The document summarizes a presentation on fair lending laws given at the 2013 Virginia Credit Union League Fall Compliance Conference. It provides an overview of key fair lending laws and regulations, including the Equal Credit Opportunity Act, Home Mortgage Disclosure Act, and Fair Housing Act. It discusses fair lending examinations and best practices for compliance, such as conducting fair lending risk assessments and maintaining fair lending policies and procedures. The presentation warns that discriminatory lending practices can violate fair lending laws and result in lawsuits and settlements.
This document summarizes a presentation on fair lending laws given at a regulatory compliance seminar. It provides an overview of key fair lending laws, examinations, and best practices. The presentation discusses laws like the Equal Credit Opportunity Act and Home Mortgage Disclosure Act, and notes the Consumer Financial Protection Bureau's focus on fair lending compliance. It also outlines prohibited lending practices and provides guidance on developing fair lending policies and procedures to mitigate risks.
2013 Virginia Credit Union League Fall Compliance ConferenceE Andrew Keeney
This document summarizes a presentation on fair lending laws given at the 2013 Virginia Credit Union League Fall Compliance Conference. It discusses the key fair lending laws, such as the Equal Credit Opportunity Act and Home Mortgage Disclosure Act. It outlines prohibited practices under fair lending laws and highlights the NCUA's focus on fair lending compliance through examinations. It also provides an overview of the fair lending examination process and best practices credit unions can implement to mitigate fair lending risks.
This document provides an overview and summary of the 2014 NCUA Fair Lending Examinations training presented by E. Andrew Keeney. It discusses the key fair lending laws, regulations and guidance that credit unions must comply with, including the Equal Credit Opportunity Act, Home Mortgage Disclosure Act, Fair Housing Act and CFPB regulations. It outlines prohibited discriminatory practices and factors that the NCUA may focus on during fair lending examinations. The presentation also provides best practices for fair lending compliance.
Focus on Fair Lending - Member Select Mortgage PresentationKaufman & Canoles
The document summarizes a presentation on fair lending laws and best practices for credit unions. It discusses key fair lending laws like the Equal Credit Opportunity Act and Home Mortgage Disclosure Act. It outlines examination priorities for regulators like the NCUA and CFPB. It provides examples of prohibited lending practices and discusses periodic risk assessments and compliance programs credit unions should implement. It also summarizes some fair lending lawsuits and settlements with large lenders.
Strategic Loan Particpations - The Good, the Bad and Maybe Even the UglyKaufman & Canoles
E. Andrew Keeney gave a presentation on strategic loan participations for credit unions. He discussed the benefits of loan participations for both selling and buying credit unions, as well as the operational, legal and compliance risks involved. Keeney provided tips to avoid risks and potential liabilities, including performing thorough due diligence, obtaining contracts early, and annual reviews. He also summarized recent regulatory changes around loan participations and concentration limits.
Focus on Fair Lending... Tips to Avoid the TrapsE Andrew Keeney
This document provides an overview and summary of fair lending laws and best practices for avoiding fair lending violations. It discusses key laws like the Equal Credit Opportunity Act and penalties agencies like the CFPB and DOJ have issued for violations. The document also summarizes fair lending examination focus areas and provides tips for credit unions to implement like developing fair lending policies and monitoring for disparities in lending practices.
ACI's 20th National Conference on Consumer Finance Class Actions & Litigation with expert defense strategies for in-house and outside counsel on navigating class actions, litigation, and government enforcement actions in the consumer finance industry.
The document discusses policies defined by the NCUA Board of Directors and which policies truly require board action. It begins with defining what a policy is and how the NCUA views policy. It then provides a list of over 40 policies that credit unions are either required by regulation to have or that the NCUA says credit unions should have. It analyzes some of these policies, like those related to loan workouts and concentration risk, to determine if board approval is explicitly required by the NCUA.
This document summarizes a presentation on fair lending laws given at a regulatory compliance seminar. It provides an overview of key fair lending laws, examinations, and best practices. The presentation discusses laws like the Equal Credit Opportunity Act and Home Mortgage Disclosure Act, and notes the Consumer Financial Protection Bureau's focus on fair lending compliance. It also outlines prohibited lending practices and provides guidance on developing fair lending policies and procedures to mitigate risks.
2013 Virginia Credit Union League Fall Compliance ConferenceE Andrew Keeney
This document summarizes a presentation on fair lending laws given at the 2013 Virginia Credit Union League Fall Compliance Conference. It discusses the key fair lending laws, such as the Equal Credit Opportunity Act and Home Mortgage Disclosure Act. It outlines prohibited practices under fair lending laws and highlights the NCUA's focus on fair lending compliance through examinations. It also provides an overview of the fair lending examination process and best practices credit unions can implement to mitigate fair lending risks.
This document provides an overview and summary of the 2014 NCUA Fair Lending Examinations training presented by E. Andrew Keeney. It discusses the key fair lending laws, regulations and guidance that credit unions must comply with, including the Equal Credit Opportunity Act, Home Mortgage Disclosure Act, Fair Housing Act and CFPB regulations. It outlines prohibited discriminatory practices and factors that the NCUA may focus on during fair lending examinations. The presentation also provides best practices for fair lending compliance.
Focus on Fair Lending - Member Select Mortgage PresentationKaufman & Canoles
The document summarizes a presentation on fair lending laws and best practices for credit unions. It discusses key fair lending laws like the Equal Credit Opportunity Act and Home Mortgage Disclosure Act. It outlines examination priorities for regulators like the NCUA and CFPB. It provides examples of prohibited lending practices and discusses periodic risk assessments and compliance programs credit unions should implement. It also summarizes some fair lending lawsuits and settlements with large lenders.
Strategic Loan Particpations - The Good, the Bad and Maybe Even the UglyKaufman & Canoles
E. Andrew Keeney gave a presentation on strategic loan participations for credit unions. He discussed the benefits of loan participations for both selling and buying credit unions, as well as the operational, legal and compliance risks involved. Keeney provided tips to avoid risks and potential liabilities, including performing thorough due diligence, obtaining contracts early, and annual reviews. He also summarized recent regulatory changes around loan participations and concentration limits.
Focus on Fair Lending... Tips to Avoid the TrapsE Andrew Keeney
This document provides an overview and summary of fair lending laws and best practices for avoiding fair lending violations. It discusses key laws like the Equal Credit Opportunity Act and penalties agencies like the CFPB and DOJ have issued for violations. The document also summarizes fair lending examination focus areas and provides tips for credit unions to implement like developing fair lending policies and monitoring for disparities in lending practices.
ACI's 20th National Conference on Consumer Finance Class Actions & Litigation with expert defense strategies for in-house and outside counsel on navigating class actions, litigation, and government enforcement actions in the consumer finance industry.
The document discusses policies defined by the NCUA Board of Directors and which policies truly require board action. It begins with defining what a policy is and how the NCUA views policy. It then provides a list of over 40 policies that credit unions are either required by regulation to have or that the NCUA says credit unions should have. It analyzes some of these policies, like those related to loan workouts and concentration risk, to determine if board approval is explicitly required by the NCUA.
