Fair Lending/Anti-Discrimination – Page 4 – Consumer Financial Services Watch

Township of Mount Holly: The United States Supreme Court Considers Whether the Fair Housing Act Recognizes Disparate-Impact Liability

Sep 05 2013

By: Paul F. Hancock, Andrew C. Glass, Melanie Brody, John L. Longstreth, Roger L. Smerage

On September 3, 2013, K&L Gates LLP filed a brief as amici curiae before the United States Supreme Court in Township of Mount Holly v. Mt. Holly Gardens Citizens in Action, Inc., a case in which the Court will consider whether the Fair Housing Act recognizes a disparate-impact theory of liability. The brief addresses the effect that the Court’s recognition of the disparate-impact theory would have on the residential mortgage lending industry and was filed on behalf of the American Financial Services Association, the Consumer Mortgage Coalition, the Independent Community Bankers of America, and the Mortgage Bankers Association. A copy of the as-filed brief is available here. The Court is likely to schedule oral argument in the matter for late 2013 or early 2014.

To read the full alert, click here.

Supreme Court Takes Mount Holly Disparate Impact Case

Jun 17 2013

By: Stephanie C. Robinson

Today, the Supreme Court granted certiorari in the appeal titled Township of Mount Holly, New Jersey v. Mt. Holly Gardens Citizens in Action, Inc., et al., No. 11-1507, agreeing to consider whether the Fair Housing Act allows claims under the disparate impact theory of discrimination. The disparate impact doctrine imposes liability on defendants for actions undertaken without discriminatory intent but which nonetheless have an allegedly disproportionately harmful effect on protected classes of persons.

Solicitor General Urges Supreme Court to Reject Mt. Holly Case; Argues No Review Is Needed as to Whether the Fair Housing Act Recognizes Disparate Impact Claims

May 22 2013

By: Andrew C. Glass, Roger L. Smerage

In an increasingly complex battle among the branches of the federal government, the Solicitor General recently urged the Supreme Court to deny certiorari in the appeal titled Township of Mount Holly, New Jersey v. Mt. Holly Gardens Citizens in Action, Inc., et al., No. 11-1507. The Mt. Holly matter seeks review of whether the Fair Housing Act recognizes a disparate impact theory of discrimination and if so, how courts are to analyze such claims. A disparate impact theory imposes liability on defendants for actions that are undertaken without discriminatory intent but that nonetheless have a disproportionately harmful effect on particular groups of individuals. The Supreme Court had previously granted certiorari to review these same questions in the appeal titled Magner v. Gallagher, No. 10-1032, which appeal the defendants subsequently withdrew under circumstances garnering review by Congress.

K&L Gates/Ernst & Young Symposium Provides Fair Lending and UDAAP Strategies

May 13 2013

On Thursday, May 9, K&L Gates and Ernst & Young co-sponsored a Fair and Responsible Banking symposium in New York City. The symposium gave our fair lending and UDAAP team a chance to discuss compliance and enforcement issues with over 70 in-house lawyers, fair lending officers and compliance officers from a wide array of institutions. K&L Gates and Ernst & Young strategized with capital markets investors, banks, mortgage lenders, auto lenders, credit card issuers and other unsecured lenders about how to tackle the challenges they face from today’s heightened regulatory scrutiny. The hot topics that were on everyone’s mind included, among other things:

developing and implementing effective compliance management systems
avoiding and defending disparate impact claims
identifying and curtailing unfair, deceptive, and abusive acts and practices
understanding and preparing for examinations or investigations
managing vendors appropriately

If you would like a copy of the materials from this event, please contact Melanie Brody (melanie.brody@klgates.com) or Stephanie Robinson (stephanie.robinson@klgates.com).

CFPB Issues Fair Lending Guidance for Indirect Auto Lenders

Mar 22 2013

By: Melanie Brody , Stephanie C. Robinson

On March 21, 2013, the CFPB issued CFPB Bulletin 2013-02: Indirect Auto Lending and Compliance with the Equal Credit Opportunity Act. In this bulletin, the CFPB describes its understanding of how the indirect auto lending industry works, and describes its view on how ECOA applies to indirect auto lending—including its theory on lender liability for disparities in dealer markups. The guidance offers advice to bank and nonbank indirect auto lenders within the CFPB’s jurisdiction on how they can limit their indirect auto fair lending risk. Read More

App Lets Users File Discrimination Complaints from Mobile Device

Feb 28 2013

By: Stephanie C. Robinson

In an effort to reach more consumers, HUD’s Office of Fair Housing and Equal Opportunity launched a new mobile app for iPhone and iPad today. The app gives users instant access to HUD’s online housing discrimination complaint form and information about fair housing rights. After downloading the app, consumers and fair housing advocacy groups will have what HUD Assistant Secretary for Fair Housing and Equal Opportunity John Trasviña called “faster and easier” access to the complaint form. This makes sense for repeat complainants like fair housing advocacy organizations. But for the average consumer looking to file a discrimination complaint, downloading an app rather than visiting HUD’s web site seems like an unnecessary extra step. In any case, the app is a valiant attempt by HUD to follow the CFPB’s lead in maximizing technology to reach out to consumers.

CFPB Provides Guidance on Effective Compliance Management Systems

Nov 07 2012

By: Jonathan D. Jaffe , Amanda D. Gossai

Last week, the Consumer Financial Protection Bureau (the “CFPB”) released its first Supervisory Highlights report, featuring issues that CFPB examiners discovered in the supervision period between July 21, 2011 and September 30, 2012. One issue upon which the CFPB focused was effective compliance management systems (“CMS”). This is not surprising given the CFPB’s focus since its inception on CMSs. Read More

Regulators Highlight Hot Topics in Fair Lending: Are You Ready?

Oct 19 2012

By: Elena Grigera Babinecz

This week the Non-Discrimination Working Group of the Financial Fraud Enforcement Task Force sponsored a webinar highlighting emerging fair lending issues and hot topics that financial institutions should be aware of as regulatory agencies continue to focus their attention on discrimination in the housing and finance markets. Whether you’re in the business of making residential mortgage, commercial, student, auto, or payday loans, or you offer credit cards, it is important to understand the regulators’ areas of interest and to ensure that your compliance program is designed to monitor and address any potential concerns in these areas. Read More

DOJ Doubles Down on Disparate Impact, Settles Discriminatory Pricing Case with SunTrust Mortgage

Jun 07 2012

By: Melanie Hibbs Brody, David G. McDonough, Jr.

The Department of Justice recently announced a $21 million settlement with SunTrust Mortgage over allegations that SunTrust’s neutral and non-discriminatory policy of granting loan originators discretionary pricing authority somehow resulted in loans to minority borrowers to be priced higher than loans to White borrowers. DOJ based its case on the disparate impact theory of discrimination; as such, the Department did not allege that SunTrust treated minority borrowers in a disparate or discriminatory manner. Instead, the case follows DOJ’s practice of filing fair lending cases solely on statistical analyses of loan data and without alleging that any person treated a borrower differently because of race or ethnicity. Read More

Supreme Court Case on Disparate Impact Voluntarily Dismissed – Parties in Magner v. Gallagher Say Never Mind

Feb 17 2012

By: Melissa S. Malpass

In a rare and unexpected move, the City of St. Paul last Friday agreed to dismiss its appeal to the U.S. Supreme Court challenging whether a violation under the Fair Housing Act may be proved under a disparate impact legal theory, or whether proof of intentional discrimination is required. As we posted previously, the Supreme Court on November 7, 2011 granted certiorari in Magner v. Gallagher to determine that issue. All briefs in the matter had been submitted, and oral argument was set for later this month. Read More

Catagory:Fair Lending/Anti-Discrimination