursuing an application.”Continue Reading District Court Dismisses CFPB Redlining Action Against Nonbank, Limits ECOA’s Reach