The Consumer Financial Protection Bureau (CFPB) announced in its latest edition of Supervisory Highlights that its examiners will continue to focus on rooting out predatory mortgage lending practices in an effort to curb so-called “redlining,” that prevents minority borrowers from obtaining access to mortgage credit.
“Redlining” refers to a practice that was once used by financial institutions in which those institutions would draw red lines on maps to identify areas that they intended to hold back mortgage lending. Those areas were typically predominately populated by African Americans and other minority groups. Recently, the CFPB has accused numerous financial institutions of engaging in this prohibited practice through less overt lending practices that result in the same impact to minority neighborhoods. (See, e.g., enforcement actions against BancorpSouth Bank and Hudson City Savings Bank.)
CFPB’s Supervisory Highlights states that its examiners consider numerous factors concerning potential redlining issues, including compliance management systems, lending patterns, marketing efforts, and neighborhood mapping tools.