The Equal Credit Opportunity Act (ECOA) and Regulation B prohibit credit discrimination on the basis of race, color, religion, national origin, sex, marital status, age, receipt of public assistance, and the exercise of certain consumer rights. They require creditors to provide notices of adverse action and retain records. Discrimination can be overt, through disparate treatment, or result from policies that have a disparate impact without sufficient business necessity. Creditors must avoid discouraging applications and cannot require signatures beyond the applicant except under specific circumstances. Permissible considerations include assessing capacity to contract and immigration status.
AllRegs History of CFPB and the Mortgage IndustryAllRegs
Do you work for a mortgage company, real estate company, or financial services organization? Are you having trouble understanding what the Consumer Finance Protection Bureau is and what it does? Are you having trouble explaining CFPB to your staff? View this colorful summary of the History of the CFPB and the Mortgage Industry to learn more!
The document summarizes key topics from a presentation on regulatory compliance given by PolicyWorks LLC. It discusses the impact of the Dodd-Frank Act, the Consumer Financial Protection Bureau (CFPB) and its director Richard Cordray, CFPB priorities including complaints, student loans, credit cards, mortgages, and overdraft fees. It also covers the CFPB's work on ability-to-repay rules, mortgage disclosures, and fair lending laws.
Safe act 8 hour comprehensive live for all states final ginger's september 20...Go2Training
The document discusses the Dodd-Frank Act and its impact on the mortgage industry. It outlines various titles in the Act, including Title IX which provides investor protections and regulations for credit rating agencies, and Title X which authorizes the Consumer Financial Protection Bureau. The Act imposes stricter standards for mortgages, including risk retention requirements and reforms for credit rating agencies.
CFPB Regulations on Ability to Repay and Qualified Mortgages - MDDCCUA Traini...Kaufman & Canoles
The document summarizes new CFPB regulations on a lender's ability to repay determination and qualified mortgages that will take effect on January 10, 2014. It outlines the 8 factors lenders must consider to determine a borrower's ability to repay. It also discusses qualified mortgages and the safe harbor protections they provide from liability. Key aspects include limits on debt-to-income ratios, points and fees, loan terms, and exemptions for small creditors operating in rural or underserved areas.
Mortgage Servicing Transfers: Meeting the Operational and Regulatory DemandsRachel Hamilton
ACI) 3rd Bank and Non-Bank Forum on MORTGAGE SERVICING COMPLIANCE will keep you one step ahead of the new regulatory scrutiny and unparalleled networking opportunities. This conference will provide attendees with the latest insights and expert advice from our exceptional faculty.
The 2018 Regulatory Update - Are You Ready?Baker Hill
This document summarizes a presentation on 2018 regulatory updates given by Doug Johnson and Melissa Sewell. The presentation covered new HMDA and small dollar lending regulations, including key data fields examiners will focus on and new transaction testing guidelines. It also discussed upcoming regulatory hot topics like CECL accounting standards and electronic signatures.
CFPB Small Dollar Lending Exam Procedures Module 2 ECOA, FCRA, TILA and Othe...Justin Hosie
This document summarizes the CFPB's examination procedures for short-term, small-dollar lending (payday lending). Module 2 addresses compliance with laws around taking applications, evaluating applicants, and originating loans, including ECOA, FCRA, TILA, and other risks. Examiners will assess compliance with requirements for non-discrimination, accurate disclosures, and proper treatment of customers. Module 3 covers repayment of loans and issues around rollovers. While not as heavily regulated, repayment is still subject to important rules depending on loan features. Examiners will seek to identify any violations of applicable laws.
Information on the Borrower’s Rights and Lender’s Responsibilities in the U.S.johnbailey322
Peer to peer lending services in the United States and in some parts of Europe are raking in billions every year. In 2014 alone, U.S. lenders accumulated a total of $5.5 billion in revenue, and many predict that the amount will grow by a considerable margin this year.
The panel discussed recent developments in regulations affecting small dollar and military lending. Specifically:
1) The Military Lending Act may be expanded to cover nearly all consumer credit under Regulation Z, including credit cards, student loans, and mortgages. It would limit interest rates to 36% for active duty service members.
2) The CFPB has proposed new rules for small dollar loans through a rulemaking process. It is considering restrictions like limiting loans to affordable amounts and banning repeated refinancing.
3) The rules could significantly impact payday, auto title, and installment lenders by reducing loan volumes by 50-70%. It may also affect banks, credit unions, and the availability of emergency credit
NAFCU Ability to Repay and Qualified Mortgage RulesKaufman & Canoles
The document summarizes the Consumer Financial Protection Bureau's (CFPB) final mortgage regulations regarding a lender's ability-to-repay determination and qualified mortgage rules. It provides an overview of the regulations, which take effect on January 10, 2014, including the requirements for lenders to consider a consumer's ability to repay, factors in the underwriting process, and exemptions for qualified mortgages that provide safe harbors for compliance. It also discusses special provisions for balloon payment qualified mortgages and limits on points and fees.
Marybeth Neagle has over 25 years of experience in mortgage underwriting, lending, and risk management. She is currently an Underwriter III at Citizens Bank, where she underwrites conventional, construction, and portfolio loans, with an emphasis on analyzing self-employed applicants. Prior experience includes underwriting roles at SunTrust Bank, CCO Mortgage, Capital Center, LLC, and Saxon Capital, as well as credit analysis, collections management, and customer service roles at other financial institutions. She holds a Bachelor's degree from Virginia Commonwealth University and Radford University.
The document summarizes key aspects of consumer credit agreements under the National Credit Act. It discusses how the NCA aims to provide a single system of consumer credit regulation and promote a fair credit market, protecting consumers. It outlines the application and exclusions of the Act, different types of credit agreements, roles of regulatory bodies, registration requirements, consumer rights and protections against reckless lending.
The document discusses the high-interest/predatory lending industry, including reasons it exists, types of loans offered, interest rates charged, and state regulations. It notes debates around balancing access to credit for high-risk borrowers while protecting consumers from exploitation. States discussed include Missouri, Nevada, New Mexico, Iowa, and Kansas, with some passing laws to curb rates and fees while others debate further regulation or moratoriums on the industry. Both pros and cons are presented, as well as how the industry is responding through practices like extended payment plans.
The Role of Regulations in the Development of Digital FinanceJohn Owens
This presentation focuses on the balancing act between innovation, safety and soundness of digital financial services as well as steps to support consumer protection. It also includes a review of the current guidelines and a checklist format to guide regulators and policy makers to compare their own regulations, policies, environments and supervisory capacity in relation to emerging developments in the field of DFS.
This document discusses the importance of conducting due diligence on vendors for credit unions. It notes that credit unions now rely more on third parties for member services, so existing agreements may be outdated or not protective of credit unions. The NCUA also mandates that credit unions properly manage risks from third party relationships. The document provides examples of vendor management risks and horror stories from 2009 to emphasize the need for thorough due diligence. It offers tips for developing vendor management policies, conducting legal reviews of contracts, monitoring vendor relationships on an ongoing basis, and using software programs to help track third party risks.
