TOPIC: Fair Lending

What is a Fair Lending Compliance Management System?

Good afternoon, Bankers! Today we are discussing fair lending compliance management system (CMS) components and how fair lending programs can ensure compliance. This post was originally published on the Ncontracts blog.

Preventing and detecting discrimination with an active fair lending (sometimes referred to as Safe and Responsible Lending) compliance management system  is essential for all financial institutions (FIs). FIs don’t just have a moral obligation to prevent and detect discrimination—they also have a legal obligation. Lending practices or programs that negatively impact a protected class can result in fines or enforcement actions—even if the discrimination was unintentional...

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    Fair Lending Review Check List

    Manager at a bank ($1.1BUSA)
    My bank completes the quarterly and annual Fair Lending Review manually. I am trying to improve the process.
    Would someone be willing to share what they look at  as part of their quarterly review, and what they check annually?
    For the quarterly review, I review a sample of the residential and consumer loans originated and compare rates given. I also review all consumer unsecured loans and all consumer loans originated with a rate exception. Is this too much, or should I look at more?
    Also, would someone be willing to share their annual review checklist? 

    Thanks for your help!

      Lending compliance in 2021: Top challenges we’re seeing from the front lines | Free webinar next week!

      Good afternoon, Bankers! I wanted to extend an invite to you all to next week's webinar from Ncontracts on how best to tackle lending compliance in 2021.

      Thursday, February 25, 2021 @ 2:00 PM CT
      Learn more and register here.

      From the COVID-19 pandemic to a new presidential administration, the lending compliance environment is always evolving. What are the greatest regulatory challenges facing lenders today? What do you need to do to remain compliant? Is your compliance management system up to the task?

      In this webinar, we’ll highlight the top challenges, complaints, and worries we’re hearing about from banks, credit unions, and mortgage companies like yours—and what to do about it.

      They include:
      • The evolution of data management, protection, and analytics
      • Fair lending
      • CRA modernization
      • Focus on governance framework
      • Operational resilience and third-party risk management
      • Cybersecurity, privacy, and financial crime
      • Aligning lending compliance with your compliance management system
      Don’t miss this chance to hear what your peers are reporting and find out how to prepare for the year ahead! Register here.

        Translation and Language interrupters

        Employee at a credit_union ($1.2BUSA)
        We are wanting to start the huge project of having all our member documents translated in other languages. We will be rolling this out in stages based on product need of the majority of the members. However I am hoping to find some independent vendor referrals. Does any one use Language line,  Shark, or Who do you use? 
        And as a secondary thought, how do you rate the criticality of this vendor? They don't have consumer data or any proprietary data but we are heavily relying on  them from a compliance standing. My gut says infrastructure with Liability verification. 
        I did search the topic but I saw similar questions with very few responses.

          What Will Examiners Be Looking for in 2021? | Free Webinar Next Week!

          What should a financial institution be doing to prepare and get exam-ready in 2021? Ncontracts will answer these questions and more as we dig into the regulatory agencies’ supervisory priorities, share our own insights, and link it all to best practices to help ensure your institution is ready to take on 2021!

          Areas to cover include:
          • Regulatory hot topics
          • Fair lending
          • Remote exams
          • Risk management trends
          • COVID-19 response
          • Lessons learned from recent enforcement actions

          Don’t get caught off guard at exam time. Join us to make sure your institution is managing risk and compliance in a way that aligns with examiner priorities! Register here.

            Ncontracts Acquires QuestSoft

            Ncontracts, the leading provider of integrated risk management solutions for the financial services industry, announced that it has acquired QuestSoft Corporation, a leading provider of compliance software and services for the mortgage, bank and credit union industries.

            Combining Ncontracts with QuestSoft will be transformative for customers and for the industry. The combination creates a powerful end-to-end risk and compliance suite uniquely enabling financial institutions to grow and succeed in the evolving regulatory environment.

            Learn more about the announcement here

              Increase Request for a Personal Line of Credit

              SVP at a bank ($682MUSA)
              I am interested to learn how you handle a request to increase a personal line of credit. Does your bank require a new application, new note number, UW, etc.? Do you do a debit modification and keep the same loan number, do you do a new note and keep the same loan number? However you are handling these I would greatly appreciate hearing your process and why you are doing it that way (State Law, Bank Procedure, etc.)

                Fair Lending/UDAAP

                Employee at a credit_union ($174MUSA)
                We are in the process of completing a prescreened offer to existing members who have auto loans financed elsewhere. Our Lending Department would like to allow for a higher LTV than what our current guidelines permit for those responding to this offer and anyone else who wishes to refinance an auto loan from another lender. The team feels this would be an acceptable practice on the basis that these borrowers have a proven payment history on a specific piece of collateral that they already own.
                We are concerned this practice may lead to fair lending/UDAAP risk exposure with examiners because we would be allowing better terms to borrowers who are refinancing from another lender versus those who own their vehicles outright or who are wishing to purchase a new vehicle and have materially similar underwriting factors, such as exemplary payment history on previously financed auto loans.
                In an effort to limit the potential fair lending/UDAAP impact, the team has considered creating a specific loan program for applicants who are refinancing a vehicle from another lender that would incorporate higher LTV guidelines in general, however we are not confident this eliminates the risk. I am wondering if anyone would be willing share their opinions and if there are other risk factors you would advise us to consider?

                  Third Party Policy Review Form/Checklist

                  Employee at a bank ($16.3BUSA)
                  Good Morning CBANC Community

                  Do any of you have a checklist or any type of form that you use when you review a policy from a third party? Or a form you complete when you review any policy for that matter. I would like to have record when I reviewed a third party policy, and record of what in the policy I reviewed. I am in Compliance, and I am thinking it could be useful for when and if our Internal Audit team or a regulator inquires about a third-party policy. It could be helpful for my own records, if I need to refer to it in the future. Many thanks.

                    Due Diligence - Lending Background Checks

                    AVP at a bank ($1.5BUSA)
                    Hello all - 

                    Wondering if any of you run background checks, or enhanced Google searches of your lending applicants? If so, would any of you be willing to share your guidelines on what you consider a disqualifier? We attempted to start with the SBA SOPs but they weren't very helpful as there wasn't much detail outside of have you been convicted previously or arrested in the past 6 months. 

                    Thank you,

                      Compliance Monitoring/Testing Plan for a Loan Product Serviced by a Third-Party

                      Employee at a bank ($16.3BUSA)
                      Hello CBANC Family,

                      I am once again reaching out for help. I am hoping I can get help from you all. We will be launching an unsecured personal loan/consumer loan product in the near future, and while the loans will remain in our books,  a third party will handle the origination and servicing of these loans. Do any of you have any compliance testing/monitoring plan(s) that you are willing to share with me, please? Any guidance will be immensely appreciated. Many thanks.