During May 2021, the federal Government Accountability Office (“GAO”) issued a report (GAO-21-393) containing findings from its review of issues related to the CFPB’s oversight and enforcement of the Equal Credit Opportunity Act (“ECOA”) and the Home Mortgage Disclosure Act (“HMDA”).  Specifically, the report examines how the CFPB has (i) managed the reorganization of its Office of Fair Lending and Equal Opportunity and related risks during 2018, (ii) monitored and reported on its fair lending performance, and (iii) used new HMDA data fields to analyze and support its fair lending activities.  The report was requested by two Democratic members of the Senate Banking Committee, Chairman Sherrod Brown (D-OH) and Elizabeth Warren (D-MA).

In conducting the study, the GAO reviewed CFPB documents related to its fair lending activities (such as strategic and performance reports, policies and procedures) and the reorganization. The GAO evaluated implementation of the reorganization against relevant key practices identified in a prior GAO 2018 report (GAO-18-427). The GAO also interviewed CFPB staff.


The report notes that the Dodd-Frank Act of 2010 required the CFPB to establish an Office of Fair Lending and Equal Opportunity (“OFLEO”), with such powers and duties as its Director may delegate.  Those powers included providing oversight and enforcement of federal fair lending laws enforced by the CFPB, and coordinating the Bureau’s efforts with other federal and state agencies.  In 2011, the CFPB established OFLEO under the Division of Supervision, Enforcement and Fair Lending (“SEFL”).

In January 2018, the CFPB announced a reorganization of OFLEO, which was completed one year later in January 2019.  As we previously reported, the rationale provided for the move at that time – orchestrated under then-Acting CFPB Director Mick Mulvaney – was that the new organizational structure was designed to best enable the Bureau to fulfill its statutorily mandated activities in a way that avoids redundancy and makes the best use of the CFPB’s resources. The reorganization chiefly involved transferring OFLEO from SEFL to the CFPB Director’s Office under the Office of Equal Opportunity and Fairness.

The GAO report indicates that the reorganization also delegated some of OFLEO’s previous responsibilities, staff and budget to other offices within SEFL.  The 38 OFLEO staff positions authorized for fiscal year 2018 were redistributed within SEFL; five were transferred to SEFL’s “front office,” eight to the Office of Enforcement, six to the Office of Supervision Examinations, and nine to the Office of Supervision Policy.  At the end of the reorganization, only 10 positions were left in OFLEO.

Key changes in the CFPB’s fair lending responsibilities under the reorganization included the following:

  • Enforcement: Shifted responsibility from specialist attorneys in OFLEO to generalist attorneys in the Office of Enforcement.
  • Supervision: Shifted subject matter expertise and examination support from dedicated supervision staff in OFLEO to a new team in the Office of Supervision Policy.
  • Prioritization: Shifted responsibility for selecting institutions for fair lending examination and identifying enforcement priorities from OFLEO to Supervision offices and the Office of Enforcement.

The GAO report notes that some duties remained unchanged after the reorganization.  Specifically, the Office of Supervision Examinations continues to be responsible for scheduling and conducting fair lending examinations, and OFLEO for orchestrating fair lending outreach and education (speaking events, webinars and roundtables).  OFLEO also continues to write the Fair Lending Annual Report to Congress on the CFPB’s fair lending activities and serves as the primary point of contact for the U.S. Department of Justice (with the notable exception of enforcement investigations) and other federal and state agencies on fair lending issues.

GAO Findings and Recommendations

Key findings of the GAO report were two-fold as it relates to the CFPB’s OFLEO reorganization:

  • As the CFPB planned and implemented the reorganization, the Bureau did not “substantially incorporate” key practices for agency reform efforts that the GAO had identified in its prior work, such as using employee input for planning or monitoring implementation progress and outcomes.
  • The GAO identified specific challenges related to the reorganization (including loss of fair lending expertise and specialized data analysts) that “may have contributed to a decline in enforcement activity in 2018.” In particular, the GAO noted that the CFPB “has not assessed how well the reorganization met its goals or how it affected [its] fair lending supervision and enforcement efforts.”

The GAO also noted that, as of February 2019 when the reorganization was completed, the CFPB stopped reporting on performance goals and measures specific to fair lending supervision and enforcement.  Those metrics included tracking the number of completed fair lending examinations and the percentage of enforcement cases successfully resolved, among others.  The GAO stated that “[w]ithout those goals and measures, CFPB is limited in its ability to assess and communicate progress on its fair lending supervision and enforcement efforts, key components of CFPB’s mission.”

The GAO report made two recommendations, both of which the Bureau agreed to:

  • The CFPB Director should collect and analyze information on the outcomes of its 2018-2019 fair lending reorganization and use that assessment to address any “challenges or unintended consequences resulting from that change;” and
  • The CFPB Director should develop and implement performance goals and measures specific to its efforts to supervise and enforce fair lending laws.

We will now have to wait and see what CFPB leadership (under either Acting Director Dave Uejio or a permanent Director) concludes in its assessment of its fair lending reorganization and whether that assessment will be made publicly available.

Another very interesting aspect of the GAO report is a section on the CFPB’s use of new HMDA data fields that mortgage lenders were required to begin reporting as of January 1, 2018 under the 2015 HMDA final rule (Regulation C).  The GAO report states that the CFPB has used the additional HMDA data to support its supervisory and enforcement activities and fair lending analyses.  Specifically, the CFPB incorporated the new loan-level data into its efforts to identity and prioritize fair lending risks for potential discriminatory lending activity (such as lending patterns that suggest potential discrimination), support fair lending examinations and investigations, and improve efficiency. As an example, the GAO cites several examples of the Bureau’s use of the new HMDA data fields:

  • An informal CFPB analysis found that the new HMDA data reduce “false positives.” This term is used by the CFPB and other regulators to refer to cases in which lenders are incorrectly identified as presenting high fair lending risk.
  • CFPB officials noted that the new HMDA data allows them to further segment lending data by geographic area, race, demographics and other variables to support fair lending examination and investigations. For example, the new data allows the CFPB to differentiate loan type (consumer v. business loans) and new data on credit scores, interest rate spread, and total loan cost improve the Bureau’s ability to compare how institutions price loans, which helps its staff identify potentially discriminatory lending practices.  The new HMDA data providing property addresses has also improved the CFPB’s ability to identify redlining risks in specific geographic areas by providing more detailed local market data.
  • The CFPB shared examples of how the new HMDA data may improve the efficiency of their fair lending work. As one illustration, officials in the Office of Enforcement stated that the new data allow them to investigate fair lending issues in greater detail before officially opening an investigation and subpoenaing additional data.

The report also notes that the Dodd-Frank Act requires the CFPB to retroactively assess the effectiveness of “significant rules” it adopts and then publish an assessment report within five years after the rule’s effective date.  While the GAO report stated that CFPB officials were considering whether the 2015 HMDA final rule qualifies as “significant” within the meaning of that requirement, on June 11, 2021 the CFPB published its Spring 2021 semi-annual regulatory agenda, in which the Bureau announced that it will indeed assess it.  The Bureau also noted that it will not pursue other HMDA rulemakings – one that concerns the data points that lenders must report and another related to the public disclosure of HMDA data.  See our separate blog post on this development.