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Welcome to the Preiss&Associates Blog -- your source for the latest fair lending compliance insights and news.

Here you'll find unique perspectives into the trends and hot topics facing compliance officers -- and easy-to-use tips to keep your institution ahead of the curve. To have new blog posts delivered to your inbox as soon as they become available, subscribe to the Preiss&Associates mailing list.



  • Alternate Credit Scoring Models: FICO vs. Vantage Models

    Alternate Credit Scoring Models: FICO vs. Vantage Models

    According an article in the Wall Street Journal, on August 13, the Federal Housing Finance Agency (HFHA), which supervises Fannie Mae and Freddie Mac, has sent to the Federal Register for publication a final rule on the validation and approval of third party credit score models that can be used …Read More »
  • What is a Peer Bank?

    What is a Peer Bank?

    What is a peer bank?  A seemingly simple question that has become anything but simple to answer.  Peer banks are a hugely important item that can vastly affect the portrayal of your institution, and thus it is paramount that when you define an institution as a “Peer Bank,” you are …Read More »
  • Redlining: A Compliance Officer’s Primer

    Redlining: A Compliance Officer’s Primer

    In today’s regulatory environment, most compliance officers are keenly aware of the fact that redlining is one of three 2017 foci for the CFPB and probably for the prudential regulators as well.  The purpose of this article is to highlight the key elements in any redlining analysis and thereby make …Read More »
  • How Model Risk Management Can Play a Leading Role in Compliance

    How Model Risk Management Can Play a Leading Role in Compliance

    By Arthur R. Preiss, PhD., and Stephen E. Sudhoff, CFA  Models help us think about our world in a structured way.  As credit products have become more complex and computing power has become cheaper and more accessible, analysis of more complex relationships has become easier.  And, as our world has …Read More »
  • CFPB Releases Complaint Data by State

    CFPB Releases Complaint Data by State

    Recently the Consumer Finance Protection Bureau released a special edition of its monthly complaint report that provided a unique look at the way the Bureau compiles national data on the complaints it receives. Since July 2015, the CFPB has released monthly reports that summarize the complaints it collects on consumer …Read More »
  • Understanding the CFPB’s Expectations through Enforcement

    Understanding the CFPB’s Expectations through Enforcement

    Once a quarter, the Consumer Finance Protection Bureau publishes a report of actions it’s taken to enforce compliance matters across the spectrum of consumer finance products. This report, called Supervisory Highlights, often contains valuable insights into how the Bureau is collecting, interpreting and acting on the data it collects. And …Read More »
  • Changes Are Coming to Small Business Lending

    Changes Are Coming to Small Business Lending

    In the Consumer Finance Protection Bureau’s Annual Fair Lending Report released earlier this year, the CFPB announced it is close to finalizing rule changes regarding the collection and reporting of data on small business lending. “Because small businesses are the backbone of our economy,” Patrice Ficklin, director of the office …Read More »
  • Changes Are Coming to Small Business Lending

    Changes Are Coming to Small Business Lending

    In the Consumer Finance Protection Bureau’s Annual Fair Lending Report released earlier this year, the CFPB announced it is close to finalizing rule changes regarding the collection and reporting of data on small business lending. “Because small businesses are the backbone of our economy,” Patrice Ficklin, director of the office …Read More »
  • Peer! Peer! Who Is Your Peer?

    Peer! Peer! Who Is Your Peer?

    The Fall 2016 edition of the Consumer Finance Protection Bureau’s Supervisory Highlights devoted several pages to the topic of redlining. Some of what the CFPB had to say about fair lending was not new—for example, that “redlining is a priority area in the Bureau’s supervisory work” or that “redlining is …Read More »
  • The DOJ Alleges Redlining at KleinBank

    The DOJ Alleges Redlining at KleinBank

    This week the Justice Department filed yet another suit alleging a financial institution unfairly excluded – or “redlined” — majority-minority neighborhoods from its lending services. The suit against Minnesota-based KleinBank alleges that between 2010 and 2015, KleinBank conducted its residential mortgage lending in a manner that avoided extending credit to …Read More »
  • Preiss&Associates’ Guide to Fair Lending in 2017

    Preiss&Associates’ Guide to Fair Lending in 2017

    What does the year have in store for fair lending and compliance professionals? Some speculate that the new year and new administration could bring big changes — perhaps reduced authority or even a new structure for the Consumer Finance Protection Bureau. But if you ask the CFPB, their priorities are …Read More »
  • REMA: Reasonably Expected Market Area

    REMA: Reasonably Expected Market Area

    Recently I attended a seminar where a Federal Deposit Insurance Corporation representative used the term “REMA” in a discussion of redlining risk. Have you heard the term? It’s a helpful acronym to know if you desire to understand how the FDIC makes determinations about redlining. What follows borrows heavily from …Read More »
  • Charter Bank Fair Lending Settlement with the Department of Justice

    Charter Bank Fair Lending Settlement with the Department of Justice

      The Department of Justice and Charter Bank of Corpus Christi, Texas have announced the settlement of the fair lending suit referred to the DOJ by the Federal Deposit Insurance Corporation. This suit is one of a long line of fair lending legal actions brought by regulators. While the provisions of …Read More »
  • Mystery Shoppers Expose Alleged Redlining at BancorpSouth

    Mystery Shoppers Expose Alleged Redlining at BancorpSouth

    This month yet another financial institution has entered into a consent order with the Department of Justice and Consumer Finance Protection Bureau over allegations of discriminatory mortgage lending practices. BancorpSouth Bank, headquartered in Tupelo, Miss., is accused of: Structuring their lending area to avoid and/or discourage mortgage applications from consumers …Read More »
  • A Closer Look at the CFPB’s Annual Report Part III: New HMDA Rules and Interagency Coordination

    A Closer Look at the CFPB’s Annual Report Part III: New HMDA Rules and Interagency Coordination

    In early May, the Consumer Finance Protection Bureau released its Annual Report on fair lending activities during 2015. The report provides a thorough and detailed look at each of the actions the Bureau took in the last year, its current methodologies for identifying and pursuing fair lending cases and pending …Read More »
  • A Closer Look at the CFPB’s Annual Report Part II: Actions and Enforcement

    A Closer Look at the CFPB’s Annual Report Part II: Actions and Enforcement

    Note: This blog is the second in a three-part series exploring the Consumer Finance Protection Bureau’s 2015 Fair Lending Report. The recently released Consumer Finance Protection Bureau’s 2015 report contained detailed insights into settlements and actions that resulted in approximately $108 million in payments to consumers and advocacy groups by lenders. …Read More »
  • A Closer Look at the CFPB’s Annual Report Part I: Approaches to Enforcement

    A Closer Look at the CFPB’s Annual Report Part I: Approaches to Enforcement

    Note: This blog is the first in a three-part series exploring the Consumer Finance Protection Bureau’s 2015 Fair Lending Report. Earlier this month the Consumer Finance Protection Bureau released its annual report of supervisory and enforcement action. The 2015 report includes insights into a number of high-profile actions the Bureau …Read More »
  • “Whether Intentional or Not” – Learning from the Fidelity Bank Settlement

    “Whether Intentional or Not” – Learning from the Fidelity Bank Settlement

    Last week yet another mortgage lender settled allegations of discriminatory lending against minority applicants. North Carolina-based Fidelity Bank agreed to spend $1 million dollars over the course of two years to boost lending in predominantly minority census tracts. Fidelity will also provide fair lending training to staff – including loan …Read More »
  • Redlining Allegations against First Federal Bank of Kansas City

    Redlining Allegations against First Federal Bank of Kansas City

    Last week the First Federal Bank of Kansas City became the latest financial institution to settle redlining allegations after the Metropolitan St. Louis Equal Housing and Opportunity Council (EHOC) and Legal Aid of Western Missouri alleged that the bank’s service area was designed in a way that excluded areas of …Read More »
  • Seasons Greetings from Preiss&Associates