Ceo, Director and Officer Liabilities and the Risks of Being SuedKaufman & Canoles
This document discusses various types of liabilities and risks that CEOs, directors, and officers of organizations may face. It covers their basic roles and responsibilities, including standards of conduct around good faith, reasonable belief, and acting in the best interests of the organization. It also discusses defenses like the business judgment rule. The document notes increasing risks from regulations, litigation, cyber threats, and other influences. It provides examples of management liability insurance options and coverage types that can help protect personal assets from lawsuits.
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The Equal Credit Opportunity Act (ECOA) and Regulation B prohibit credit discrimination on the basis of race, color, religion, national origin, sex, marital status, age, receipt of public assistance, and the exercise of certain consumer rights. They require creditors to provide notices of adverse action and retain records. Discrimination can be overt, through disparate treatment, or result from policies that have a disparate impact without sufficient business necessity. Creditors must avoid discouraging applications and cannot require signatures beyond the applicant except under specific circumstances. Permissible considerations include assessing capacity to contract and immigration status.
AllRegs History of CFPB and the Mortgage IndustryAllRegs
Do you work for a mortgage company, real estate company, or financial services organization? Are you having trouble understanding what the Consumer Finance Protection Bureau is and what it does? Are you having trouble explaining CFPB to your staff? View this colorful summary of the History of the CFPB and the Mortgage Industry to learn more!
The document summarizes key topics from a presentation on regulatory compliance given by PolicyWorks LLC. It discusses the impact of the Dodd-Frank Act, the Consumer Financial Protection Bureau (CFPB) and its director Richard Cordray, CFPB priorities including complaints, student loans, credit cards, mortgages, and overdraft fees. It also covers the CFPB's work on ability-to-repay rules, mortgage disclosures, and fair lending laws.
Safe act 8 hour comprehensive live for all states final ginger's september 20...Go2Training
The document discusses the Dodd-Frank Act and its impact on the mortgage industry. It outlines various titles in the Act, including Title IX which provides investor protections and regulations for credit rating agencies, and Title X which authorizes the Consumer Financial Protection Bureau. The Act imposes stricter standards for mortgages, including risk retention requirements and reforms for credit rating agencies.
CFPB Regulations on Ability to Repay and Qualified Mortgages - MDDCCUA Traini...Kaufman & Canoles
The document summarizes new CFPB regulations on a lender's ability to repay determination and qualified mortgages that will take effect on January 10, 2014. It outlines the 8 factors lenders must consider to determine a borrower's ability to repay. It also discusses qualified mortgages and the safe harbor protections they provide from liability. Key aspects include limits on debt-to-income ratios, points and fees, loan terms, and exemptions for small creditors operating in rural or underserved areas.
Mortgage Servicing Transfers: Meeting the Operational and Regulatory DemandsRachel Hamilton
ACI) 3rd Bank and Non-Bank Forum on MORTGAGE SERVICING COMPLIANCE will keep you one step ahead of the new regulatory scrutiny and unparalleled networking opportunities. This conference will provide attendees with the latest insights and expert advice from our exceptional faculty.
The 2018 Regulatory Update - Are You Ready?Baker Hill
This document summarizes a presentation on 2018 regulatory updates given by Doug Johnson and Melissa Sewell. The presentation covered new HMDA and small dollar lending regulations, including key data fields examiners will focus on and new transaction testing guidelines. It also discussed upcoming regulatory hot topics like CECL accounting standards and electronic signatures.
CFPB Small Dollar Lending Exam Procedures Module 2 ECOA, FCRA, TILA and Othe...Justin Hosie
This document summarizes the CFPB's examination procedures for short-term, small-dollar lending (payday lending). Module 2 addresses compliance with laws around taking applications, evaluating applicants, and originating loans, including ECOA, FCRA, TILA, and other risks. Examiners will assess compliance with requirements for non-discrimination, accurate disclosures, and proper treatment of customers. Module 3 covers repayment of loans and issues around rollovers. While not as heavily regulated, repayment is still subject to important rules depending on loan features. Examiners will seek to identify any violations of applicable laws.
Information on the Borrower’s Rights and Lender’s Responsibilities in the U.S.johnbailey322
Peer to peer lending services in the United States and in some parts of Europe are raking in billions every year. In 2014 alone, U.S. lenders accumulated a total of $5.5 billion in revenue, and many predict that the amount will grow by a considerable margin this year.
The panel discussed recent developments in regulations affecting small dollar and military lending. Specifically:
1) The Military Lending Act may be expanded to cover nearly all consumer credit under Regulation Z, including credit cards, student loans, and mortgages. It would limit interest rates to 36% for active duty service members.
2) The CFPB has proposed new rules for small dollar loans through a rulemaking process. It is considering restrictions like limiting loans to affordable amounts and banning repeated refinancing.
3) The rules could significantly impact payday, auto title, and installment lenders by reducing loan volumes by 50-70%. It may also affect banks, credit unions, and the availability of emergency credit
NAFCU Ability to Repay and Qualified Mortgage RulesKaufman & Canoles
The document summarizes the Consumer Financial Protection Bureau's (CFPB) final mortgage regulations regarding a lender's ability-to-repay determination and qualified mortgage rules. It provides an overview of the regulations, which take effect on January 10, 2014, including the requirements for lenders to consider a consumer's ability to repay, factors in the underwriting process, and exemptions for qualified mortgages that provide safe harbors for compliance. It also discusses special provisions for balloon payment qualified mortgages and limits on points and fees.
Marybeth Neagle has over 25 years of experience in mortgage underwriting, lending, and risk management. She is currently an Underwriter III at Citizens Bank, where she underwrites conventional, construction, and portfolio loans, with an emphasis on analyzing self-employed applicants. Prior experience includes underwriting roles at SunTrust Bank, CCO Mortgage, Capital Center, LLC, and Saxon Capital, as well as credit analysis, collections management, and customer service roles at other financial institutions. She holds a Bachelor's degree from Virginia Commonwealth University and Radford University.
The document summarizes key aspects of consumer credit agreements under the National Credit Act. It discusses how the NCA aims to provide a single system of consumer credit regulation and promote a fair credit market, protecting consumers. It outlines the application and exclusions of the Act, different types of credit agreements, roles of regulatory bodies, registration requirements, consumer rights and protections against reckless lending.
The document discusses the high-interest/predatory lending industry, including reasons it exists, types of loans offered, interest rates charged, and state regulations. It notes debates around balancing access to credit for high-risk borrowers while protecting consumers from exploitation. States discussed include Missouri, Nevada, New Mexico, Iowa, and Kansas, with some passing laws to curb rates and fees while others debate further regulation or moratoriums on the industry. Both pros and cons are presented, as well as how the industry is responding through practices like extended payment plans.
