Zalewski ppt for 11 09 version 2 final [compatibility mode]

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Introductory Fair Lending presentation intended to be used for a Board of Director's training

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Zalewski ppt for 11 09 version 2 final [compatibility mode]

  1. 1. Fair Lending Trainingg g
  2. 2. F i L di A li t All Loans Fair Lending Applies to: All Loans Application ProcessApplication Process Loan ProcessingLoan Processing Loan Underwritingg Collection Process
  3. 3. C f N liConsequences of Noncompliance • Longer regulatory exams • Lawsuits • Reputation Risk• Reputation Risk
  4. 4. Fair Lending Laws • Fair Housing Act (FHA-1968) • Equal Credit Opportunity Act (ECOA-1974) • Home Mortgage Disclosure Act (HMDA-1975)
  5. 5. Fair Housing Act Prohibits discrimination in housing based a ous g ct on: – Race or colorace o co o – Religion National Origin– National Origin – Sex – Familial status – HandicapHandicap
  6. 6. Equal Credit Opportunity Act Prohibits discrimination in lending based on: S qua C ed t Oppo tu ty ct – Sex – Marital status C O– Race, Color, National Origin – Age – Religion – Receipt of protected income/public assistance – Exercise of rights under the consumer credit laws
  7. 7. Home Mortgage Disclosure Act • Data reporting requirements to detect Home Mortgage Disclosure Act ata epo t g equ e e ts to detect discrimination in housing related credit. • Applies to loan applications that are incomplete, withdrawn, denied, and originated.g • HMDA data collection policies, procedures andp , p internal controls need to be in place.
  8. 8. O t Di i i ti Open or blatant discrimination on a prohibited Overt Discrimination: Open or blatant discrimination on a prohibited basis. Example: A lender offers a credit card with a limit of upA lender offers a credit card with a limit of up to $750 for applicants aged 21 to 30 and $1,500 for applicants over the age of 30.for applicants over the age of 30.
  9. 9. Disparate Treatment: Different treatment based upon a prohibited Disparate Treatment: factor (Race, sex, national origin, etc.). • Considered discrimination because there is no credible, non-discriminatory reason to explain the diff i t t t hdifference in treatment, such as: – Denial of “similarly situated” applicants – Loan pricing and fees charged are not consistent
  10. 10. Disparate Impact • A uniform policy or practice that results in an Disparate Impact A uniform policy or practice that results in an adverse impact on a protected class of applicants.pp • Example – “loan minimums” that are not basedExample loan minimums that are not based on a business necessity.
  11. 11. Regulatory Direction • More regulatory resources dedicated to t ticonsumer protection. • NCUA Regulatory Alert 09-RA-09
  12. 12. Robert Zalewski, CUCE, CU HR Solutions 1-800-262-6285 ext. 493

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