1. Defending Against Fair Lending & Disparate Impact
Experts in The Field Share Their Knowledge on
What to Do and How to be Prepared.
June 17, 2013 3:00-4:30pm
Moderator:
Tammy Butler, Master CMB, Director of Fair lending and Compliance,
Optimal Blue
Panelists:
Steven Bakst, COO, GFI Mortgage Bankers
Mitch Kider, Managing Member, Weiner, Brodsky, Kider PC
David Skanderson, Principal, Charles River Associates
2. Defending Against Fair Lending & Disparate Impact
Disparate Impact and Fair Lending from a secondary
standpoint
What is Disparate Impact and Disparate Pricing?
GFIโs story
Real life scenarios
What can you do?
What Optimal Blue can do to help you
3. Disparate Impact and Disparate Pricing
Disparate Impact - Occurs when a policy or practice applied
equally to all applicants has a disproportionate adverse
impact on applicants in a protected class.
Disparate pricing โ Occurs when a pricing policy or practice
applied equally to all applicants has a disproportionate
adverse impact on applicants in a protected class.
5. Lenderโs Policy: No mortgage loans permitted for less than
$100,000.
This policy may disproportionally exclude potential minority
applicants:
Due to income levels
Due to housing values by area
Scenario #1
6. This can result in Loan Officer A offering borrowers
a higher rate than Loan Officer B
This will result in a disparity, as the protected class
receives the higher rate.
Loan Officer A (Connecticut) Loan Officer B
(Ohio)
100 Basis Points per Loan 50 Basis Points per Loan
Protected Class Non-Protected Class
Scenario #2
7. Rates drop due to an uptake in the market, and borrowers
seek to renegotiate their loan rates.
Disparate Pricing: data analyzation shows that only non-
protected class borrowers had their rates renegotiated.
Scenario #3
10. My Original Solution
Look-Back Monitoring System
Track which borrowers had higher rates or higher APR
in a given month
Able to document each rate with clear reasoning, or
lower the rate before closing
16. Summary
Review your pricing policies and practices
Use the tools that Optimal Blue has available or create
your own
Donโt become a statistic, trust me it is not worth it!
17. Defending Against Fair Lending & Disparate Impact
Steven Bakst
Chief Operating Officer
GFI Mortgage Bankers, Inc.
212-837-4537
sbakst@gfimortgage.com
