Credit unions: Don’t get bitten by fair lending compliance issues
by. Steve Gibbs
Being a native Texan, one learns to remember (and live by) the numerous “gems” of wisdom passed down through the generations from our sage pioneer ancestors. Sayings like “Make hay while the sun shines…” teaches us to diligently work when the opportunity is there. “That dog don’t hunt” is another way of telling a person that something just doesn’t “add-up” or make logical sense. My favorite, and an appropriate description of the current compliance environment, is “If it was a snake, it would have bitten me.” Such is the case with Fair Lending.
In 2009, Interagency Fair Lending Examination Procedures were released to banks and credit unions in the form of 09-RA-09. Not much was said at the time with the exception of “It’s coming down the line…” (another convenient idiom used as a warning of the need for impending action or as a reason for others to procrastinate). Recently, NCUA began sending out letters advising of pending Fair Lending Examinations to be performed off-site for the receiving credit union(s). Obviously, we need to realize that we are now “down the line” and the “rattling” you may be hearing isn’t a baby; however you don’t have to be “bitten”.
There are a number of actions that you can take to be better prepared should your credit union become the recipient of a Fair Lending examination:
- Review Basic Data Resources – this includes Loan Products, Lending Markets, Decision Centers, Lending Time Frames, and elements of Prohibited Basis;
- Board and Management Support – Review of Policies, Procedures, and any reports related to Fair Lending. Policies should include Lending (Consumer, Real Estate, Business); Fair Lending (addressing ECOA/Reg. B and Fair Housing); Ability to Repay (can be separate or part of the Lending Policy), and; Appraisal Policy, Procedure and Guidelines;