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#2223241 - 10/08/19 12:04 PM Ethnicity monitoring
Kristi Offline
Joined: Feb 2005
Posts: 85
We are a non HMDA bank. During our recent compliance exam we received a MRIA because we were not tracking loans to Hispanics (all loan types). When we questioned how we were supposed to do this since it would be a violation to collect that information he stated that we should compare the last name of our borrower(s) to a list from the census bureau of common Hispanic surnames and put those loans on a spreadsheet to review for fair lending. He only wants this done for Hispanic surnames, not common female names or other ethnicities.

Has anyone else run into this? Anyone have any thoughts on this? Since when can we make assumptions on all loans on the ethnicity of a borrower based on a surname?

Any help or thoughts would be appreciated

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Fair Lending
#2223243 - 10/08/19 12:29 PM Re: Ethnicity monitoring Kristi
rlcarey Offline
10K Club
Joined: Jul 2001
Posts: 77,277
Galveston, TX
Kind of a strange finding but it probably points to an overall weakness in your fair lending monitoring efforts and is meant to serve as a wake up call to your management and board..
The opinions expressed here should not be construed to be those of my employer:

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#2223246 - 10/08/19 12:56 PM Re: Ethnicity monitoring Kristi
Inherent_Risk Offline
Gold Star
Joined: Jan 2017
Posts: 326
Fair Lending proxy analysis is suggested (i.e. required) by our regulator for any major line of business where Demographic Information is not collected. It's very common in indirect auto lending, but the concept is applicable to any LOB. As you stated, how else are you supposed to monitor your fair lending.

Here are some resources for methedology. Using the Fed's methedology(second link), the analysis is very very easy to run in house if you know how to use vlookup and pivot tables in excel.

Your examiner will do this anaylsis. It's probably a good idea to know what they are going to find regardless of whether they are requiring it. Our examiner has been very open about what their methedology is and what their expectations are. I suggest finding out from yours exactly what is expected.

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