The Federal Housing Finance Agency issued a policy statement providing a foundation for its fair lending program and requiring Fannie Mae and Freddie Mac (the Enterprises) to submit fair lending reports.
“Illegal discrimination has not and will not be tolerated by FHFA,” FHFA acting Director Sandra Thompson said in a release. “FHFA is committed to fair mortgage lending because it ensures that all Americans have equal access to safe, decent, and affordable housing. FHFA’s policy statement on fair lending clearly communicates the agency’s fair lending expectations for the regulated entities and outlines the agency’s fair lending oversight and enforcement to ensure compliance with the law.”
The policy statement communicates the FHFA’s position on monitoring and information gathering, supervisory examinations, and administrative enforcement related to the Equal Credit Opportunity Act (ECOA), the Fair Housing Act, and the Federal Housing Enterprises Safety and Soundness Act.
The agency stated it regularly monitors the fair lending risk presented by Enterprises and Federal Home Loan Bank activities, and may request data and information to ensure effective, ongoing oversight. The data is used to “appropriately scope monitoring and examinations commensurate with fair lending risk.”
Fair lending monitoring information includes data and other information necessary to monitor and evaluate the policies, programs, and activities of the regulated entities; information about changes in policies, programs, and activities; information about the regulated entities’ fair lending testing and other compliance activities; and the regulated entities’ self-evaluations of fair lending risk and the compliance of their policies, programs, and activities with respect to fair lending laws.
The agency also stated it may conduct examinations of the Enterprises and FHLBanks whenever FHFA determines an examination is necessary or appropriate. Its examination program is committed to effective, tailored supervisory measures to ensure the regulated entities adhere to applicable fair lending compliance standards.
Finally, the FHFA addressed its enforcement actions. The Housing and Economic Recovery Act granted the agency the authority to use cease-and-desist orders to enforce violations of all applicable laws, as well as civil money penalties where the statutory bases for such penalties are present.
“That a regulated entity is in conservatorship does not preclude other enforcement actions; however, the conservator’s broad statutory powers may provide FHFA with more efficient means to address problems than traditional enforcement tools,” the agency stated. “FHFA as conservator may take immediate action, consistent with applicable law, to direct or restrict the activities at the regulated entity, including the activities of the board of directors and executive management.”
The agency said if necessary under its enforcement policy, it may engage in consent order negotiations with regulated entities to resolve fair lending violations. The FHFA is not statutorily required to refer potential fair lending violations to the attorney general when it has a reason to believe a regulated entity has engaged in a pattern or practice of discouraging or denying applications for credit. However, the agency stated it will consult and refer matters to the attorney general and coordinate with the Department of Justice as appropriate.
The statement also indicated the FHFA will consider any self-evaluations or corrective actions a regulated entity takes as part of responsible business practices when making its examination. It will view these and other actions such as self-testing, implementation of management controls, and voluntary remedial action favorably when making fair lending supervisory and enforcement determinations.
“In particular, FHFA commits to taking into consideration an entity’s cooperation and candor during examinations and monitoring,” the agency stated. “Regulated entities are not required to self-report potential violations of fair lending laws. However, self-reporting of violations of fair lending laws will be viewed favorably by FHFA as it exercises its discretion.”
Interested parties have 60 days after the policy statement’s publication in the Federal Register to submit comments to the FHFA.