In the realm of fair lending compliance, three key regulations hold utmost importance: Regulation B, Regulation C, and the Community Reinvestment Act (CRA). Together these regulations form a comprehensive framework for fair lending practices. To navigate this complex compliance landscape, Clark Schaefer Consulting partners with financial institutions, providing specialized internal controls and compliance advisory services. With a wealth of experience in the mortgage lending industry, our team is equipped to guide organizations through the intricacies of fair lending compliance and regulatory change management.
Regulation B implements the Equal Credit Opportunity Act (ECOA) and prohibits lenders from discriminating against credit applicants based on their race, color, religion, national origin, sex, marital status, age, or receipt of public assistance. Lenders must provide equal access to credit for all applicants and collect and maintain data on credit applications, loan approvals, and denials to enable monitoring for compliance with fair lending laws.
Regulation C, also known as the Home Mortgage Disclosure Act (HMDA), requires lenders to report data on mortgage lending activity to the government. The report is referred to as the Loan Application Register (LAR) and the data includes information on the race, ethnicity, gender, and income of applicants, as well as the type and amount of the loan. This data is used to identify potential fair lending violations and to monitor lenders for compliance with fair lending laws.
The CRA requires banks and other financial institutions to meet the credit needs of their local communities, including low and moderate-income neighborhoods. Banks are evaluated on their performance in meeting these needs and can receive incentives for doing so.
Together, these three regulations provide a comprehensive approach to fair lending. This involves implementing policies and procedures that prevent discrimination, collecting and analyzing data on lending activity, and providing ongoing training to employees to ensure they understand and comply with fair lending laws and regulations.
With the fair lending compliance landscape ever changing, the need to ensure that regulatory change management has been effectively implemented, compliance monitoring is occurring, as well as being formally documented is instrumental towards the mitigation of compliance risk. Clark Schaefer Consulting partners with financial institutions to provide internal controls and fair lending compliance advisory services. Our team has significant experience providing consulting services to mortgage lenders and financial institutions. We understand the unique needs and requirements of this industry and are subject matter experts in mortgage lending and servicing operations.