The Role of Regulations in the Development of Digital FinanceJohn Owens
This presentation focuses on the balancing act between innovation, safety and soundness of digital financial services as well as steps to support consumer protection. It also includes a review of the current guidelines and a checklist format to guide regulators and policy makers to compare their own regulations, policies, environments and supervisory capacity in relation to emerging developments in the field of DFS.
This document discusses the importance of conducting due diligence on vendors for credit unions. It notes that credit unions now rely more on third parties for member services, so existing agreements may be outdated or not protective of credit unions. The NCUA also mandates that credit unions properly manage risks from third party relationships. The document provides examples of vendor management risks and horror stories from 2009 to emphasize the need for thorough due diligence. It offers tips for developing vendor management policies, conducting legal reviews of contracts, monitoring vendor relationships on an ongoing basis, and using software programs to help track third party risks.
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This document discusses various types of liabilities and risks that CEOs, directors, and officers of organizations may face. It covers their basic roles and responsibilities, including standards of conduct around good faith, reasonable belief, and acting in the best interests of the organization. It also discusses defenses like the business judgment rule. The document notes increasing risks from regulations, litigation, cyber threats, and other influences. It provides examples of management liability insurance options and coverage types that can help protect personal assets from lawsuits.
The threat of fraud against your members continues to grow. Criminals will continue to find new ways to breach information technology systems and seek access to money and sensitive information from credit union members. This session covered the latest state-of-the-art ways to better manage fraud.
E. Andrew Keeney presented NCUA’s Examinations and Your Credit Union’s Rights at the NAFCU Annual Conference and Annual Solutions Expo on June 26, 2015.
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E. Andrew Keeney presented Social Media Compliance Risks at The Credit Union League of Connecticut's Compliance Series: Social Media Compliance Risks on February 10, 2015.
E. Andrew Keeney presented CyberSecurity (Emerging Threats) at The Credit Union League of Connecticut's Compliance Series: Social Media Compliance Risks on February 10, 2015.
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The document discusses the benefits of exercise for mental health. Regular physical activity can help reduce anxiety and depression and improve mood and cognitive function. Exercise causes chemical changes in the brain that may help protect against mental illness and improve symptoms.
NAFCU Regulatory Compliance Seminar - Required Policies and Risk Assessments:
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This document summarizes new integrated mortgage disclosure requirements under TILA and RESPA that take effect on August 1, 2015. It discusses the new Loan Estimate form that must be provided within 3 business days of application and the Closing Disclosure that must be provided 3 days before closing. It also covers timing requirements, tolerance limits for cost variations, and best practices for implementation. Creditors must make significant changes to comply with the new rules for providing standardized, consumer-friendly disclosures.
This document discusses NCUA Board policies and which ones truly require action. It begins with definitions of policy and how NCUA defines it. It then lists major topics policies often cover and provides examples from credit union handbooks. The document identifies 27 specific policies that are required by regulations, including those relating to BSA compliance, children's privacy, consumer lending, disaster recovery, fair lending, and information security. It notes that while board approval is not always needed, credit unions still must establish policies to address regulatory requirements.
The document provides an overview of the new integrated mortgage disclosure rules issued by the CFPB that combine early TILA disclosures and the GFE into a Loan Estimate form and combine the HUD-1 and final TILA disclosures into a Closing Disclosure form. Key points include: the Loan Estimate must be provided within 3 business days of application and the Closing Disclosure must be provided 3 business days before closing; tolerances allow for some cost variations between estimates and closing; implementation of the new rules will require significant changes and is effective August 1, 2015.
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Confirmation of Payee (CoP) is a vital security measure adopted by financial institutions and payment service providers. Its core purpose is to confirm that the recipient’s name matches the information provided by the sender during a banking transaction, ensuring that funds are transferred to the correct payment account.
Confirmation of Payee was built to tackle the increasing numbers of APP Fraud and in the landscape of UK banking, the spectre of APP fraud looms large. In 2022, over £1.2 billion was stolen by fraudsters through authorised and unauthorised fraud, equivalent to more than £2,300 every minute. This statistic emphasises the urgent need for robust security measures like CoP. While over £1.2 billion was stolen through fraud in 2022, there was an eight per cent reduction compared to 2021 which highlights the positive outcomes obtained from the implementation of Confirmation of Payee. The number of fraud cases across the UK also decreased by four per cent to nearly three million cases during the same period; latest statistics from UK Finance.
In essence, Confirmation of Payee plays a pivotal role in digital banking, guaranteeing the flawless execution of banking transactions. It stands as a guardian against fraud and misallocation, demonstrating the commitment of financial institutions to safeguard their clients’ assets. The next time you engage in a banking transaction, remember the invaluable role of CoP in ensuring the security of your financial interests.
For more details, you can visit https://technoxander.com.
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13 Jun 24 ILC Retirement Income Summit - slides.pptxILC- UK
ILC's Retirement Income Summit was hosted by M&G and supported by Canada Life. The event brought together key policymakers, influencers and experts to help identify policy priorities for the next Government and ensure more of us have access to a decent income in retirement.
Contributors included:
Jo Blanden, Professor in Economics, University of Surrey
Clive Bolton, CEO, Life Insurance M&G Plc
Jim Boyd, CEO, Equity Release Council
Molly Broome, Economist, Resolution Foundation
Nida Broughton, Co-Director of Economic Policy, Behavioural Insights Team
Jonathan Cribb, Associate Director and Head of Retirement, Savings, and Ageing, Institute for Fiscal Studies
Joanna Elson CBE, Chief Executive Officer, Independent Age
Tom Evans, Managing Director of Retirement, Canada Life
Steve Groves, Chair, Key Retirement Group
Tish Hanifan, Founder and Joint Chair of the Society of Later life Advisers
Sue Lewis, ILC Trustee
Siobhan Lough, Senior Consultant, Hymans Robertson
Mick McAteer, Co-Director, The Financial Inclusion Centre
Stuart McDonald MBE, Head of Longevity and Democratic Insights, LCP
Anusha Mittal, Managing Director, Individual Life and Pensions, M&G Life
Shelley Morris, Senior Project Manager, Living Pension, Living Wage Foundation
Sarah O'Grady, Journalist
Will Sherlock, Head of External Relations, M&G Plc
Daniela Silcock, Head of Policy Research, Pensions Policy Institute
David Sinclair, Chief Executive, ILC
Jordi Skilbeck, Senior Policy Advisor, Pensions and Lifetime Savings Association
Rt Hon Sir Stephen Timms, former Chair, Work & Pensions Committee
Nigel Waterson, ILC Trustee
Jackie Wells, Strategy and Policy Consultant, ILC Strategic Advisory Board
The Rise and Fall of Ponzi Schemes in America.pptxDiana Rose
Ponzi schemes, a notorious form of financial fraud, have plagued America’s investment landscape for decades. Named after Charles Ponzi, who orchestrated one of the most infamous schemes in the early 20th century, these fraudulent operations promise high returns with little or no risk, only to collapse and leave investors with significant losses. This article explores the nature of Ponzi schemes, notable cases in American history, their impact on victims, and measures to prevent falling prey to such scams.
