On November 16, 2011 the United States Department of Housing and Urban Development (“HUD”) released a proposed rule to establish that proof of intentional discrimination is not necessary to establish a violation of the Fair Housing Act, and that a violation may be established under a disparate impact approach. HUD’s proposal makes clear the intention of the agency to apply this new approach to lenders. In describing policies “that may have a disparate impact,” the proposal references: “mortgage pricing policies that give lenders or brokers discretion to impose additional charges or higher interest rates unrelated to a borrower’s creditworthiness” and “credit scoring overrides provided by a purchaser of loans.” Read More
Those who have been concerned about the expansive powers of the new Consumer Financial Protection Bureau (“CFPB” or the “Bureau”) should ready themselves for the risk assessment reviews that the Bureau is about to initiate. The CFPB recently released the first edition of its Supervision and Examination Manual (“Examination Manual”), which provides an overview of the Bureau’s supervision planning process and details the Bureau’s examination procedures. A key component of the Examination Manual is the CFPB’s Consumer Risk Assessment process, which evaluates supervised entities based on the amount of risk their activities pose to consumers, identifies sources of risk, and assesses the quality of risk controls put in place by the supervised entities.
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