Fair Lending Programs: Recommendations for Financial Institutions for 2024

In 2024, the National Credit Union Administration’s consumer financial protection supervisory priorities include fair lending. This focus is not new, NCUA’s 2023 supervisory priorities also called out consumer financial protection and fair lending, including review of residential real estate appraisals for any bias.

All financial institutions — not just credit unions — have a responsibility to determine and verify their lending practices are fair and non-discriminatory. To achieve this, financial institutions must have a comprehensive fair lending program in place.

Recommended fair lending program components

CLA’s fair lending consulting services provide optional focal points for assessing fair lending program components, data analytics, and comparative file review. Here are some key areas financial institutions should prioritize when developing their fair lending program:

• Credit and compliance lending policies, automated underwriting system parameters, and underwriting guidelines and pricing structure of loan programs
• Management systems over marketing activities
• Internal monitoring and reporting of fair lending risks
• Fair lending risk assessment
• Systems for identifying and mitigating third-party risk in lending processes
• Fair lending training program

By focusing on these areas, financial institutions can provide controls for their fair lending program to help support preventing discriminatory lending practices. Financial institutions should regularly review and update their fair lending program to confirm it remains comprehensive and up-to-date with fair lending laws and regulations.

How we can help

A fair lending evaluation should be completed in an area outside of mortgage lending production and by compliance professionals who understand testing criteria such as the control versus prohibitive ratio. CLA’s professionals have more than two decades of direct experience in completing assessments under the interagency guidelines providing neutral and impartial testing services. Contact us for assistance.