In an upcoming series of posts we address types of fair lending discrimination that are commonly recognized by the regulatory and enforcement agencies.
These will represent areas of risk and are often examined in the normal course of regulatory reviews. It is critical to note that fair lending laws and regulations are vast and cover every facet of lending. Therefore, there are almost an infinite number of issues and twists and turns that a fair lending review can take.
To further amplify this point, fair lending risk is always present no matter what an institution may do to mitigate the risk. This is because there are always issues which can create risk. These range from simply errors and oversights to differences in perspectives and interpretation between institutions and the regulatory and enforcement agencies. Although it may sound extreme, the only way to completely avoid fair lending risk is to stop lending.
That said, there are ways to effectively reduce fair lending risk. The point here is that it must be a managed and ongoing process. All issues in regard to fair lending are a function of the interaction of loan policies, procedures and actual lending practices. Our goal in this series is to draw from our experiences in our fair lending practice and provide information that will help mitigate this inherent risk.
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