Category: Fair Lending

Handling Missing Data in Fair Lending Regression Analysis

Missing data is a common problem in econometric analysis in general and fair lending analysis specifically.

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Improve Customer Service to Lower Fair Lending Risk

A formal complaint filed against a financial institution with a regulatory agency often results in some type of inquiry or investigation of the institution in order to resolve the issue. If the nature of the complaint involves a potential violation of fair lending laws, it can often cause a formal fair lending review of the […]

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Understanding the 3 Types of Fair Lending Discrimination

Fair lending laws and regulations are broad and cover every phase of the lending transaction. This includes the initial inquiry and loan application process through the servicing and ultimate settlement of the debt. Accordingly, there are nearly an infinite range of possible pressure points that a lender may need to evaluate in order to assess […]

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Modeling Rate Sheet Variables for Fair Lending Regression Analysis

Most financial institutions have rate sheets that provide pricing guidance for various loan products. Loan pricing is often in the form of a matrix in which the appropriate rate is determined by a combination of two or more values.

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Five Basic Tips for Managing Fair Lending Compliance

Fair lending compliance remains treacherous waters for financial institutions. The advent of Dodd-Frank added a multiplicity of compliance challenges to an already significant regulatory burden. This has left fair lending just one of many issues with which banks must contend, meaning efficiency is an absolute necessity in order to be successful.

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The Consequences of Using Proxies For Fair Lending Regression Analysis

In a whitepaper entitled “BISG Methodology and Its Impact on Regression Analysis,” we study the use of proxy methodologies as applied in regression analysis designed to test for potential discriminatory practices. In that study, we ran a number of simulations to test various aspects of proxy methods including accuracy and examining different ways to quantify […]

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Detecting Discrimination in Fair Lending Analysis Using Proxies

The use of proxy methods in fair lending analysis – and in particular fair lending enforcement actions – has drawn much attention. In an article entitled “BISG Methodology and Its Impact on Regression Analysis,” we studied the use of proxy methodologies as applied in regression analysis designed to test for potential discriminatory practices.

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BISG Matching and Its Impact on Regression Analysis for Fair Lending

In determining whether discrimination occurs based on race or ethnicity, particularly with regard to fair lending, it is obviously important to know the race or ethnicity of the applicant(s). However, for some non-mortgage products lenders are not allowed to collect these data. Therefore, one must use proxies for race and ethnicity.

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Essential Elements of Profitable Loan Pricing

  In a previous article, we discussed the fair lending benefits of having a profitable and risk-based loan pricing strategy. In this post, we dissect the specific components that comprise an effective approach. 

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Proper Loan Pricing Structure is Profitable & Fair Lending Friendly

The first rule of policy analysis is that policies have both intended and unintended consequences. This is no more true than in the commercial banking space, as good intentions can sometimes produce negative results. In this article, we examine the importance of lenders having a well-designed and profitable loan pricing strategy as part of fair […]

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