CUNA’s inaugural Fair Lending Workshop took place last week in Denver, leading to valuable discussions on compliance with the Equal Credit Opportunity Act (ECOA), the Fair Housing Act (FHA), the Home Mortgage Disclosure Act and more. Avoiding discrimination was another hot topic, which led CUNA’s compliance staff to reflect on the importance of guarding against disparate treatment in lending.
Disparate treatment is a form of discrimination defined as “when evidence exists to suggest that applicants have been treated differently on the basis of a protected classification.”
Disparate treatment is a significant fair lending concern, and being in compliance with fair lending requirements is more than merely knowing that the credit union is not overtly discriminating in its lending practices.
CUNA compliance staff suggests lenders:
The Consumer Financial Protection Bureau has settled with a number of creditors in recent years to resolve allegations of disparate treatment in indirect auto loan pricing. These institutions include Ally Financial Inc.; American Honda Finance Corp.; Santander Consumer USA; Toyota Motor Credit Corp.; and Fifth Third Bank.