On June 24th, the Consumer Financial Protection Bureau (CFPB) announced an initiative to enable consumers to assert their rights more effectively with large financial institutions. Specifically, the CFPB requests information about customer service experiences with their banks or credit unions. CFPB Director Chopra noted that the initiative is designed “to ensure the legally enshrined right to obtain basic customer service.”
The CFPB initiative is in response to the shift of focus of financial institutions from relationship banking toward consolidation and digitization, which may have resulted in a decline in customized advice, responsiveness, and care. The CFPB’s sense is that a sharper focus on relationship-based banking could play a critical role in fostering a fair, transparent, and competitive marketplace.
The link to the announcement and the Request for Information is here.
On May 26, 2022, the CFPB published its Circular 2022-03 (available here), which confirms the obligation of lenders to comply with ECOA and Reg B adverse action requirements, even if the credit decision is made using complex algorithms, artificial intelligence, or machine learning often found in ‘black box’ computer underwriting engines. No matter the underwriting method used, the legal requirement for notice in the event of adverse action is the same: lenders must provide applicants with an accurate statement of the specific, principal reasons for any adverse action determination. It is not a defense that the technology used to make the determination is too complicated or opaque for the lender to understand. The CFPB confirmed that the notice requirement is necessary to support the anti-discrimination purpose of ECOA.
The Consumer Financial Protection Bureau (CFPB) recently announced an initiative to stop lenders from charging potentially excessive and exploitative ancillary “junk” fees that may obscure the actual cost of the product being purchased. While many notable instances of these fees are tied to credit card late fees, bank deposit overdraft, and insufficient funds fees, mortgage loan closing fees are also considered.
The first step in this initiative is a public request for information about consumers’ experiences with fees they believed were included in the price but were charged separately, unexpected fees, fees that seemed too high for the service provided, and fees where the purpose of the fee was unclear. The CFPB requests input not only from consumers but also from other potential stakeholders, such as small business owners, academics, local government officials, and financial institutions.
The CFPB’s stated goal is to remove unnecessary barriers to homeownership, as well as additional charges that may price a homeowner out of a home. While the period for sending comments has passed, the link to the announcement is here.
Asurity Technologies, LLC (“Asurity”) is pleased to announce Era Williams has joined the
company as Director of Marketing. Era brings with her over 20 years of experience in
marketing. Over the course of her career, she has guided technology companies in integrating
digital and traditional marketing, sales and business development, client relations and retention,
as well as lead and demand generation, brand awareness, and event management. Prior to
joining Asurity, Era directed a wide range of activities for Anju Software, a leading provider of
comprehensive software solutions to the life sciences industry, including product launches,
optimizing digital marketing strategies and SEO, and modernizing corporate and product
presence online.
Asurity delivers compliance-focused products and solutions to the mortgage and consumer
lending sectors. Asurity’s software offerings include RiskExec®, a reporting and analytics
platform for HMDA, CRA, redlining, fair lending, and fair servicing; Propel™, a leading solution
for the dynamic preparation of compliant mortgage document packages; and RegCheck®, a
loan compliance engine that seamlessly integrates to mortgage LOS software to produce real
time compliance checks and certificates.
“We are constantly evolving ways to get the word out about our exceptional software products,
and Era will play a critical role in messaging the potential for the lenders that we serve to better
automate their processes while improving compliance and driving cost efficiencies,” said Luke
Wimer, COO of Asurity. He continued, “Building on the rapid adoption of RiskExec® by our
financial services clients, Asurity this year released its fully updated mortgage loan document
platform, Propel™, a highly configurable application that supports innovative lenders. And, in
Q1 2022, Asurity launched RegCheck®, also built on an entirely new, integrated technology
stack for flexibility, rapid deployment, and scalability.”
Driving lead generation and sales growth through effective marketing and brand-building
strategies is Era’s passion. She commented, “I am proud to join the Asurity team. The organization demonstrates innovation and garners accolades from its dedicated clients across the financial services industry. With the mortgage industry undergoing a digital transformation, Asurity is already playing a big role in helping to simplify and automate critical steps in lending and servicing processes. I look forward to leveraging digital and traditional marketing strategies to increase market share and expand brand awareness of all Asurity’s solutions and services.”
For more information on Asurity’s suite of software solutions, contact us at (202) 765-2150 or
info@asurity.com.
The CFPB recently announced separate initiatives designed to ensure that home valuations used by lenders to determine loan amounts and other terms are fair and accurate, and not discriminatory. The first initiative announced here creates a Small Business Review Panel that will investigate potential quality control standards for automated valuation models (AVMs). The report will inform a future CFPB rulemaking that will be designed to ensure a high level of confidence in the AVM value estimate, protect the AVM from data manipulation, avoid conflicts of interest, and require random sample testing and reviews of AVMs. The CFPB also anticipates that future rulemaking will also specify quality control criteria to ensure compliance with applicable nondiscrimination laws.
