WASHINGTON (5/12/15)--Exclusionary and misleading practices in the mortgage industry have attracted recent attention from the Consumer Financial Protection Bureau (CFPB).
According to a report in American Banker, officials from the CFPB and U.S. Department of Justice (DOJ) are “aggressively” warning lenders that they are seeing potential instances of “redlining.” The term refers to the practice of lenders charging more for or denying services to residents in particular areas, often with the effect of racial discrimination.
The report cites sources that claim the CFPB and DOJ are using a “somewhat different screening methodology” that is helping trigger more findings. Regulators have gone on record saying that they are finding more redlining in the wake of the financial crisis.
During a panel discussion earlier this year, representatives from the two agencies focused most of the conversation on redlining. Per American Banker, the two agencies have strengthened their relationships over the past year.
The DOJ had opened 25 fair lending investigations by the end of last year, 10 of which with the CFPB jointly.
The CFPB has not taken a public enforcement action regarding redlining, but according to the report, the bureau’s fair lending office said it had several open investigations of potential redlining.
The bureau did take action Monday against a company that transmits funds from consumers to their mortgage servicers. Nationwide Biweekly Administration Inc., Loan Payment Administration LLC and their owner Daniel Lipsky are alleged to have misrepresented savings consumers would receive through their programs.
The CFPB alleged in its complaint that Nationwide: