Equal Credit Opportunity Act (ECOA) – Consumer Financial Services Watch

CFPB Revises Supervisory Appeals Process

Nov 12 2015

The CFPB recently revised its policy on Appeals of Supervisory Matters. Supervisory appeals are an avenue for supervised entities to obtain a second opinion from CFPB headquarters about examiners’ findings. However, the Bureau’s policy excludes the most significant matters — specifically, all aspects of enforcement — from this process.

In 1994, Congress required the federal prudential regulators to establish “an independent intra-agency appellate process” that is “available to review material supervisory determinations,” with “appropriate safeguards … for protecting the appellant from retaliation by agency examiners.”

Although the Bureau is not expressly subject to this congressional mandate, it established a similar appeals process in 2012. The Bureau’s policy allows entities to appeal less-than-satisfactory compliance ratings (a 3, 4, or 5) and adverse findings in a supervisory letter or examination report, but not the supervisory letter or examination report itself.

None of the regulators allow a supervised entity to use the appeals process to contest the decision to pursue an enforcement action. But in the case of the OCC, “[w]hile banks may not appeal a decision by [examiners] to pursue a formal enforcement-related action, banks may appeal conclusions in” an exam report that underlies a potential enforcement action.

Key Takeaways From the CFPB’s and DOJ’s Redlining Settlement With Hudson City Savings Bank

Sep 25 2015

By: Melanie Brody, Anjali Garg

On Thursday, September 24, 2015, the CFPB and DOJ filed a complaint and proposed consent order against Hudson City Savings Bank (“Hudson City”) alleging violations of the Equal Credit Opportunity Act and Fair Housing Act. The complaint alleges that Hudson City discriminated against Black and Hispanic borrowers by redlining majority-Black-and-Hispanic neighborhoods (defined in the consent order as a census tract in which more than 50 percent of the residents are identified in the 2010 U.S. Census as either “Black or African American” or “Hispanic or Latino”) in its residential mortgage lending in New York, New Jersey, and Pennsylvania. The complaint alleges that Hudson City engaged in redlining through its (1) location of branches and loan officers, (2) exclusion of Black and Hispanic census tracts from its Community Reinvestment Act (“CRA”) assessment area, (3) use of brokers outside of majority Black and Hispanic neighborhoods, (4) marketing directed at neighborhoods with relatively few minority residents, and (5) exclusion of residents from majority-minority counties from discounted home improvement loans for borrowers with low to moderate incomes.

The Supreme Court to Consider Whether Spousal Loan Guarantors Are “Applicants” for Credit under ECOA

Mar 06 2015

By: Andrew C. Glass, Olivia Kelman

The United States Supreme Court has granted certiorari to decide whether the Equal Credit Opportunity Act (“ECOA”) excludes loan guarantors from the definition of “applicants” entitled to bring suit under the Act. See Hawkins v. Community Bank of Raymore, No. 14-520 (U.S. Mar. 2, 2015). Specifically, the Court will decide whether the Federal Reserve Board exceeded its authority in its 2003 amendment to Regulation B, the regulation implementing ECOA, to purportedly bring guarantors within the ambit of ECOA’s protection. The Court’s decision may have far-reaching implications for lenders extending credit guaranteed by a non-borrower.

Tag:Equal Credit Opportunity Act (ECOA)