    Seasons Greetings from Preiss&Associates

  • Sage Bank: Some Fair Lending Compliance Take-Aways

    Sage Bank: Some Fair Lending Compliance Take-Aways

    Once again the Justice Department has filed a complaint alleging discrimination by a residential mortgage lender. In a recently proposed consent order, the DOJ has accused Sage Bank, based in Lowell, Mass., of a pattern of discriminatory pricing that disproportionately impacted African-American and Hispanic borrowers. “Sage Bank’s loan pricing policies …Read More »
  • A Look Inside the FFIEC Mortgage Lending Data

    A Look Inside the FFIEC Mortgage Lending Data

    The Federal Financial Institutions Examination Council recently released a treasure trove of data on mortgage lending transactions at U.S. financial institutions covered by the Home Mortgage Disclosure Act in 2014. The data include applications, originations, purchases and sales of loans, denials and other actions from more than 7,000 banks, savings …Read More »
  • Wells Fargo & Minimum Credit Scores for FHA Loans: What You Should Know

    Wells Fargo & Minimum Credit Scores for FHA Loans: What You Should Know

    In a move aimed at deterring scrutiny from the Justice Department, Wells Fargo –the largest home loan lender in the United States – has raised the minimum credit score requirements for Federal Housing Administration (FHA) loans. In 2014, Wells Fargo had lowered credit score requirements to 600. Now borrowers will …Read More »
  • The Consequences of Redlining: Hudson City Savings Bank

    The Consequences of Redlining: Hudson City Savings Bank

    Less than a month ago the Department of Justice and Consumer Finance Protection Bureau pledged to work in cooperation to fight what they saw as a resurgence of redlining cases. It seems that they have kept their promise. In a recently released consent order, the DOJ and CFPB have ordered …Read More »
  • Redlining is Back: Keeping Steve and Patrice Away

    Redlining is Back: Keeping Steve and Patrice Away

    “Redlining is making a comeback…” So said Steve Rosenbaum, chief of Housing and Civil Enforcement in the DOJ’s civil rights division, at a recent HUD hosted fair housing conference. The conference, attended by a number of DOJ, CFPB and HUD officials, highlighted the DOJ and CFPB’s cooperation in pursuing fair …Read More »
  • Insights into the August 2015 CFPB Complaint Snapshot

    Insights into the August 2015 CFPB Complaint Snapshot

    Since the Consumer Finance Protection Bureau was created as a part of the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2011, a key component of its work has been handling consumer complaints from across the country. Each month the CFPB releases a snapshot of these complaints (You can …Read More »
  • Fair Lending Regression Analysis: Some Frequently Asked Questions

    Fair Lending Regression Analysis: Some Frequently Asked Questions

    ­Fair Lending Regression Analysis: Some Frequently Asked Questions Whether you use regression analysis in your fair lending monitoring program or you are thinking about using it, a few regression related questions are asked regularly. This blog will discuss four of the more popular questions. What data do I need? Depending …Read More »
  • Lessons in Fair Lending: Santander Holdings USA, Inc.

    Lessons in Fair Lending: Santander Holdings USA, Inc.

    Last week the Federal Reserve Bank of Boston released the written agreement between Santander Holdings USA, Inc. and the Federal Reserve Bank. There are at least two things about this document that are noteworthy: (1) the level of detailed requirements and (2) the fact that the Boston Fed Bank made …Read More »
  • The Need for Monitoring: Honda Motors Consent Agreement

    The Need for Monitoring: Honda Motors Consent Agreement

    This week the the Consumer Financial Protection Bureau (CFPB) and Department of Justice (DOJ) signed a consent agreement with American Honda Finance Corporation in response to discretionary auto loan pricing and compensation practices. CFPB Director Richard Cordray commended Honda for being proactive in addressing these practices, but had Honda been …Read More »
  • Data Driven Regulation: What It Means for Fair Lending Compliance

    Data Driven Regulation: What It Means for Fair Lending Compliance

    The Consumer Finance Protection Bureau prides itself on being a data driven organization when it comes to fair lending compliance. What does that mean for a compliance officer? More importantly, what does it mean for your next fair lending compliance exam? Does it mean more number crunching? In part, yes, …Read More »
  • Overdraft Protection Violations: A Check-in for Compliance Officers

