The Consumer Financial Protection Bureau (CFPB) is expanding the scope of what it focuses on as the nation’s first federal agency with a mission focused solely on consumer financial protection.
Established by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub.L. 111-203), which became effective in July 2010, the CFPB has three goals: “strengthen industry compliance programs, root out illegal activity, and ensure that harmed consumers are remediated,” Richard Cordray, director of the bureau, said.
The bureau’s work is largely handled by its Office of Fair Lending and Equal Opportunity, which uses a risk-based prioritization process to focus supervisory and enforcement efforts on the markets, products and institutions that represent the greatest fair-lending risk for consumers.
Based on the risks identified, the CFPB’s market-level focus for the past five years has been on ensuring that credit-worthy consumers are not excluded from or made to pay more for mortgages, indirect auto loans and credit cards “because of their race or ethnicity or any other prohibited basis,” Cordray wrote in the bureau’s 2016 Lending Report released last week.
Actions last year by the bureau’s Office of Fair Lending and Equal Opportunity resulted in roughly $46 million in remediation to harmed consumers across the United States, according to the report, and over $400 million in remediation since the office began its work.
Mortgage lending will continue to be a key priority during 2017, according to the report.
Going forward, however, emerging fair-lending risks in other areas mean that the Office of Fair Lending also will monitor institutions for compliance in three more areas.
The first area for redirected focus include redlining risk, or evaluating whether lenders intentionally discouraged prospective applicants in minority neighborhoods from applying for credit.
The second is mortgage and student loan servicing.
“We will increase our focus in the areas of redlining and mortgage and student loan servicing to ensure that creditworthy consumers have access to mortgage loans and to the full array of appropriate options when they have trouble paying their mortgages or student loans, regardless of their race or ethnicity,” Patrice Alexander Ficklin, director of the Office of Fair Lending, wrote in the report.
Small business lending will be the third area of focus.
“We will focus more fully on pursuing our statutory mandate to promote fair credit access for minority- and women-owned businesses. We know that these businesses play an important role in job creation for communities of color, while also strengthening our economy,” Ficklin said. “Discrimination on prohibited grounds in the financial marketplace … is by no means a thing of the past,” wrote Cordray. “The Consumer Bureau will continue to enforce existing fair lending laws at a steady and vigorous pace.”