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DOJ Issues Annual Report To Congress On 2016 ECOA/FHA/SCRA Enforcement Activities

The Department of Justice’s Civil Rights Division has issued its annual report to Congress regarding its activities to enforce the ECOA, FHA and SCRA.  The report covers 2016 activities that would have taken place under the Obama Administration.  As a result, although it concludes by noting the role of the DOJ’s “vigorous enforcement of fair lending laws” in expanding credit access, it is unclear how the DOJ will carry out that role under the leadership of Attorney General Jeff Sessions.

The report states that the DOJ opened 18 fair lending investigations in 2016, filed seven fair lending lawsuits of which it settled six, obtaining nearly $37 million in relief.  The six settled cases, which are described in the report, include cases involving alleged mortgage redlining (one from June 2016 and the other from December 2016), alleged discrimination on the basis of national origin in connection with vehicle-secured loans, alleged discrimination on the basis of familial status or disability and source of income, and alleged predatory targeting of minority homeowners.

The report indicates that at the end of 2016, the DOJ had 33 open fair lending investigations, including seven redlining investigations.  It also indicates that in 2016, the DOJ “continued to build its working relationships with the federal banking agencies, [HUD] and the [FTC] to strengthen our individual and collective capabilities to enforce fair lending laws,” and that the DOJ also continues “to seek opportunities to work in partnership with various state attorneys general.”  (We note that the CFPB is not specifically mentioned as one of the agencies with which the DOJ is working to improve collaboration.)

One section of the report is devoted to ECOA and FHA referrals made to the DOJ by other federal agencies.  According to the report, the DOJ received 22 ECOA and FHA referrals in 2016: eight from the CFPB, four from the FDIC, seven from the Fed, one from the OCC, and two from HUD.  The report indicates that the DOJ opened eight investigations based on the 22 referrals and returned 12 to the referring agency for administrative enforcement without opening an investigation.  It also indicates that all but one of the fair lending lawsuits filed by the DOJ in 2016 were based in part on referrals.

The report reviews the factors considered by the DOJ when evaluating referrals, listing the characteristics of a referral that will generally result in its return and those that generally will result in its retention by the DOJ.  According to the report, the same factors apply when the DOJ has conducted an investigation and is deciding whether a lawsuit is warranted.

The report also includes descriptions of four settlements involving alleged SCRA violations.

Copyright © by Ballard Spahr LLP

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Culhane, Ballard, Partner
Partner

John L. Culhane, Jr., is known for his work advising on interstate direct and indirect consumer and residential mortgage loan and leasing programs, through both traditional brick-and-mortar facilities and e-commerce. Before joining Ballard Spahr, Mr. Culhane was associate counsel with Mellon Bank, N.A.; associate counsel with Bank of America NT&SA; and senior attorney (section chief) with the National Credit Union Administration, the federal agency regulating federal credit unions.

Mr. Culhane addresses issues involving licensing,...

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