“An ounce of prevention is worth a pound of cure”: Fair lending issues

first_img 9SHARESShareShareSharePrintMailGooglePinterestDiggRedditStumbleuponDeliciousBufferTumblr Lately, we’ve been receiving some questions stemming from fair lending issues that came up during NCUA examinations. We will review some of these today, but overall credit unions can take a variety of actions to proactively address fair lending risk. These actions include carefully drafting fair lending policies and procedures, training employees, performing risk assessments and ongoing monitoring of compliance with fair lending laws.Fair lending laws are designed to provide fair and equal access to credit, based on individual creditworthiness, without regard to a prohibited basis such as race, gender or national origin. Fair lending laws include the Equal Credit Opportunity Act (Regulation B), Home Mortgage Disclosure Act (Regulation C), and Fair Housing Act.From a litigation perspective, discrimination cases are often based on one of two theories – “disparate treatment” or “disparate impact.” A standard disparate treatment case involves a conscious decision by the credit union to discriminate against an applicant on a prohibited basis. On the other hand, disparate impact cases are far more nuanced and fact intensive. These types of cases involve a facially neutral policy that has a disparate impact (or disproportionately burdens) members of a protected class. Disparate impact cases do not require applicants to demonstrate an intent to discriminate and may be proven using statistical evidence. continue reading »last_img

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