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#1603166 - 09/13/11 08:58 PM Fair Lending Test????
BSBIA Offline
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Joined: Dec 2009
Posts: 21
We are a very small institution and have a difficult time selecting an area to test for Fair Lending with a large enough sample. Typically we do loan approvals and denials based on gender or age. Does anyone have any other suggestion for criteria we could test? We are not HMDA nor do we have any significant population of any minority.


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Lending Compliance
#1603208 - 09/13/11 10:28 PM Re: Fair Lending Test???? BSBIA
Rocky P Offline
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Joined: Jun 2003
Posts: 7,420
Most times (for smaller banks) the regulators do not do comparative file reviews unless they suspect the bank is doing things different for some applicants. You might start doing a self assessment and determining your risks. Then, key-off of the higher risk items and work down. (Rank and yank)

At a minimum for a comparative file review, they will need 5 prohibited basis denials (same group- all Black, or Hispanic, or female) offset by 20 control group approvals.

Also - make sure that Management and the Board is fully aware of your review and that they have an action plan in the event that something is found.
Last edited by Southern Banker; 09/13/11 11:07 PM. Reason: added a comment
Integrity. With it, nothing else matters. Without it, nothing else matters.

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#1603685 - 09/14/11 07:22 PM Re: Fair Lending Test???? BSBIA
3up3down Offline
Junior Member
Joined: Jun 2008
Posts: 25
We are also a small bank and don't have many minorities in our area. We just finished a compliance exam. The examiners commented several times that they loved my Fair Lending Self Assessment; they said it was just like they would have done.

I took a 6 month time period(probably larger than it needed to be)and looked at the number of loans and denials and documented how many were male,female or joint loans. I also looked at the same information on signature loans and also included the average interest rate charged each group was charged. I also did the same for our real estate loans.

I also looked at our adverse action notices for any dicriminatory treatment.

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