    Overdraft Protection Violations: A Check-in for Compliance Officers

    In April the Consumer Finance Protection Bureau announced that Regions Bank had signed a Consent Order regarding Overdraft Protection violations. While overdraft programs are not exactly front burner issues for most compliance officers, there are some noteworthy findings in this case that compliance officers would do well to give some …Read More »
  • Insights into the DOJ 2014 Annual Report on Equal Credit Opportunity Act Referrals

    Insights into the DOJ 2014 Annual Report on Equal Credit Opportunity Act Referrals

    This week the Department of Justice published its Equal Credit Opportunity Act or ECOA annual report to Congress. Some of the data in the report makes for interesting reading. A Look at the Numbers For 2014 DOJ received 18 referrals from the various agencies (CFPB, FDIC, FRB, OCC NCUA, HUD …Read More »
  • Consumer Compliance & Fair Lending Trends: Kansas City Federal Reserve

    Consumer Compliance & Fair Lending Trends: Kansas City Federal Reserve

    Beginning on April 7, the Federal Reserve Bank of Kansas City will hold a series of forums to discuss several regulatory compliance hot topics including trends in consumer compliance. The recently released Powerpoint presentation provides some insight into the Fed’s supervisory focus for the coming year. (You can view the presentation …Read More »
  • Centralized Regulation: A Closer Look at Janet Yellen’s Recent Remarks

    Centralized Regulation: A Closer Look at Janet Yellen’s Recent Remarks

    Janet Yellen, Chairwoman of the Board of Governors of the Federal Reserve, recently gave a speech that questioned Wall Street’s ethics and culture – and hinted at an overall approach to regulation that should have compliance officers taking note. To quote Ms. Yellen “…the Fed also promotes safety and soundness …Read More »
  • What Compliance Officers Can Learn from JPMorgan Chase

    What Compliance Officers Can Learn from JPMorgan Chase

    In a recent filing with the Securities and Exchange Commission, JPMorgan Chase reported that it has been questioned by the U.S. Department of Justice regarding possible racial disparities in loans the bank purchased from auto dealers. While the report does not mention whether the bank is the target of the …Read More »
  • Another Lesson in Fair Lending: First United Bank of Texas

    Another Lesson in Fair Lending: First United Bank of Texas

    Background The First United Bank of Texas (FUB) is a $1.2 billion FDIC regulated subsidiary of Plains Bancorp operating in western Texas (Dimmitt, TX). The FDIC/DOJ investigations found the Bank charged Hispanic applicants 205 basis points (BPs) more than non-Hispanic applicants for unsecured consumer loans. After performing a regression analysis, …Read More »
  • Compliance Officers: Earning a Seat at the CEO’s Table

    Compliance Officers: Earning a Seat at the CEO’s Table

    At the most recent ABA Compliance Conference one session focused on how compliance officers get invited to the table with other key management. When asked this question, the CEO of Ally Bank looked at the audience of compliance officers and said “You earn it.” Few people in a financial institution …Read More »
  • Learning from the OCC’s Semi-Annual Risk Perspective Report

    Learning from the OCC’s Semi-Annual Risk Perspective Report

    Last Friday the OCC released its Semi-Annual Risk Perspective report. A key finding of the report is that increased competition among financial institutions has resulted in increased credit risk due to the weakening of underwriting standards as well as the increased layering of risk in credit products such as indirect …Read More »
  • Finding Fair Lending Focal Points Using Excel

    Finding Fair Lending Focal Points Using Excel

    Though there are numerous software options available to help you keep track of your fair lending focal points, Excel can be a powerful tool if you know how to use it. Follow these easy steps to keep track of your loan products using a pivot table. What is a Focal Point? Fair Lending …Read More »
  • A Survival Strategy: What Can Regression Analysis Do For You?

    A Survival Strategy: What Can Regression Analysis Do For You?

    “Monitoring is not an option”- a quote from a speaker at the recent American Bankers’ Association (ABA) fair lending conference in reference to fair lending monitoring. In today’s fair lending compliance environment, compliance officers are besieged with new regulations as well as new requirements for old regulations.  How do you …Read More »
  • What Is Bayesian Improved Surname Geocoding (BISG)?

    What Is Bayesian Improved Surname Geocoding (BISG)?

