What are Some Current "Hot Buttons" for Fair Lending Monitoring?

Fair Lending can be a bit of a moving target so it is important to know what questions to ask and for what to look. First, you must identify the risk within your institution. The following will give you a starting point on what to look for and the initial questions to ask.

1. Does the bank have a clearly defined Fair Lending Policy?
2. Is Fair Lending training provided to all employees as well as the Board of Directors?
3. Does the bank monitor complaints? Is the process centralized?
4. Have loan policies or guidelines recently changed materially?
5. Underwriting - Are there higher disparity ratios within a prohibited basis group? Does the bank have a second review process in place? Does the bank monitor and document exceptions?
6. Pricing- Is there an increased incidence of higher priced loans for a prohibited basis group? Does the bank have a process in place to review exceptions? Does it clearly document exceptions?
7. Levels of Assistance - Are there higher percentages of applications by a protected basis group that were: either approved but not accepted, withdrawn or applications that were closed for incompleteness?
8. Steering - How is the loan product selected? How is the customer's product selection documented?
9. Redlining - What are the distribution patterns within high minority census tracts versus low minority census tracts for high priced loans and for denials?