Understanding Ponzi Schemes
A Ponzi scheme is an investment scam where returns are paid to earlier investors using the capital from newer investors, rather than from legitimate profit earned. The scheme relies on a constant influx of new investments to continue paying the promised returns. Eventually, when the flow of new money slows down or stops, the scheme collapses, leaving the majority of investors with substantial financial losses.
Historical Context: Charles Ponzi and His Legacy
Charles Ponzi is the namesake of this deceptive practice. In the 1920s, Ponzi promised investors in Boston a 50% return within 45 days or 100% return in 90 days through arbitrage of international reply coupons. Initially, he paid returns as promised, not from profits, but from the investments of new participants. When his scheme unraveled, it resulted in losses exceeding $20 million (equivalent to about $270 million today).
Notable American Ponzi Schemes
1. Bernie Madoff: Perhaps the most notorious Ponzi scheme in recent history, Bernie Madoff’s fraud involved $65 billion. Madoff, a well-respected figure in the financial industry, promised steady, high returns through a secretive investment strategy. His scheme lasted for decades before collapsing in 2008, devastating thousands of investors, including individuals, charities, and institutional clients.
2. Allen Stanford: Through his company, Stanford Financial Group, Allen Stanford orchestrated a $7 billion Ponzi scheme, luring investors with fraudulent certificates of deposit issued by his offshore bank. Stanford promised high returns and lavish lifestyle benefits to his investors, which ultimately led to a 110-year prison sentence for the financier in 2012.
3. Tom Petters: In a scheme that lasted more than a decade, Tom Petters ran a $3.65 billion Ponzi scheme, using his company, Petters Group Worldwide. He claimed to buy and sell consumer electronics, but in reality, he used new investments to pay off old debts and fund his extravagant lifestyle. Petters was convicted in 2009 and sentenced to 50 years in prison.
4. Eric Dalius and Saivian: Eric Dalius, a prominent figure behind Saivian, a cashback program promising high returns, is under scrutiny for allegedly orchestrating a Ponzi scheme. Saivian enticed investors with promises of up to 20% cash back on everyday purchases. However, investigations suggest that the returns were paid using new investments rather than legitimate profits. The collapse of Saivian l
4. WHY?
• March 2013 NCUA Letter to Federal Credit Unions
— 13-FCU-02
• NCUA Fair Lending Examination Program
• Priority for Consumer Financial Protection Bureau
• Because it is the Law!
4
5. Fair Lending Laws and Regulations
• Equal Opportunity Act (ECOA)
as Implemented by Regulation B
• Home Mortgage Disclosure Act (HMDA)
as Implemented by Regulation C
• The Fair Housing Act (FHA)
• NCUA Rules and Regulations Concerning
Non-Discrimination/Real-Estate Related Loans
• CFPB – Indirect Lending
5
6. What Are Fair Lending Laws?
• The Equal Credit Opportunity Act (ECOA) prohibits
discrimination in any aspect of a credit transaction.
It includes extensions of credit.
• The Homeowners Disclosure Act (HMDA) requires
financial institutions to meet certain reporting
requirements and compile and disclose loan
application data.
• The Fair Housing Act (FHA) prohibits discrimination
in all aspects of residential real-estate related
transactions.
6
7. CFPB Focus on Fair Lending
• Fair Lending Report, issued in December 2012
• CFPB Bulletin 2012-04 (outlines the CFPB's expectations on
fair lending)
• Memorandum of Understanding on information sharing
between the CFPB and Department of Justice
• CFPB Bulletin 2013-02 on Indirect Auto Lending
• Potential CFPB focus on Business Loans and Credit Cards
• CFPB Blog Posts: Fair Notice on Fair Lending
7
8. Violations!!!
It is a violation of a fair lending law to express,
orally or in writing, a preference based on
prohibited factors or to treat applicants differently
8
9. Guidance from the NCUA
•
•
•
•
•
Letter to Federal Credit Unions 13-FCU-02
Fair Lending Guide
Best Practices Document
Frequently Asked Questions Document
Fair Lending Exams and Off-Site Supervision Contacts
•
•
•
•
HMDA Outliers
Fair Lending Violations
General Compliance Risks
Certain “Other Factors”
9
10. NCUA’s Fair Lending Guide
• It provides a summary of fair lending laws and
regulations affecting federal credit unions – ECOA,
HMDA and FHA
• Contains key definitions
• Overview of Fair Lending Laws and Regulations
• Discusses the operational requirements of fair lending laws
• Lists review considerations that management should consider
• Provides checklists that serve as a starting point for
developing fair lending compliance procedures
10
11. Comprehensive List of All Fair
Lending Documents
http://www.kaufmanandcanoles.com/news/articles/fair
11
13. What Practices are Prohibited
Under Fair Lending Laws?
A lender may not…
•Provide different information or services regarding any aspect of the lending process,
application procedures or lending standards
•Discourage or selectively encourage applicants with respect to inquiries about or
applications for credit
•Refuse to extend credit or use different standards in determining whether to extend
credit
•Vary the terms of credit offered including the amount, interest rate, duration or type of
loan by class of applicants
•Use different standards to evaluate collateral
•Treat a borrower differently in servicing a loan
•Use different standards for pooling or packaging a loan in the secondary market
13
14. Overview of the Fair Lending Laws
Types of Lending Discrimination
•Overt Discrimination
•Lenders generally do not engage in overt discrimination
•Disparate Treatment
•May be evidenced by statements revealing that a lender explicitly considered prohibited factors
•Found where difference in treatment are not fully explained by legitimate nondiscriminatory
factors
•Disparate Impact
•Found where lending policies are applied equally, but nevertheless disproportionately
disadvantage certain persons on a prohibited basis
•If there is a disparate impact, the lender must show that the policy or practice serves a
legitimate business purpose
14
15. Overview of the Fair Lending Laws
(continued)
The Disparate Impact Theory is also known as the “Effects Test”
•Regulation B states that Congress intended the “effects test” concept to
be applicable to a lender’s determination of creditworthiness
•Effects test is outlined in the employment field by Supreme Court cases
•Title VII of the Civil Rights Act of 1964 prohibits discriminatory employment
practices
•In applying the discriminatory effects standard
•Under ECOA, the agencies and courts have used Title VII’s burden-shifting
framework
•Under the Fair Housing Act, HUD and many federal courts have used a burdenshifting approach
15
16. Overview of the Fair Lending Laws
(continued)
HUD’s Proposed Rule on Discriminatory Effects Standard
•Would establish uniform standards for determining when a housing
practice with a discriminatory effect violates the Fair Housing Act
•The standard would be the same under both the ECOA and the Fair
Housing Act
•Burden Shifting:
•Plaintiff must make a prima facie showing of disparate impact
•Burden of proof then shifts to the lender to justify its actions
•Plaintiff then has the burden of proving a less discriminatory alternative
16
18. Fair Lending Examination Overview
ECOA
•ECOA prohibits discrimination based on:
•Race or Color
•Religion
•National Origin
•Sex / Gender
•Marital Status
•Age (provided the applicant has the capacity to contract)
•The applicant’s receipt of income derived from any public assistance program
•The applicant’s exercise, in good faith, of any rights under the Consumer Credit
Protection Act
18
19. Fair Lending Examination Overview
(continued)
FHA
•FHA prohibits discrimination based on:
•Race or Color
•Religion
•National Origin
•Sex / Gender
•Marital status
•Familial Status (defined as children under the age of 18 living with a parent or legal
custodian, pregnant women, and people securing custody of children under 18)
•Handicap
19
20. What Can Credit Unions Do to
Mitigate Fair Lending Risks?
