CFPB Goes After Lenders for Disparate Discrimination

If new guidance from the consumer bureau means anything, lenders could face action in instances that allegedly involve discriminatory lending practices for homeowners ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô even if practices seem fair at face value.

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The ""Consumer Financial Protection Bureau"":http://www.consumerfinance.gov/ (CFPB) released a bulletin Wednesday that reasserts disparate impact, a legal doctrine tucked into the Equal Credit Opportunity Act (ECOA) by policymakers that lays blame at the feet of lenders for overt and disparate acts of discrimination.

""We want consumers to avoid

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the marketplace's silent pickpocket-discrimination,"" CFPB Director Richard Cordray said in a statement. ""We cannot afford to tolerate practices, intentional or not, that unlawfully price out or cut off segments of the population from the credit markets.

""That's why the CFPB is educating consumers about their fair lending rights and pursuing lenders whose practices are discriminatory,"" he added.

The bureau said that the disparate income policy will apply to both banks and nonbanks. It also covers consumers of financial services like student and mortgage loans.

The bulletin is the second from the bureau in the last two weeks.

The CFPB published guidance in mid-April that called for new servicing standards that would require mortgage lenders to promptly credit payments to homeowner accounts, resolve errors upon notification, and notify consumers of changes to interest rates for adjustable-rate mortgages.

Beltway insiders have said in past interviews with _MReport_ that guidance like bulletins typically functions in the same manner as rules and orders, reasserting past policies and standardizing procedures for lenders even in the absence of a formal regime.