Fair Lending Examinations: Increased Scrutiny, New Methodologies & False Positives

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The​ law has long permitted the use of disparate impact analysis to prove discrimination, which means that your bank can be found liable for discrimination even if there was no intent to discriminate. Community banks have recently reported that regulators are using statistical analysis and unpublished analytical formulas during fair lending exams, with a new focus on unsecured and vehicle loans, in addition to home loans. The problem is that using these new methodologies and analytical formulas has resulted in “false positive” findings of discrimination. 

The ICBA stated recently:
A recent trend of increased scrutiny and changed methodologies in fair lending exams and investigations has resulted in ‘false positive’ findings of disparate treatment, thus requiring the affected community banks to spend large amounts of time and money in disproving false fair lending allegations. Community banks are particularly vulnerable to such allegations because they are committed to working with their customers to provide customized loans under exceptional circumstances.

The new concern is that regulators can establish disparate impact (i.e., discrimination) based solely on statistics and unpublished analytical formulas. This webinar will help you prepare for your next fair lending exam and include suggestions on how to defend against disparate impact and discrimination claims.

HIGHLIGHTS

  • Overview of the fair lending laws and your institution’s obligations 
  • Risks of noncompliance 
  • Difference between discrimination and disparate impact
  • Restrictions on obtaining a spouse’s signature on loan documents and situations when a spouse’s signature is permitted
  • Defending against red-lining claims

TAKE-AWAY TOOLKIT

  • Interagency Fair Lending Examination Procedures
  • Fair Lending Report of the Bureau of Consumer Financial Protection (December 2018)
  • Employee training log
  • NEW – Interactive quiz

WHO SHOULD ATTEND?
This informative session is designed for all lending personnel, including loan officers, loan operations personnel, credit analysts, compliance officers, auditors, attorneys, and managers.

ABOUT THE PRESENTER – Elizabeth Fast, JD, CPA, Spencer Fane LLP
Elizabeth Fast is a partner with Spencer Fane LLP where she specializes in the representation of financial institutions. Elizabeth is the head of the firm’s training division. She received her law degree from the University of Kansas and her undergraduate degree from Pittsburg State University. In addition, she has a Master of Business Administration degree and she is a Certified Public Accountant. Before joining Spencer Fane, she was General Counsel, Senior Vice President, and Corporate Secretary of a $9 billion bank with more than 130 branches, where she managed all legal, regulatory, and compliance functions. She is a member of the Missouri State Banking Board by appointment of the Governor.

Originally recorded on June 3, 2019.

Recorded webinar is available until December 31, 2019.

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