• Develop written fair lending policies and
procedures
• Perform risk assessments
• Ongoing monitoring of compliance
20
22. HMDA
All Credit Unions with more than $42 million in assets as of
December 31, 2012 must file HMDA data if they had an office
in a MSA and originated at least 1 purchase mortgage or
refinance during 2012.
22
23. Determine Whether the Credit Union
is Required to Submit HMDA Data
• Establish prices and procedures
• Ensure personnel responsible for maintaining the data are
properly trained
• Establish a verification system
• FIELD OF MEMBERSHIP LIMITATIONS CAUSE MOST
CREDIT UNIONS TO PRODUCE HMDA STATISTICS THAT
WOULD DEFINE THEM AS STATISTIC OUTLIERS
23
24. NCUA Targets for
Fair Lending Examinations
• HMDA Outliers
• Fair Lending Examinations
• CAMEL Rating
• Volume, Types or Complexity of lending products and
services
• Types of Communities served within FOM
• Prior Lending Discrimination Complaints
24
25. Off-Site Supervision Contacts
• Review of policies and procedures
• Audit and verify assessments and compliance
• Evaluate the accuracy of loan application registry
• 2009 FFIEC Interagency Fair Lending Examination
Procedures
25
26. Prohibited Practices
It is a violation of fair lending laws to express, orally or in
writing, a preference based on prohibited factors or to
indicate that the lender will treat applicant differently on a
prohibited basis even if the lender treats applicants equally.
26
27. Prohibited Practices (continued)
The FHA prohibits discrimination on the basis of handicap
and requires lenders to make reasonable accommodations
for a person with disabilities when such accommodations are
necessary to afford the person an equal opportunity to apply
for credit.
27
28. Prohibited Practices (continued)
Under ECOA and/or FHA, a lender may not, because of a
prohibited factor:
•Fail to provide information or services or provide different
information or services regarding any aspect of the lending
process, including credit availability, application procedures,
or lending standards
•Discourage or selectively encourage applicants with respect
to inquiries about or applications for credit
•Refuse to extend credit or use different standards in
determining whether to extend credit
28
29. Prohibited Practices (continued)
Under ECOA and/or FHA, a lender may not, because of a
prohibited factor:
•Vary the terms of credit offered, including the amount,
interest rate, duration, or type of loan
•Use different standards to evaluate collateral
•Treat a borrower differently in servicing a loan or invoking
default remedies
•Use different standards for pooling or packaging a loan in
the secondary market
29
30. Prohibited Practices (continued)
A lender may not discriminate on a prohibited basis because
of the characteristic of:
•An applicant, prospective applicant, or borrower
•A person associated with an applicant, prospective applicant, or
borrower (for example, a co-applicant, spouse, business partner, or
live-in aide)
•The present or prospective residents of the property to be
financed
•The neighborhood or other area where property to be financed is
located (e.g., on the basis of the area’s racial or ethnic composition
- known as “redlining”)
30
31. ED
ET
RG Prohibited
TA
Practices (continued)
Some fair lending concerns that may result in additional
regulatory review or enforcement actions include:
•Disparities in the pricing of credit, including fees or rates, based on
a prohibited factor and where price differences are not related to
pricing factors described in credit union policy and procedures
•Disparities in loan product selection or underwriting, where there is
discretion by loan officers, including where policy is unclear or
where exceptions are allowed
•Marketing and lending practices that exclude geographic areas
based on the racial or ethnic composition of those areas (redlining)
31
33. Fair Lending Program Based on the
Results of Risk Assessments
Triggers:
•Lack of specific guidelines for pricing
•Use of risk-based pricing that is not based on an objective criteria
•Broad pricing discretion
•Lack of clear documentation
•Lack of monitoring for pricing disparities
•Financial incentives for loan originators that charge higher prices
•Pricing policies or practices that treat applicants of a protected class differently
•Loan programs offered to borrowers of a particular protected class
•Complaints about pricing
33
34. Best Practices in Fair Lending Compliance
Self Testing
•Self-Testing and corrective actions do not expunge or extinguish legal
liability for violations of the law. BUT, self-testing and comprehensive
corrective action will be considered a substantial mitigating factor by
regulatory agencies, HUD and DOJ when contemplating possible
enforcement actions.
The most common types of self-testing are:
•Use of mystery shoppers to identify pre-application discrimination
•Surveys of loan applicants after lending decision
•Compliance Officers’ participation
•Outside Audit
34
35. Best Practices in Fair Lending Compliance
(continued)
Self Testing
•Under ECOA, a self-evaluation is different from a self-test.
A
self-test is defined as “any program, practice, or study designed
and used specifically to determine the extent or effectiveness of a
creditor’s compliance with the act or Regulation B; and creates
information that is not available and cannot be derived from
files/records related to credit transactions.”
•The report or results of the self-test (NOT self-evaluation) that a
lender voluntarily conducts are privileged, but the privilege applies
only if appropriate corrective action is being or has been taken.
35
39. DOJ Sued SunTrust Mortgage
Allegations – violations of ECOA and FHA for maintaining
policies and practices, including compensation systems,
which caused 20,000 African-American and Hispanic
borrowers to pay higher loan fees and costs.
