[4] See, e.g., Thiel v. Veneman, 859 F. Supp. 2d 1182 (D. Mont. 2012), at 1188.[5] 15 U.S.C. § 1691(a).[6] 724 F.2d 789 (9th Cir.), cert. denied, 105 S. Ct. 121 (1984).

The provision simply states that “[i]t shall be unlawful for any creditor to discriminate against any applicant” based on race, religion, or certain other characteristics. See 15 U.S.C. § 1691(a). Thus, a key pillar of the majority’s reasoning in Inclusive Communities is missing from ECOA.

The provision simply states that “[i]t shall be unlawful for any creditor to discriminate against any applicant” based on race, religion, or certain other characteristics. See 15 U.S.C. § 1691(a). Thus, a key pillar of the majority’s reasoning in Inclusive Communities is missing from ECOA.Second, the main argument of the strongly-worded principal dissent in Inclusive Communities, which carried the support of four Justices, focused on the use of the phrase “because of” in the FHA.

ng the couple’s credit, was further told “You drive very fast through Markham and you don’t look at anybody or lock on anybody’s eyes in Markham…”A June 2016 episode where Sturner described the south side of Chicago as “hoodlum weekend” between Friday and Monday;A January 2017 episode where Sturner and other hosts described a Chicago Jewel-Osco location as the “jungle Jewel;”A November 2017 episode where Townstone’s senior loan officer equated the rush of skydiving with the rush of walking through the south side of Chicago late at night;Among other derogatory comments directed at the general pool of potential African-American applicants, but who had not yet submitted mortgage applications.By its amended complaint, the CFPB asserted that these statements unlawfully discriminated against not actual mortgage applicants but prospective applicants on the basis of their race by discouraging any and all possible borrowers from applying for a mortgage loan from Townstone, which violates ECOA, 15 U.S.C. § 1691(a), and its implementing regulation, Regulation B, 12 C.F.R. § 1002.4(b) (hereinafter referred to as “Regulation B”). Regulation B, which was drafted by the CFPB pursuant to Congress’s delegation authority, makes it unlawful to discriminate against “prospective applicants” rather than actual “applicants” alone, unlike § 1691(a) of the ECOA (which only covers actual “applicants”). In so alleging, the CFPB did not identify in its pleadings any specific or identifiable potential applicant who was allegedly discouraged from applying. Townstone and Sturner moved to dismiss, arguing that the plain language of § 1691(a) only prohibits discrimination against actual “applicants” and, thus, Regulation B’s “prospective applicant” language was improper and a regulatory overreach and, accordingly, should not be relied upon by the court in its analysis. Townstone therefore argued that the CFPB’s allegations failed to state a claim because the CFPB had only alleged discriminatory conduct against prospe

Creditors should also establish and maintain a strong fair lending program and model risk management framework, leveraging industry standards and practices, to ensure models are appropriately onboarded, validated, and monitored.15 U.S.C. 1691(a); .15 U.S.C. 1691(d)(2)(A); .SeeCFPB Announces First No-Action Letter to Upstart Network | Consumer Financial Protection Bureau (consumerfinance.gov).SeeInnovation spotlight: Providing adverse action notices when using AI/ML models | Consumer Financial Protection Bureau (consumerfinance.gov).12 CFR 1002.9(b)(2)-3 and 1002.9(b)(2)-4.Seehttps://www.consumerfinance.gov/about-us/blog/innovation-spotlight-providing-adverse-action-notices-when-using-ai-ml-models/Seehttps://www.consumerfinance.

[i] But equally important will be a shifting enforcement focus: we anticipate that, under President-Elect Biden, the CFPB will revive the “disparate impact doctrine” (the “Doctrine”) as a means for curtailing business practices that result in racial disparities, whether intended or not. Although there has been significant debate about the Doctrine’s validity as applied to the Equal Credit Opportunity Act of 1974 (“ECOA”), codified at 15 U.S.C. §1691, the CFPB under President Obama applied the doctrine aggressively. We expect that Biden’s CFPB will rely upon the Doctrine as a key piece of its ECOA enforcement agenda, and if matters are litigated, the Doctrine’s validity may be resolved in court.

