Fair Lending

Redlining is the practice of treating geographies with a minority concentration differently than those without a minority concentration. As a regulator, Michael P. Wallace managed every examination that included a redlining focal point over a five-year period.  We also have first-hand experience with a redlining examination that resulted in a landmark Consent Order with the U.S. Department of Justice.  We follow the “four prongs” of redlining:

Modeled after examination procedures, this our most extensive Fair Lending offering.  Our Fair Lending Risk Assessments (FLRA) follow the Interagency Fair Lending Examination Procedures (IFLEP), focusing on a detailed review of your bank’s policies, procedures, internal controls, and lending patterns.  We identify the IFLEP “risk factors” for HMDA/residential real estate, consumer, commercial, and agricultural applications and loans.  These risk factors are subject to statistical testing methodologies to determine the levels of residual risk.  We also conduct an evaluation of your Fair Lending Compliance Management System based on interagency guidance.  The FLRA will determine focal points (comparative file reviews or audits) that should be conducted in conformance with IFLEP and risk-based examination principles.

This is our newest, automated tool.  We can quickly parse HMDA or other data to determine lending patterns exhibiting elevated Fair Lending risks.  Based on statistical testing methodologies, our Fair Lending Dashboards evaluate HMDA and other loan data by loan type, lending channel, geographic market, and the prohibited bases of ethnicity, race, sex, age, and minority concentration (for redlining concerns). The Fair Lending Dashboards include the following aspects of credit operations, as set forth in IFLEP:  Underwriting, Pricing (and Other Terms and Conditions), Steering, Redlining, and Marketing.