•Higher fees allegedly were not based on borrower’s
creditworthiness or objective criteria related to borrower risk
•Retail mortgage loan officers were compensated accordingly to
net overages
•Loan officers were able to extract above-base rates
39
40. SunTrust Mortgage Settlement
In order to avoid the risks, expense and burdens of
litigation, SunTrust entered into a consent order and
agreed to:
•Maintain policies and procedures designed to ensure the price
charged for residential loan products is set in a nondiscriminatory manner consistent with ECOA and FHA
•Compensate affected African-American and Hispanic
borrowers through the administration of a $21,000,000
settlement fund
40
41. SunTrust Mortgage Policy Changes
•
•
•
•
•
•
•
•
•
Prohibited overages in its retail loans that exceeded 100 basis points
Required employees to document reason for any rate change
Required documentation of compliance with fair lending standards
Required an appropriate manager under the supervision of a
designated senior official to review compliance with new practices
Instituted a monitoring program including a review of overages,
subsidies and total brokerage compensation
Maintained a complaint resolution program to address consumer
complaints alleging discrimination
Provided equal opportunity training to management officials and
employees to participate in taking loan applications
Deposited $21,000,000 into a settlement fund to compensate borrowers
impacted by SunTrust discrimination
Submitted semi-annual reports to the Department of Justice
41
42. DOJ Settled with the Following after
Settling/Consent Orders for SunTrust
Wells Fargo
Texas Champion Bank
C&F Mortgage
First United Security Bank
GFI Mortgage Bankers
First Lowndes Bank
Nara Bank
Nixon State Bank
Pacifico Ford
PrimeLending
Springfield Ford
42
43. Discriminatory Brokers’ Fees
• DOJ sued AIG alleging it allowed mortgage
brokers to charge total brokerage fees 20 basis
points higher, on average, to black borrowers
than those fees charged to white borrowers
• Allegations – violations of FHA and ECOA
through its policy and practice of allowing brokers
unsupervised and subjective discretion to set the
amount of their direct fees
43
44. AIG Agreed:
•
Maintain annual fair-lending training appropriate to the nature of its
lending activities and requirements of ECOA and FHA
•
Develop and implement specific, non-racial standards for the
assessment of direct brokers’ fees including written documentation of
such fees in every loan file
•
Post and prominently display a Notice of Non-discrimination in each
location where loan applications are received
•
Require brokers to make full disclosure to applicants that includes the full
amount of direct broker fees and any other form of broker compensation
•
Develop and implement direct broker-fee monitoring programs including
a quarterly review by senior managers documented and presented to the
Board of Directors for review
44
45. AIG Agreed:
•
Contribute $1,000,000 to a qualified organization to provide credit
counseling, financial literacy and other related educational programs
targeted at African-American borrowers
•
Provide training with respect to AIG’s obligations under ECOA and FHA
for all management officials, loan officers and all other employees who
participated in the pricing of wholesale mortgage related loans
•
Deposit $6,100,000 in settlement account to pay damages to affected
borrowers
•
Maintain a complaint resolution program to address complaints regarding
mortgage loans
45
46. Minimum Loan Amounts
DOJ sued Luther Burbank Savings
•Allegations -- violations of ECOA and FHA when it enforced the
$400,000 minimum loan amount policy for its wholesale singlefamily residential mortgage loan programs causing a relatively
small number of mortgage loans to be made to African-American
and Hispanic borrowers
•DOJ alleged that they found evidence that Luther Burbank
Savings acknowledged its low levels of lending to these minority
groups but continued the minimum loan amount policy that created
the disparity, even after its regulator identified the policy as the
primary contributing factor
46
47. Consent Order
In order to avoid the cost, risk and burdensome litigation, Luther
consented and agreed to the following:
•Refrain from implementing a minimum loan policy similar to the prior $400,000
policy
•Provide notice to the Department of Justice of any proposed changes that would
increase the minimum loan amount
•Provide periodic fair lending training to all bank employees who may have
significant involvement in a single-family residential lending
•Offer all mortgage brokers who deal with the Bank the opportunity to participate in
its fair lending training program
•Employ at least one community development leader
•Participate in partnerships with one or more community-based organizations that
provide financial and credit services to minorities
47
48. Consent Order (continued)
In order to avoid the cost, risk and burdensome litigation, Luther
consented and agreed to the following:
•Spend at least $450,000 on the partnerships that are created one or more
community-based organizations
•Develop marketing, advertising and outreach programs to increase lending
presence among borrowers and minority census track spending at least $300,000
•Conduct at least 4 outreach programs each year for brokers and agents
•Invest $150,000 in credit counseling, financial literacy and other related educational
programs
•Contribute at least $1,100,000 in special financing programs for borrowers within
the areas affected by the bank’s prior violations of ECOA and FHA
•Offering interest rates below what Luther would normally charge
•Down payment or closing costs, grants or assistance
•Other financial aid
48
49. Steering
• DOJ Sued Wells Fargo alleging that Wells Fargo
placed African-American applicants in subprime
mortgages more often than similarly situated white
applicants from 2004-2008 even where AfricanAmerican borrowers qualified for prime loan products
-- a practice known as “steering”
• It was alleged between 2004 and 2008 prime
qualified African-American borrower were more than
four times as likely to be “steered” into subprime
mortgages than white borrowers
49
50. Consent Order
In order to avoid the risks, expenses and burdens of litigation,
Wells Fargo entered into a consent order as follows:
•Prohibit originators from receiving compensation based on any of
the terms or conditions of the loan if it varies from the par rate
•Limit total brokerage compensation to 3.25% of the loan amount
•The amount per loan is to be determined on a quarterly basis and
cannot vary by loan product
•Maintain a complaint resolution program to address alleged
discrimination regarding pricing or product placement
50
51. Consent Order (continued)
•
Maintain a fair lending auditing and monitoring program including
semi-annual review by senior managers and presentations to the
board of directors for review
•
Prominently display a notice of non-discrimination in each
location that accepts loan applications
•
Provide comprehensive fair lending training to management,
employees and mortgage brokers
•
Deposit $125,000,000 to an escrow account to compensate
borrowers affected by the ECOA and FHA violations and enter
into a contact with a settlement administrator to monitor the
disbursements of the settlement fund
51
52. Consent Order (continued)
•
Institute a new home buyer assistance program with at least
$50,000,000 in funding to be spent directly on down payment
assistance, closing costs and other home renovation financing
•
Adopt an agreed upon statistical model and process in order to
determine whether qualified African-Americans and/or Hispanic
borrowers who received subprime loans might have qualified for
prime loans and provide cash rebates to such impacted
borrowers
•
Send semi-annual reports of progress and compliance to the
Department of Justice
52
53. Redlining
• DOJ sued Citizens Bank for alleged violations of ECOA and
FHA when it engaged in “redlining”
• The term redlining derives from the discriminatory practice in
which loan officers would mark integrated minority census
tracts on residential maps in red, indicating that they
represent poor risks
• Citizens Bank allegedly expanded its operations, including
the acquisition of Republic Bank and opening new branch
offices, but limited its expansion to minority-white census
tracts
53
54. Redlining
Citizens Bank entered into a consent order in which it agreed
to the following:
•Refrain from engaging in any act or practice that discriminates
the basis of race in residential real estate transactions
on
•Include Wane County and the City of Detroit in its assessment areas
•Provide periodic training to all employees on fair lending practices
consistent with ECOA and FHA
•Form a partnership with the City of Detroit to promote sustained
homeownership in majority-black communities, including a $1,625,000
grant to provide existing homeowners in targeted neighborhoods up to
$5,000 for exterior improvements
54
55. Redlining (continued)
Citizens Bank entered into a consent order in which
it agreed to the following:
