CFPB, DOJ Stepping Up Interest in Redlining Cases

American Banker
Friday, May 8, 2015

The CFPB and Department of Justice are taking a renewed interest in redlining, the practice of lenders discriminating against minorities within certain geographic areas. The two agencies have begun to use a more stringent screening methodology than other regulators and have become more aggressive in warning lenders that they are seeing potential instances of redlining. The new methodology examines disparities between peer institutions within groups defined by quantity of Federal Housing Administration lending. The CFPB has not yet taken a public enforcement action solely related to redlining, but has several open investigations of potential redlining. Of the 25 open fair lending investigations opened by Justice by the end of 2014, 10 were being done jointly with the CFPB. Among 18 referrals they received from other agencies during that year, 15 came from the CFPB.