On April 14th the Consumer Financial Protection Bureau’s (CFPB) Office of Fair Lending and Equal Opportunity issued its annual report on fair lending. The report provides an overview of the work that the Bureau has done over the past year to provide oversight and enforcement of the fair lending laws under its jurisdiction. The report provides details about how CFPB is working to ensure lenders are following fair lending laws for consumer loans such as for student, mortgage and auto loans.
The report also raised concerns about fair lending within the commercial lending sector. In particular, the report provides an update on the process CFPB is taking to develop a rule that would require small business lenders to provide the CFPB with additional new data on women and minority - owned business loan applicants. CFPB’s authority to issue a rule on this topic comes from Section 1071 of the Dodd Frank Act. However, because the ECOA prevents lenders from asking applicants questions about race, color, religion, etc., the CFPB will ultimately have to provide guidance to help resolve this legal conflict.
CFPB reports that it is currently in the the pre-rule stage, which will likely continue through mid-2017. Meanwhile, the Bureau continues to conduct outreach and research on policy options. The CFPB said it expects to expand its supervisory activity into the small business lending marketplace, and this activity will provide key information to supplement its research, especially with respect to the credit application process and any associated fair lending risk.
The CFPB has not provided detailed information about when it might publish a proposed rule, and Experian will continue to monitor this issue that is important to our clients.