The CFPB’s second initiative is the Interagency Task Force on Property Appraisal and Valuation Equity (PAVE), which published a report and action plan to promote valuation equity (the Report), available here. The Report notes the results of recent research indicating that appraised property values tend to decrease as the share of historically marginalized populations increases. Appraiser ‘free-form narratives’ in the appraisal reports themselves sometimes make racial and ethnic references that may indicate bias. A widespread pattern of undervaluation in minority communities can have a significant effect on the accumulated wealth of homeowners in those communities. The action plan in the Report includes the potential use of alternatives to traditional appraisals to reduce the impact of appraisal bias, use of value ranges instead of a specific value, modification of the sales comparison approach to yield more accurate and equitable valuations, and public sharing of aggregated historical data to foster the development of unbiased valuation methods.
May 24, 2022 – Vesta, a modern mortgage loan origination system and software-as-a-service company,
today announces a new first-class integration with Asurity Technologies, LLC® (“Asurity”), a leading
provider of mortgage compliance technology. With this partnership, lenders using the Vesta loan
origination platform will be able to seamlessly access real-time compliance monitoring and verify
compliance with all key regulations via the Asurity RegCheck® solution.
Vesta is building the LOS of the future that allows lenders of all sizes and specialties to build
customizable no-code workflows and rules around their business logic directly into the platform. Vesta’s
open, cloud-native API’s allow lenders to take advantage of best-in-class solutions such as Asurity’s
RegCheck, which powers comprehensive compliance tooling and allow lenders to accelerate loan
closings by flagging and remediating complex compliance issues.
“We’re delighted to announce our partnership with Asurity, a leader in driving digital transformation and
increased efficiency through its suite of compliance software. Together, we’re excited to help lenders stay
operationally efficient and nimble, particularly in today’s ever-changing regulatory environment,” said
Mike Yu, Vesta CEO.
Asurity officially launched RegCheck in January 2022, adding this exciting new compliance technology
solution to its existing product suite of Propel™, for compliant document generation, and RiskExec®, the
leading Fair Lending, CRA and HMDA analysis and reporting platform. “Today’s lenders want more
efficient and effective loan processing and access to real-time compliance monitoring seamlessly
integrated into their processes. We’re excited to partner with Vesta to further our mutual goal to advance
digital transformation for the mortgage industry,” said Andy Sandler, Founder and CEO, Asurity.
On February 16, 2022, the CFPB announced a new process (available here) to receive public petitions for rulemaking or regulatory changes, and to post them on a public docket on the CFPB website for review and comment. The move is intended to strengthen the public right in the U.S. Constitution to petition the government, enhance transparency at the CFPB, and also address the CFPB’s sense that individuals and small businesses often feel the need to engage former government officials, lawyers, or lobbyists to petition federal government agencies.
The CFPB will accept these public petitions under the Federal Administrative Procedures Act, which become part of the public record when received. The CFPB expects each petition to give the contact information for the submitting party, describe the requested action, such as a new rule or repeal or amendment of an existing rule, the factual and legal reasons for the request, and also the expected effects of the proposed action. The CFPB has committed to deliver a final, public response to each petition that it posts to its website with an assigned docket number.
Now more than ever, it’s essential for financial institutions to take part in the evolution of fair lending and compliance initiatives. The compliance function, along with the lending industry as a whole, is undergoing a digital transformation, and it’s essential that lenders keep up with impactful trends. One of the best ways to stay on top of industry insights is to engage in the larger fair lending community.
This year, the Asurity and RiskExec® teams will be participating in and speaking at the Fair Lending Forum in Charlotte, North Carolina. With numerous sessions about recent trends, practitioners’ experience in creating robust compliance management systems, enforcement actions, community perspectives, and more, the Forum is a great opportunity for financial institutions to hear firsthand about the direction of the fair lending landscape and how to be prepared.
Where, When, and Who?
This year’s Fair Lending Forum will take place Monday, May 2, through Wednesday, May 4, 2022. It will be hosted in Charlotte, North Carolina, at both the JW Marriott Charlotte and the Atrium Health Ballpark.
Sessions at the Fair Lending Forum will feature speakers from the Asurity and RiskExec teams, along with highly seasoned professionals from other major agencies, including the Federal Housing Finance Agency (FHFA), Consumer Financial Protection Bureau (CFPB), Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), Federal Reserve Board of Governors (FRB) Department of Justice (DOJ), Freddie Mac, and Fannie Mae, and financial organizations such as Ally, Valley Bank, Bank OZK, and Bank of the West.
What Will I Learn?
The Fair Lending Forum is an exciting opportunity for financial institutions to be the first ones to know and learn about the latest trends in HMDA, CRA, redlining, fair lending, and fair servicing to help prepare for the future of the compliance industry. The Forum will highlight discussions about hot topics in the field, including the increase in scrutiny surrounding AI in lending, COVID-19 and its recent and long-term impacts on foreclosures and forbearance, and reporting protocols connected to Section 1071 of the Dodd-Frank Act and will prepare attendees for the shifts in the lending industry that are on the horizon.
