From 2016 through 2020, federal fair lending enforcement actions against financial institutions ground to almost a complete stop. The only area in which actions continued was redlining. Redlining is:
- Usually cited as a fair lending violation;
- Frequently listed as a weakness in a Community Reinvestment Act (CRA) management system;
- Quite often listed as both a fair lending and a CRA concern.
In the last three months there has been an explosion of redlining issues:
- On August 20, 2021, the DOJ and the Office of the Comptroller of the Currency (OCC) announced coordinated actions to address allegations of redlining by Cadence Bank N.A.
- On October 22. 2021, the CFPB and the DOJ, in cooperation with the Office of the Comptroller of the Currency (OCC), took action to put an end to alleged redlining by Trustmark National Bank in majority-Black and Hispanic neighborhoods in the Memphis metropolitan area.
- On October 22, 2021, the DOJ announced the launch of a new Combatting Redlining Initiative.
- On October 22, 2021, CFPB Director Rohit Chopra said that the CFPB will be watching for "digital redlining, disguised through so-called neutral algorithms, that may reinforce the biases that have long existed."
The concept of Reasonable Expected Marketing Area (REMA) has been used by regulators in recent years. REMA is not defined by law, is not covered in fair housing or CRA regulations, and is barely mentioned in examination procedures. For such a poorly defined concept it has caused big problems for many financial institutions.
The CRA regulations are in the process of being revised. The OCC, FDIC and Federal Reserve Board have not completed their CRA revisions. The program discusses how the concept of redlining is impacted by the revised CRA regulations.
This program explains the concept of redlining and how to avoid the problem. It reviews recent redlining cases analyzing the problems in each institution that led to the redlining charges, the penalties imposed, and the corrective action required in each case. It clarifies the concept of REMA.
Participants receive a detailed manual that serves as a handbook long after the program is completed.
Upon completion of this program participants understand:
- The concept of redlining;
- The interagency examination procedures used by the federal financial institution regulatory agencies to detect redlining;
- Steps to detect potential redlining and actions to take to minimize problems;
- The concept of Reasonable Expected Marketing Area and its impact in redlining cases;
- The issues present in the three recent redlining cases, the penalties imposed on each institution and the corrective action ordered by the regulators; and
- How the revised CRA regulations may impact the concept of redlining.
This program is designed for members of the board of directors, managers of all lending departments, bank counsel, compliance officers, loan officers, and auditors.