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Last week — roughly 8 1/2 years after the CFPB published a letter to financial institutions promising to develop rules “expeditiously” — the CFPB held an information-gathering symposium on Section 1071 of the Dodd-Frank Act. Section 1071 amended the Equal Credit Opportunity Act to require that financial institutions collect and report information concerning credit applications made by women- or minority-owned businesses and by small businesses.

As we previously noted, once Section 1071 is implemented, institutions will be required to collect information regarding the race, sex, and ethnicity of the principal owners of small businesses and women- and minority-owned businesses. Collection of this information is designed to “facilitate enforcement of fair lending laws,” among other things. Applicants can refuse to provide required information, but the financial institution must retain the required demographic information that it collects and submit it to the CFPB. Section 1071 mandates that, where feasible, a financial institution’s underwriters, officers, employees, or affiliates involved in making credit determinations should not have access to this demographic information, and applicants must receive notice if those individuals do receive access to demographic information.

While the CFPB is responsible for drafting rules to implement Section 1071, it had not previously taken significant steps to meet that obligation other than reporting on some preliminary research it conducted in 2017. The CFPB had moved the Section 1071 rulemaking to “long-term” status. However, in its Spring 2019 rulemaking agenda, the CFPB indicated that it expected to resume pre-rulemaking activities related to Section 1071.
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Last week, the CFPB announced that it will hold a symposium on Section 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) on November 6, 2019. This will be the third in a series of symposia held by the CFPB. Section 1071 of the Dodd-Frank Act amended the Equal Credit Opportunity Act (“ECOA”) to require financial institutions to collect, report, and make public information about credit applications made by women- and minority-owned businesses and small businesses. The CFPB is responsible for drafting rules to implement Section 1071, but, other than issuing a Request for Information in 2017, has not yet taken significant steps to meet this statutory requirement. The stated purpose of the symposium is to hear various perspectives on the small business lending marketplace and CFPB’s implementation of Section 1071. The CFPB had moved the Section 1071 rulemaking to long-term status, but indicated in its Spring 2019 rulemaking agenda that it expected to resume pre-rulemaking activities. With this symposium, the CFPB appears to be (re)starting those activities.

Once Section 1071 is implemented, institutions will be required to collect information regarding the race, sex, and ethnicity of the principal owners of small businesses and women- and minority-owned businesses. Applicants have the right to refuse to provide required information. Financial institutions must retain required demographic information and submit it to the CFPB.
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On August 19, the U.S. Department of Housing and Urban Development (HUD) published a proposed rule for the purpose of aligning HUD’s 2013 Disparate Impact Rule with the Supreme Court’s 2015 decision in Texas Department of Housing and Community Affairs v. Inclusive Communities. HUD sought comments from relevant stakeholders and the public on the

The saga over whether to include a controversial “preferred language” question on the new redesigned Uniform Residential Loan Application (URLA) continues. Last week, the Federal Housing Finance Agency (FHFA) changed course yet again and decided to remove the language preference question from the redesigned URLA. Instead, the question will be moved to a separate, optional

Since the Consumer Financial Protection Bureau’s inception in 2011, the Office of Fair Lending and Equal Opportunity (Office of Fair Lending) has been a powerful force within the agency. This week, Acting Director Mick Mulvaney announced that the Office of Fair Lending will be transferred from where it currently resides – in the Division of

The Federal Housing Finance Agency (FHFA) rejected the pleas of many in the mortgage industry by adding a question about the applicant’s language preference to the future Fannie Mae/Freddie Mac Uniform Residential Loan Application (URLA) (Form 1003/65). While the FHFA is seeking to promote access to credit for consumers with limited English skills, lenders remained

When, if at all, should a mortgage lender or servicer be required to conduct business in a language other than English when the consumer has expressed a preference that language? The Federal Housing Finance Agency (FHFA) is seeking input on actions Fannie Mae and Freddie Mac could take to promote access to mortgage credit for

On June 22, 2017, the CFPB’s Student Loan Ombudsman put out its annual report on student loans, as required by the Dodd-Frank Act. The report analyzes complaints submitted by consumers about student loan servicers between March 2016 and February 2017. Many of the complaints relate to practices, such as payment processing, customer service and borrower communication, and income-based repayment plan enrollment, that the CFPB has frequently scrutinized in the past through supervision and enforcement activities.

However, the majority of the report focuses on complaints from consumers related to the Public Service Loan Forgiveness (PSLF) program, which allows those who enter careers in public service to have their student loans forgiven after a decade. The CFPB’s report criticizes servicers’ alleged failures to actively advise borrowers on how to qualify for PSLF, track their progress toward PSLF completion, and inform them about the requirements of the PSLF program. In conjunction with the report, the CFPB updated its education loan examination procedures to include additional questions about the PSLF program.
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On Friday, January 13, the Department of Justice (“DOJ”) filed a lawsuit against a Minnesota bank in which it alleged that the bank violated the Fair Housing Act and the Equal Credit Opportunity Act by unlawfully redlining in the Minneapolis-St. Paul-Bloomington metropolitan statistical area (“Minneapolis MSA”).  The complaint, filed in the U.S. District Court for the District of Minnesota, claims that from 2010 to at least 2015, the bank purposely avoided serving the credit needs of residents in majority-minority neighborhoods while meeting the credit needs of residents in majority-white neighborhoods.  The DOJ is seeking damages for aggrieved persons, civil money penalties, and injunctive relief. The bank has chosen to litigate, rather than settle, as it believes the DOJ’s claim is baseless.
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