CFPB Issues 2022 Annual Fair Lending Report

The CFPB recently released its 2022 Fair Lending Report to Congress, highlighting the CFPB’s fair lending activities in several key areas, including enforcement, rulemaking, and stakeholder engagement.

The CFPB conducted one public fair lending-related enforcement action in 2022.  This action—which alleged redlining by a non-depository mortgage lender—was brought jointly by the CFPB and the DOJ, and resulted in a consent order requiring the lender to pay more than $20 million in loan subsidies and penalties, as well as other relief.

The Report also noted that the CFPB made five referrals in 2022 to the DOJ, including four matters involving discrimination on the basis of race and national origin in mortgage lending (redlining) and one matter involving discrimination in underwriting mortgage loans on the basis of receipt of public assistance income.  The CFPB also highlighted its supervisory activity, noting that it initiated 32 fair lending examinations or targeted reviews in 2022, representing a 146 percent increase in fair lending examinations and targeted reviews since 2020.

The Report highlighted three fair lending-related rulemakings in 2022:

• A now-final rule amending Regulation B to require covered financial institutions to collect and report to the CFPB data on applications for credit for small businesses, including women- and minority-owned businesses.

• The CFPB published an outline of proposals and alternatives under consideration to prevent algorithmic bias in connection with Automated Valuation Models (AVMs) and home valuations.  The CFPB and five other agencies subsequently issued a proposed rule seeking to implement quality control standards for the use of AVMs in the mortgage process.

• Under HMDA (Regulation C), the CFPB issued a final rule amending the official commentary regarding the asset-size exemption threshold and a technical amendment regarding the coverage threshold for closed-end mortgage loans.

The Report also identified various fair lending supervisory guidance and other formal and informal publications by the CFPB in 2022 on topics such as: unlawful consideration of religion when making decisions on financial products; appraisal discrimination; and financial issues facing rural communities.

Finally, the Report noted that the CFPB will continue to focus on the increased use of advanced and emerging technologies in financial services.  Areas of focus will include algorithmic bias, digital surveillance and data harvesting, dark patterns, and advanced technologies that are black boxes.