ECOA

We are responsible for ensuring “fair, equitable, and nondiscriminatory access to credit” under the Dodd-Frank Act. Today, we submitted a report to Congress on our efforts to fulfill this fair lending mandate. The CFPB has made great strides on this front over the past year, and the Fair Lending Report of the Consumer Financial Protection Bureau describes our accomplishments.

Credit discrimination can result in some borrowers paying more than they should have to for credit—if they are able to get credit at all. In many cases, borrowers don’t know they are paying more for credit than their friends or neighbors are. Not only is this wrong, it’s against the law. And the CFPB is working to stop it.

Congress gave the CFPB authority over large banks, private student lenders, mortgage companies, and certain other businesses that offer credit. We make sure that these businesses comply with federal consumer financial laws, including the Equal Credit Opportunity Act (ECOA) and the Home Mortgage Disclosure Act (HMDA). ECOA protects consumers from credit discrimination. HMDA requires that some financial institutions collect and disclose certain information about home mortgage loan applications. This helps with identifying discrimination and enforcing the law.

Over the past year, the Office of Fair Lending, together with our colleagues in Supervision, has built a system to supervise lenders. We examine lenders to ensure that they comply with ECOA and HMDA. We’ve carried out fair lending reviews at financial institutions across the country. And together with our colleagues in Enforcement, we’ve worked on several fair lending investigations that may result in further action if we find that violations of the law occurred.

Currently, we are in the process of updating the rules that implement ECOA and HMDA. These new rules will help us carry out our fair lending mandate. We’re also talking with consumers and lenders. We help consumers understand their rights, and we make sure lenders know how to comply with the rules. Finally, Congress asked us to examine fair lending issues in specific areas of consumer finance, such as student lending. We presented our findings in July.

We’ve made a lot of progress, but there’s more to do. Moving forward, we will continue to supervise lenders to ensure fair lending compliance. As part of our continued commitment to transparency, we will share our fair lending expectations with financial institutions. We will work with financial institutions to ensure that our exams are carried out efficiently and effectively.

And we’ll continue to talk to consumers. An informed consumer is the first line of defense against discriminatory practices. We are proud to work for American consumers, and we do our job best when we hear from you directly. Tell us your story, and get answers to your financial questions.

Find out more about the Office of Fair Lending and Equal Opportunity. And if you think you’ve been discriminated against by a lender, submit a complaint.

Millions of Americans rely on loans and other credit products to attend college, buy cars, purchase homes, or open businesses. For many of us, access to credit makes it possible to achieve the American Dream of a better life for ourselves and our children. All too often, credit discrimination stands in the way of this access. It keeps worthy borrowers from the tools they need to reach their financial goals.

Credit discrimination is illegal. Under the Equal Credit Opportunity Act (ECOA), a creditor may not discriminate against you because of your race, color, religion, national origin, sex, marital status, or age (as long as you are old enough to enter into a contract). It is also against the law for a creditor to discriminate against you because you receive public assistance income, or because you exercise in good faith any of your rights under the Consumer Credit Protection Act.

Discrimination is not always obvious. A borrower may not realize that she has been the victim of intentional discrimination on the basis of her race or sex. Moreover, lending policies that seem evenhanded can be illegal if they have a disproportionate, negative effect on a group that is protected under ECOA, such as women or seniors. Lending practices that produce these adverse effects are said to have a “disparate impact.” They are unlawful unless they meet a legitimate business need that can’t be met by an alternative that has a less disparate impact. Discrimination that disparately impacts borrowers in violation of the law hurts consumers and can threaten the economic stability of our communities. That is why the law has long recognized this form of unlawful credit discrimination.

The Consumer Financial Protection Bureau is responsible for enforcing the Equal Credit Opportunity Act. The Office of Fair Lending and Equal Opportunity at the CFPB helps ensure that all Americans have fair, equitable, and nondiscriminatory access to credit, and we will use every tool at our disposal to protect American consumers.

Today we are giving fair notice on fair lending. We are letting both lenders and consumers know that in our examination and enforcement work, we will combat unlawful, discriminatory practices—including those that have an illegal disparate impact on protected borrowers. We will look not only at mortgage lending, but also at other types of credit including student loans, loans for cars, and credit cards.

Access to credit is critical to a successful financial future. At the CFPB, we are committed to fighting unlawful, discriminatory practices and creating a fair marketplace for all consumers.

Patrice Ficklin is the CFPB’s Assistant Director for the Office of Fair Lending and Equal Opportunity.

The CFPB is the first federal agency with the primary mission of making consumer financial markets work for American consumers. Congress charged us with ensuring that:

• All consumers have access to markets for consumer financial products and services; and
• Markets for consumer financial products and services are fair, transparent, and competitive.

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