Forum Sessions
The Forum has organized a number of important sessions discussing HMDA, CRA, redlining, fair lending, and fair servicing. Here are only a handful of the session topics to be covered:
- “Hot Topics: AI Risks on Underwriting and Pricing, Discrimination in Appraisals, and Gender Identity and Sexual Orientation Implications,” moderated by Melissa Hammer, SVP of Fair Lending Product Management at RiskExec, and featuring Lindsay Yousif of Ally, Britt Faircloth of Valley Bank, and Lynn Woosley of Treliant
- “Enforcement Actions: A Practical Review of Recent Trends,” featuring Andrea Mitchell of Mitchell Sandler and Jon Seward, Principal Deputy Chief of the Department of Justice (DOJ)
- “Deep Dive on Fair Servicing: Views on Foreclosures, Evictions and REO,” moderated by Todd Karazim of Mitchell Sandler and featuring Dr. Marsha Courchane of Charles River Associates, Danielle McCoy of Fannie Mae, Arvind Jagnnath of Sagent, and Jeff Jaffee of Freddie Mac
- “Know What Your Redlining Analysis Says About Your Institution,” moderated by Daniella Casseres of Mitchell Sandler, Amy Magee of Bank OZK, Brenda Baylor of Cross River, and Tim Smyth of Freddie Mac
You’ll hear from Asurity and RiskExec professionals about topics such as:
- “Community Group Perspectives on Emerging Issues,” moderated by Andy Sandler, CEO of Asurity, Lisa Rice, President and CEO of the National Fair Housing Alliance, and Mike Calhoun, President of the Center for Responsible Lending
- “1071: Intersects with Dodd-Frank, Data Collection, SBA, ECOA and Community Development Needs,” moderated by Dr. Anurag Agarwal, President of RiskExec and featuring Chris Napier of Mitchell Sandler, Bev Donawho of Cornerstone Home Lending, Inc., and David Roell, VP of Compliance Products and Analytics at RiskExec
- “RiskExec Tips and Tricks,” moderated by Katey McBurney, Director of Client Success and Engagement at RiskExec and featuring John Murphy, Chief Architect at RiskExec, Brett Lewis, VP of Software Development at RiskExec, and David Roell, VP of Compliance Products and Analytics at RiskExec
- “The Practitioner's Guide to Implementing a Robust CRA Program,” moderated by Arielle Gilman, Director of Implementation and Training at RiskExec and featuring Linda Ezuka of CRA Today and the CRA Hub and Ellen Murphy of Bank of the West
These sessions are designed specifically to provide tangible outcomes for financial professionals, including gaining expertise in compliance management systems, networking with peers in your industry, being the first to know fair lending trends that can be applied to practices within your institution, and even earning 12 CRCM and 1.25 CERP Continuing Education (CE) credits.
See You at the Fair Lending Forum
The frequent changes in regulatory requirements and fair lending compliance coupled with the digital transformation of the lending industry have created a new landscape for financial institutions. Now is the time for lenders to be aware of trends in the compliance industry and apply them to the future of their organizations.
The Fair Lending Forum is the perfect opportunity for lenders to hear from government officials, regulators, compliance professionals, and other financial institutions about the direction of fair lending. To learn more about the 2022 Fair Lending Forum, register today.
On January 6, 2022, the CFPB issued its Fall 2021 Supervisory Highlights, available here. Of interest to residential mortgage lenders is the CFPB’s description of its fair lending examination results. It found that lenders may have violated ECOA by failing to make pricing exceptions in response to competitive offers from other lenders where the applicants were African American or female. Examiners observed that lenders generally maintained policies and procedures for pricing exceptions, including exceptions to competitive offers, but that managers often required consumers to request the exception, and often did not document the reason for the exception. In response to these findings, lenders were asked to undertake remedial and corrective action with respect to their policies and procedures.
FHA recently published Mortgagee Letter (ML) 21-27, which adds language to FHA Single Family Manual 4000.1 regarding appraisals for FHA-insured transactions. The new language specifies that the existing requirement to comply with applicable laws in the creation and evaluation of an appraisal to be used in an FHA-insured loan transaction includes compliance with the Fair Housing Act and any other federal, state, or local anti-discrimination laws. Specifically, no part of the appraisal analysis or reporting may be based on the race, color, religion, sex, actual or perceived sexual orientation, actual or perceived gender identity, age, actual or perceived marital status, disability, familial status, national origin of either the prospective owners or occupants of the appraised property, present owners or occupants of the appraised property, or the present owners or occupants of the properties in the vicinity of the appraised property, or on any other basis prohibited by federal, state, or local law.
Appraisers must be knowledgeable about these anti-discrimination requirements and must generate appraisals in a competent, independent, impartial, and objective matter, also in conformity with USPAP requirements. In addition, the appraiser may not discriminate in developing any part of the appraisal or value conclusion based on characteristics that are protected by federal, state, or local laws, misrepresent the scope of work performed in the completion of the FHA appraisal or develop or communicate an appraisal report to FHA that is knowingly misleading or fraudulent.
