Fair and Responsible Lending

Fair Lending

Recent regulatory supervision and enforcement activities clearly signal the importance of establishing an effective fair lending program. Risk management efforts include identifying and defining inherent risk, establishing standards and controls for limiting risk, and initiating appropriate corrective action plans.

Understanding the complexity of business practices and the effectiveness of policies, procedures and processes is key to ensuring the institution is effectively managing fair lending risk. Performance analysis that includes statistical analysis and comparative file review, plays a key role in measuring the underwriting outcomes, application fall out rates, pricing, steering and redlining. In addition, lenders should evaluate and understand the credit needs of communities within their market areas.

Fair Lending services include:

• Program Development
• Program Review/Audit
• Statistical Performance Analysis
• Peer Analysis
• File Review
• Community Credit Needs Assessment
• Remediation and Issue Resolution
• Training

HMDA

The accuracy and completeness of an institution’s Home Mortgage Disclosure Act (HMDA) data is critical to fair and responsible lending risk management, as well as Community Reinvestment Act (CRA) performance. In addition, the low tolerance for errors imposed by federal and state regulators increases the need for a comprehensive data integrity management process. We assist lenders in validating the accuracy and completeness of HMDA data through statistical and systemic comparative analyses, as well as reviewing processes, procedures, and systems and loan files.

HMDA & CRA services include:

• Process Review
• Data Integrity
• File Review
• Training

View and subscribe to HMDA Hub, a HMDA Q&A Series in which CrossCheck Compliance answers questions that arise as lenders collect and review data and prepare their HMDA loan application register (LAR) for submission. These insights will help clarify ambiguities and ensure adherence to regulatory standards.

Community Reinvestment Act (CRA)

Depository institutions are subject to the Community Reinvestment Act (CRA) which is intended to encourage efforts to meet the credit needs of the communities they serve specifically low and moderate-income neighborhoods. Evaluating an institution’s CRA performance includes developing performance context and assessing lending, service, and investments test performance. We assist clients in reviewing performance consistent with a regulatory examination, establishing performance parity analysis, evaluating assessment areas, and ensuring the accuracy of the CRA loan register.

Additional CRA services include:

• CRA Performance Context
• CRA Parity Analysis
• CRA Peer Analysis
• Community Credit Needs Assessment

Representative Engagements

• CRA Performance Review– analyzed performance in anticipation of an upcoming exam, including lending, service, and investment tests
• Community Credit Needs Assessment– conducted a mortgage credit needs assessment of a selected MSA to identify housing needs, obstacles, and opportunities
• CRA Parity Analysis – analyzed lending activity compared to demographic and market data to identify gaps in lending performance
• Fair Lending Advisory– acted as an advisor to fair lending team in the development of statistical models designed to assess risk associated with marketing, underwriting, pricing, and loss mitigation
• Fair Lending and UDAAP Audit Program Development– developed audit programs to assess the effectiveness of internal risk management efforts associated with loan origination and servicing
• Fair Lending Examination Assistance– acted in an advisory role in responding to examination requests, evaluating redlining risk, and preparation for referral to DOJ
• Fair Lending Performance Review – performed an analysis of HMDA data to identify disparities in levels of assistance, underwriting, and pricing, as well as risk associated with steering and redlining
• Fair Lending Program Audit– performed an audit of the bank’s fair lending compliance management system (FL CMS)
• Fair Lending Program Review– comprehensive evaluation of the fair lending CMS and assistance in enhancing internal control environment
• HMDA Data Integrity– validated the accuracy of HMDA data previously submitted or in preparation for an upcoming submission using systemic data routines to identify errors and omissions

View Engagements