Fair Lending

When our Review Team conducts a compliance review, they always have fair lending in the back of their mind. They are looking for anything of concern in loan files, adverse action notices, advertising, complaints, etc. They may also dive a little deeper and look at any fair lending risk assessments, policies and procedures, underwriting standards, exception tracking, HMDA analysis, training efforts and more. This often includes interviews with lending staff to ensure consistency in carrying out an institution’s policies and procedures. When lenders give them different answers to the same question, it raises some red flags. Having all your lenders on the same page is important. A few areas where we see inconsistencies include:

• Procedures and processes for requesting, documenting, and approving exceptions (loan terms, rate, etc.);
• Any approval process for waiving loan fees;
• Any process for grossing up nontaxable income, including what forms of nontaxable income is to be grossed up and ensuring underwriting consistency among all lenders;
• Treatment of any types of income an institution won’t accept, such as bonuses, gambling, commissions, etc.; and,
• The credit report fees charged to married joint applicants when compared to unmarried joint applicants.

Published
2025/09/16