Regulation B

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The Department of Justice (DOJ) announced a settlement agreement with Washington Trust Company, of Westerly (WTC) to resolve claims that WTC redlined majority Black and Hispanic neighborhoods in Rhode Island.

In its complaint against WTC, DOJ alleged that the following practices were used to discriminate against Black and Hispanic borrowers from 2016 to at least 2021:

  • WTC located and maintained all of its Rhode Island branches and loan officers outside of majority-Black and Hispanic neighborhoods (WTC designated all five counties in Rhode Island as its Community Reinvestment Act (CRA) assessment area);
  • WTC never had a branch in a majority-Black and Hispanic census tract despite the significant presence of majority-Black and Hispanic neighborhoods and census tracts throughout Rhode Island;
  • WTC did not assign a single mortgage loan officer to conduct outreach, market, advertise, or generate loans from majority-Black and Hispanic neighborhoods;
  • WTC failed to conduct outreach, marketing, and advertising of mortgage services in majority-Black and Hispanic areas;
  • WTC received only 2.4% of its mortgage loan applications from residents of, or for properties located in, majority-Black and Hispanic areas in its CRA assessment area, compared to 9.5% for its peer lenders, and on average 46.5% of the applications generated by WTC in those areas were from White applicants, compared to 25% for its peers.
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In a memorandum issued on January 26, 2021, President Biden has ordered the Secretary of the U.S. Department of Housing and Urban Development (“HUD”) to “as soon as practicable, take all steps necessary to examine the effects of” the final rule issued by HUD in September 2020 (“2020 Rule”) revising its 2013 Fair Housing Act (“FHA”) disparate impact standards (“2013 Rule”).… Continue Reading

On December 21, 2020, the CFPB issued an advisory opinion that addresses regulatory uncertainty related to certain aspects of special purpose credit programs (“SPCPs”) designed and implemented by for-profit organizations. The advisory opinion was issued as an interpretive rule that will be published in the Federal Register and therefore is exempt from the notice and comment rulemaking requirements of the Administrative Procedure Act.… Continue Reading

On September 21, the CFPB finalized its proposal to amend Regulation B requirements related to the collection of consumer ethnicity and race information, in order to resolve the differences between Regulation B and revised Regulation C (the “Final Rule”).  This Final Rule is effective on January 1, 2018, the same effective date for most of the 2015 Home Mortgage Disclosure Act (HMDA) Final Rule. … Continue Reading

Last Friday in New Orleans, the ABA Business Law Section Consumer Financial Services Committee hosted a fascinating program about CFPB enforcement at the Section’s 2017 Spring Meeting.  The program was entitled:  “Too Much or Too Little?  Is the CFPB Exercising its Enforcement Power with Appropriate Restraint?”  As might  be expected, the two industry representatives on the panel criticized certain of the CFPB’s enforcement initiatives, including, among others, the PHH case and the use of disparate impact analysis in connection with  discretionary dealer pricing to assess Equal Credit Opportunity Act (“ECOA”) compliance by auto finance companies. … Continue Reading

On March 24, the CFPB announced a proposal to amend Regulation B requirements related to the collection of consumer ethnicity and race information, in order to resolve the differences between Regulation B and revised Regulation C.  These proposed rule amendments are effective on January 1, 2018, the same effective date as the 2015 Home Mortgage Disclosure Act (HMDA) Final Rule.… Continue Reading