There are two major problems with fair lending and commercial loans, but lenders should still be prepared for an increase in scrutiny. The CFPB signaled in December of 2016 that small business lending was one of their priorities for 2017.
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In a previous post, we discussed the binary choice regression model which is often employed in evaluating consistency in underwriting with respect to fair lending laws and regulations. Let’s continue the discussion.
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Binary choice models arise when the dependent variable (the measurement variable or what is to be explained) in a regression model y only takes two possible outcomes, generally 0 or 1. For example, it is common in a fair lending analysis of underwriting to regress denial (y=1 if denied, 0 approved) on a target group […]
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In this series of posts, we address types of fair lending discrimination that are commonly recognized by the regulatory and enforcement agencies. The points covered are risk areas that are often examined in the course of regulatory reviews. Previously, we’ve covered fees and steering. It is critical to bear in mind that fair lending laws and […]
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So you are all prepared to conduct a fair lending analysis. You have determined the focal point(s), to include a product target as well as the prohibited basis and control groups, all of which are topics for another day. Now you are ready to assemble your data and begin conducting the review. In doing so, […]
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Recent FDIC reports have highlighted the stability and growing profitability among the nation’s financial institutions. In examining (2) key measures of asset quality (net charge-off rates as a percent of loans) and profitability (ROA), the data suggests both measures have stabilized for commercial banks since the financial crisis.
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In fair lending analysis, one of the most common comparisons is to examine loan files based on race or ethnicity. These classifications are often misunderstood and can be confusing. This is because race and ethnicity are two different things.
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Lending fees represent a major area of risk among forms of fair lending discrimination. In this article, we explore a fair lending analysis of fees.
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In this series of posts, we address types of fair lending discrimination that are commonly recognized by the regulatory and enforcement agencies. The points covered are risk areas that are often examined in the course of regulatory reviews. Today’s entry will cover the unfair practice known as “steering.” It is critical to bear in […]
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After being at record lows for nearly a decade, the Fed has raised interest rates three times in the past fifteen months. Although the current rate of 1% is still historically low, the rate environment has been static up until December of 2016.
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