Better Take a Second Look!
By: Bill Dolan, CMB, AMP
For those of you who have not been following SCA’s blogs or newsletters for the past few weeks, much of our attention has focused on CRA, Fair Lending and HMDA.
Just last week, SCA posted an article highlighting a California Bank penalized by the Dept. of Justice (DOJ) to the tune of $31M for refusing to underwrite loans to predominately Black and Latino communities, the largest redlining settlement in department’s history.
This could never happen to you, right? If not, why not? Ask yourself the following questions:
Does your lending team really know what redlining is?
Has your CRA assessment area been drawn that excludes areas with relatively high concentrations of minority residents?
Who is reviewing your HMDA data on a regularly scheduled basis (President and Senior Management, Compliance Officer, Auditing, Lending) in the areas of number of applications received, withdrawn, approved not accepted, and closed for incompleteness in your market that has relatively high concentration of minority group residents compared to low concentrations of minority residents?
Fair Lending and CRA compliance are so deeply interrelated that regulators are using the HMDA data to demonstrate whether your institution is under-penetrating your market. It is therefore critical that you familiarize your organization with any/all apparent anomalies in your reported HMDA data within your assessment area.
You need to review prior CRA and Fair Lending performance evaluations to ensure that you are conducting advanced analysis regarding the following:
Institution’s geographic distribution of loans
Concentration of loans made within your assessment area
Customer complaint data
Economic and demographic data about your local communities
If you are unsure how to get started, look no further. If you have an upcoming CRA /Fair Lending exam or your staff is unsure as to how to read the data found on your HMDA LAR, SCA can provide your organization with a Compliance Audit and Data Analysis Review to address these specific areas. SCA’s Compliance Consultants are subject matter experts whose deep knowledge and work experience in this field spans over 25 years.
This settlement by the DOJ should send a very strong message to the financial industry that the regulators and examiners expect lenders to serve all members of your community and that you will be held accountable when you fail to do so.
Get started by contacting Bill Dolan, Director at (617) 694-2617 and also visit our website at www.scapartnering.com to learn more about SCA’s services we provide our industry each and every day.
