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How to Conduct a Fair Lending Risk Assessment

Recorded on May 19, 2012

The federal bank regulatory agencies, the Department of Justice and others continue to pound banks over fair lending issues. Examiner-ordered corrective action generally includes conducting a risk assessment, training, ongoing monitoring and other solutions. All of these actions are part of a compliance management system (CMS). A well-developed Fair Lending CMS is the best way to prevent fair lending problems in the first place. And the CMS starts with a risk assessment.

Upon completion of the program you will understand how to develop a fair lending risk assessment by;

  • Evaluating inherent and residual risk;
  • For various loan products (commercial, real estate, consumer, etc.);
  • For various aspects of the process (application, underwriting, pricing, advertising, collection);
  • Rating risk; and
  • Evaluating appropriate risk controls including factors related to both managing and mitigating specific inherent risks as well as the strength of an entity's overall system of compliance management.

Fair lending violations are getting a lot of attention from examiners and from the Department of Justice. Violations can be very expensive and the damage to the reputation of the financial institution can be devastating. In several 2011 cases cures have included requirements to open branches in minority areas and to provide grants exceeding $1 million.

The program is designed for management of all loan departments, compliance officers, auditors, and those with responsibility for assuring compliance with fair lending laws and regulations.

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