•Take into account the City of Detroit’s credit needs assessment in deciding
how best to provide residential mortgage lending to majority black areas in
Wane County
•Employ two community development leaders to focus on mortgage loan
generation and grant distribution in majority-black census tracts
55
56. Redlining (continued)
•
Open a loan production office in a majority-black area of the City of
Detroit to focus on marketing and intake of mortgage loan applications
•
Continue to evaluate the feasibility of branch expansion in majority
black areas of Wane County
•
Enhance advertising and marketing efforts in Wane County, including:
•
•
•
print, radio and point of distribution materials
direct marketing
at least four outreach programs per year for residential real estate
professionals doing business in majority-black areas
56
57. Redlining (continued)
•
Provide at least 6 outreach seminars to residents of majority black
areas per year, including credit counseling, financial literacy and other
related educational programs
•
Invest at least $1,500,000 for a loan subsidy program to residents in
majority black census tracts, including providing terms that are more
advantageous than normally provided such as: interest rate subsidies,
down payment assistance or closing assistance
57
58. Discriminatory Documentation Requests
•
DOJ filed a lawsuit against Bank of America for alleged violations of
ECOA and FHA in connection with its policy of requiring borrowers who
are recipients of social security disability income to produce additional
documentation of their disability in the form of a letter from their
physicians
•
HUD discovered this policy after it received only 3 separate complaints
from applicants about the bank’s requests
•
Non-disabled applicants are not required to submit documentation of
the duration or permanence of their income
58
59. Discriminatory Documentation Requests
In order to avoid the cost of litigation, Bank of America entered into
a consent order which provided as follows:
•Refrain from discriminating against any mortgage loan applicant who receives
disability income by asking for a letter from a doctor to document or substantiate
their disability income
•Take steps to destroy all medical information contained in its files with regard to the
HUD complaints
•Implement a monitoring program to ensure compliance with disability income
policies
•Take prompt corrective action, including compensation to victims and retraining of
employees who it finds disabled individuals’rights have been violated
59
60. Discriminatory Documentation Requests
(continued)
In order to avoid costly litigation, Bank of America entered into a
consent order which provided as follows:
•Inform applicable employees of the disability income policies and the terms of the
consent order, including documentation of employees’ acknowledgement and
understanding of such education
•Update fair lending training to include current disability income policies
•Maintain a complaint resolution program to address discrimination complaints
concerning verification of disability
•Enter into a contract with a settlement administrator for a minimum of $370,000,000
in relief
•Notify aggrieved individuals and compensate them between $1,000 and $50,000
depending on the degree of harm caused by Bank of America’s violations
60
61. Discrimination Based on Marital Status
DOJ filed a lawsuit against Compass Bank for alleged
violations of ECOA when the bank promulgated a policy of
discriminating against co-applicants for automobile loans
based on their non-spousal relationship
•DOJ alleged that Compass Bank issued rate sheets to over 400
participating automobile dealerships directing them to either quote
interest rates 1% to 2% higher than base rates for unmarried
coapplicants or to deny them the right to apply altogether
61
62. Discrimination Based on Marital Status
In order to avoid costly litigation, DOJ and Compass Bank entered into a
settlement/consent order in which it was agreed to as follows:
•Ensure that the buy rates for automobile loans are made available on no less
favorable terms to unmarried co-applicants than married co-applicants
•Continue to distribute new rate sheets that provide equal terms to unmarried coapplicants as married applicants to participating automobile dealerships
•Distribute the amended credit policy to all employees involved in setting rates for
indirect automobile loans
•Provide annual equal opportunity training to employees and officers who
are
involved in the setting of rates and secure a signed statement of acknowledgement
and receipt of the consent order by such employees and officers as well as their
completion of training
62
64. Best Practices
Commitment from Board and Senior Management
1.To maintain an effective fair lending compliance management
system
2.To allocate the appropriate amount of resources to ensure that
compliance function can mitigate fair lending risks
3.Learn from those that have been sued by DOJ
64
65. Best Practices
Know Your Data
Credit Unions should carefully review their data and
assessment area information for any potential fair lending
concerns (such as prohibited basis disparities in pricing and
underwriting, irregular assessment areas, etc.)
65
66. Best Practices
Know Your Products
Credit Unions should incorporate a compliance review of all
proposed products and services early in the development
cycle, before the product is offered to members, to
proactively address potential fair lending risks
66
67. Best Practices
Self-Tests and Self-Evaluations
Self-tests and self evaluations can serve as important components of
an institution’s fair lending compliance management program
1.A self-test is any program, practice or study that is designed and specifically used to
determine the extent or effectiveness of the institution’s compliance with the ECOA and
the FHA. It creates data or factual information that is not otherwise available and cannot
be derived form loan, application or other records related to credit transactions.
2.A self-evaluation, while generally having the same purpose as a self-test, does not
create any new data or factual information, but uses data readily available in loan or
application files other records use in credit transactions.
3.The report or results of the self-test (NOT self-evaluation) that a lender voluntarily
conducts are privileged, but the privilege applies only if appropriate corrective action
is being or has been taken.
67
68. Best Practices
Fair Lending Risk Assessments
•Risk assessments allow a credit union to develop an
effective fair lending compliance management program to
mitigate fair lending risks
68
69. Best Practices
Avoid Discouraging Applicants
Credit Unions should carefully review their lending process to
avoid discouraging applicants
•Refrain from making potentially discriminatory comments or
stating personal opinions about the location of a home
•Avoid requiring prospective applicants to provide their social
security number and/or have their credit report pulled before
providing basic loan product information
•Avoid inconsistency in referrals
69
70. Best Practices
Avoid Potential Steering
If a credit union has multiple lending options available to
members they should advise the potential applicants of all
options and explain the advantages and disadvantages of
each
70
71. Best Practices
Fair Lending Training
•A formal fair lending training program, tailored to the credit
union, should be implemented to remind employees about
the requirements of fair lending laws, and to reinforce
policies and procedures
•The training should address all aspects of the application
process
•Prominent displaying of signage
71
72. NCUA's Recommendations
for Best Practices
• Develop written fair lending policies and
procedures
• Conduct periodic fair lending risk
assessments
• Develop a fair lending compliance program
72
73. Best Practices
Paper Documentation for Fair Lending Policies
and Procedures
•Credit Unions need a clear set of policies and procedures
that include a thorough documentation
of all activities
Lending
•The formal policies and procedures must commence with
the pre-application process, as well as the application
process
73
74. Best Practices
Second Review Process
Credit Unions should consider implementing a second review
process to ensure that all credit decisions receive a “second
look” and to monitor whether the decisions are consistent
with its policies and procedures and not made on a
prohibited basis. This review process should carefully
monitor any exceptions and decisions where discretion is
allowed.
74
75. Summary Targets
and Key Takeaways
• Learn from the Litigation
• Documentation/Policies and Procedures
• Conduct your own Fair Lending Exam using the
NCUA Examination Documentation
• Second Review
• Monitor All Resources to Stay Current
• K&C Link to All Documentation
http://www.kaufmanandcanoles.com/news/articles/fair_lendin
75
76. E. Andrew Keeney, Esq.
Kaufman & Canoles, P.C.
150 West Main Street, Suite 2100
Norfolk, VA 23510
(757) 624-3153
eakeeney@kaufcan.com
77. 2013 Virginia Credit Union League
Fall Compliance Conference
October 16, 2013
E. Andrew Keeney, Esq.
Kaufman & Canoles, P.C.