      BISG and Other Proxies:  What Is BISG and Why Proxies Matter to All Banks? BISG, which is the CFPBs newest method of determining race and ethnicity proxies, is the acronym for Bayesian Improved Surname Geocoding.  Like many other analyses in fair lending, BISG is borrowed from another research area.  …Read More »
  • Small Bank Signs Intent Decree for Fair Lending Complaint

    Small Bank Signs Intent Decree for Fair Lending Complaint

    Fort Davis State Bank: Elements of a Small Bank Monitoring Program Recently Fort Davis State Bank (FDSB) of Fort Davis, Texas a $78 million three branch institution signed a consent decree with the Department of Justice. The DOJ complaint, based on an FDIC referral, alleged that FDSB charged Hispanic borrowers …Read More »
  • Ally Financial Fair Lending Consent Order

    Ally Financial Fair Lending Consent Order

    By now most compliance officers have heard about the consent order between Ally Bank, the CFPB and DOJ.  In short, Ally agreed to pay a total of $98 million in fines ($18 million) and restitution ($80 million) in a disparate impact settlement of an indirect auto lending case.  While several …Read More »
  • DOJ Settlement with Texas Champion Bank

    DOJ Settlement with Texas Champion Bank

    Yesterday the Department of Justice announced a fair lending settlement with Texas Champion Bank, a $345 million bank in Alice, Texas.  The allegations concerned pricing on unsecured consumer loans to Hispanic applicants.  The settlement was the result of a 2010 referral by the FDIC.  In the settlement Texas Champion agreed …Read More »
  • Auto Lending:  A New Fair Lending Hot Topic

    Auto Lending: A New Fair Lending Hot Topic

    In the current edition of the ABA Banking Journal Rich Riese, the Senior Vice President at the ABA Center for Regulatory Compliance, gave his view of the outlook for fair lending in 2013.  He said “bankers can expect to see the aggressive pursuit of fair lending to continue – and …Read More »
  • Community State Bank – Redlining

    Community State Bank – Redlining

    Community State Bank – Redlining Background Community State Bank is a $200 million institution in St. Charles, Mich., (near Saginaw and Flint) with eight branches.  Community consented to redlining allegations from the Department of Justice.  In the Complaint, DOJ alleged that Community had policies/practices to deny/discourage the residents of majority-minority …Read More »
  • FDIC Fair Lending Hot Topics Teleconference 12/18/12

    FDIC Fair Lending Hot Topics Teleconference 12/18/12

      FDIC Fair Lending Topics Teleconference Earlier this week the FDIC held one of their Banker Teleconference Series on Fair Lending Topics.  The teleconference was broken into four sections:  an overview of the fair lending exam process, criteria interviews and statistical analysis, third party providers and fair lending risk and …Read More »
  • Ben Bernanke Weighs in on Fair Lending and Housing Discrimination

    Ben Bernanke Weighs in on Fair Lending and Housing Discrimination

    Ben Bernanke Weighs in on Housing Discrimination Yesterday Federal Reserve Board Chairman Ben Bernanke gave a speech at the Operation HOPE Global Financial Dignity Summit in Atlanta.  Bernanke’s remarks were among the most forceful comments about housing discrimination and fair lending that I can remember a Fed chairman making in …Read More »
  • Fair Lending Hot Topics Webinar Summary

    Fair Lending Hot Topics Webinar Summary

    Introduction  Recently the Non-Discrimination Working Group of the Financial Fraud Enforcement Task Force presented a webinar entitled “Fair Lending Hot Topics.”  Presenters and their topics were: U.S. Department of Justice – “Recent Fair Lending Enforcement Efforts” Federal Deposit Insurance Corporation – “Risk Assessment” Consumer Financial Protection Bureau – “Fair Lending …Read More »
  • Luther Burbank Savings Settlement

    Luther Burbank Savings Settlement

    Luther Burbank Savings Minimum Loan Amount Settlement On September 12th the Department of Justice announced a settlement with Luther Burbank Savings regarding the setting of minimum loan amounts for home mortgages. Facts ·         The case originated as an OTS referral to DOJ. ·         DOJ alleged that through mid-2011 Luther had …Read More »

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