For more than a year, lenders have complained about the tough enforcement regime and controversial legal theories espoused by the Justice Department's fair lending unit.
But this week’s fair lending compliance bulletin from the Consumer Financial Protection Bureau was an important reminder that DOJ has a new partner: the CFPB's Office of Fair Lending and Equal Opportunity.
Hours after the bulletin's release, Patrice Ficklin, the agency's assistant director for fair lending, offered a glimpse into the office's top priorities, including its rulemaking agenda, enforcement opportunities and coordination with other regulators.
"We're truly a horizontal function," Ficklin said at a panel discussion at a National Community Reinvestment Coalition conference in Washington, "because fair lending really does touch every aspect of what the bureau does."
Ficklin said the office, which was created by the Dodd-Frank Act, interacts with different offices and programs across the entire agency, including bank and nonbank supervision, rulemaking and community engagement. But banks expect the office to play its biggest fair lending role through enforcement.
CFPB has authority to enforce just two of the four federal fair lending laws — the Equal Credit Opportunity Act and the Home Mortgage Disclosure Act. The prudential banking regulators continue to enforce the Fair Housing Act and the Community Reinvestment Act.
The agency has independent litigating authority, meaning it can bring its own fair lending cases against banks and nonbanks in federal court. It can also hold adjudication proceedings before the bureau's own administrative judges, which can issue cease and desist orders and penalties, and provide equitable relief for borrowers.
Ficklin said her office is also "co-leading" the agency's fair lending enforcement program and priorities in collaboration with its Office of Enforcement.
The bureau must still refer fair lending violations to the Justice Department when there is evidence of a "pattern or practice" of discrimination, she said. "But we are currently in active dialogue with DOJ regarding these referrals and also regarding opportunities to engage in joint enforcement efforts with DOJ," Ficklin added.
On the supervision front, Ficklin's office is working with the bank and nonbank supervision teams to build out a fair lending supervision program.
"I actually have a fair lending staff member assigned to each and every supervision exam that is conducted by both bank and nonbank supervisors," she said. "Their responsibility is to collaborate with the folks that are under Peggy [Twohig] and Steve [Antonakes'] supervision to ensure that fair lending is covered in every examination."
The bureau must also issue several fair lending rules under Dodd-Frank, including new HMDA and ECOA reporting requirements, as well as rules under the Truth in Lending Act related to steering borrowers into certain products.
Ficklin said her office is working with the agency's rulemaking division now on a rule that would add a number of data fields that are collected under HMDA, including age, rate spread for all loans, collateral value, applicant credit score, total points and fees, prepayment penalty terms and teaser periods, among others.
The Fed had begun work on the rule before CFPB was created, and "most graciously handed over to us a significant body of information and data that were collected through that process," Ficklin said.
"So we're taking that and we're beginning that work and the planning toward implementing the data fields," she said.
