There have been numerous warning shots over the last year that Fair Lending is in the crosshairs, not only by the CFPB but also the Department of Justice (DOJ). In October the DOJ announced an “Initiative to combat modern-day redlining”.
The reference to “modern-day redlining” seems to refer back to what CFPB Director Chopra has referred to as “digital” and “algorithmic” redlining. While pouring data into automated systems may, on the surface, help prevent illegal discrimination, Director Chopra believes this “black box underwriting” may only make the situation worse.
He has recently stated, When consumers and regulators do not know how decisions are made…, consumers are unable to participate in a fair and competitive market free from bias.
The DOJ is wasting no time as there has already been a settlement tied to this initiative as well as several open investigations. More investigations are expected to be opened in the months ahead.
Keep in mind, redlining is just one area of focus when it comes to fair lending compliance. Be sure JOIN US for our webinar, “All About Fair Lending”, to learn more.
Published
2022/01/11