The Court now has extended this reasoning to housing discrimination claims under the FHA. The decision is particularly relevant to the residential mortgage industry, where the FHA – along with the Equal Credit Opportunity Act, 15 U.S.C. 1691 et seq. (the “ECOA”) – are the basis for discrimination claims under federal law. The Inclusive Communities decision did not address the question of whether the ECOA similarly permits disparate impact claims.

Bank of Raymore, 761 F.3d 937 (8th Cir. 2014), cert. granted, No. 14-520, 2015 U.S. LEXIS 1635 (U.S. Mar. 2, 2015)—on appeal from the Eighth Circuit—to decide whether certain guarantors are excluded from the definition of “applicant” under the Equal Credit Opportunity Act (ECOA), 15 U.S.C. § 1691 et seq., and whether the Federal Reserve Board (FRB) had the authority under the ECOA to include certain guarantors as “applicants” in Regulation B, 12 C.F.R. pt. 1002 et seq.

least 2,500 small business loans annuallyApril 1, 2025, for lenders that originate 500 – 2,499 small business loans annuallyJanuary 1, 2026, for lenders that originate 100 - 499 small business loans annuallyThe CFPB states that it intends to propose a related rule that would provide additional implementation time for certain small lenders that have successfully served their local communities, as measured by their Community Reinvestment Act performance and/or other similar measures.We Can HelpThe practical impacts of the Section 1071 Rule will vary greatly depending on lenders’ current practices and procedures. Several of the rule’s provisions will require different approaches for compliance depending on specific facts and circumstances, including requirements related to the determination of the relevant applicant owner demographics to report, the treatment of multiple applicants, the impact of mergers and acquisitions, and voluntary data collection and reporting.[] 12 CFR Part 1002.[] 15 USC 1691 et seq.[] Generally, the Section 1071 Rule does not apply to motor vehicle dealers, as defined in section 1029(f)(2) of the Dodd-Frank Act, that are predominantly engaged in the sale and servicing of motor vehicles, the leasing and servicing of motor vehicles, or both. 12 USC 5519.[] 12 CFR1002.3(c)(1).[] Consumer Financial Protection Bureau, Statement on Enforcement and Supervisory Practices Relating to the Small Business Lending Rule under the Equal Credit Opportunity Act and Regulation B (March 30, 2023), available at https://files.consumerfinance.gov/f/documents/cfpb_1071-enforcement-policy-statement.pdf.[] That is, the rule applies on a particular date if the financial institution originates the minimum number of loans indicated for that date in both 2022 and 2023. A transitional provision in the rule allows financial institutions that did not collect sufficient information to determine whether borrowers were small businesses under the rule to annualize the number of covered orig

risk of being labeled as a discriminatory lender. Even more, this data could be utilized by class action attorneys and advocacy groups to initiate investigations and litigation.Need to Begin ImplementationThe CFPB has signaled that these rules will not become mandatory for 18 months following their release. Given the dangers associated with the failing to comply with these rules, and the difficulty and complexity of building out, testing and implementing similar data processes, it would be a best practice for all financial institutions covered by this rule to further study and begin implementing this rule as soon as possible. The CFPB has communicated that they will aggressively enforce these regulations, so failure to be prepared once collection and reporting become mandatory could result in serious consequences.[1] Small Business Lending under the Equal Credit Opportunity Act, Consumer Financial Protection Bureau (Docket No. CFPB-2021-0015) (March 30, 2023).[2] 12 CFR Part 1002.[3] 15 USC 1691 et. seq.[4] Small Business Lending under the Equal Credit Opportunity Act, at p. 55.[5] Id. at 3.[6] Id. at 2-3.[7] Id.[8] Id. at 4.[9] 12 CFR 1002.2(g) (definition of “Business Credit” under Regulation B).[10] Small Business Lending under the Equal Credit Opportunity Act, at p. 61.[11] 12 CFR Part 1003[12] 12 CFR Part 1003.2(e).[13] For a full list of the data that will be collected, refer to 12 CFR 1002.107.[14] Small Business Lending under the Equal Credit Opportunity Act, at p. 525.[15] Although generally available to the public, the CFPB intends to create a firewall that will prevent the employees of a financial institution involved in credit decisions from accessing demographic information reported by applicants. This is unless a financial institution can demonstrate it that an officer or employee should have access to the applicant’s responses and institution’s inquiries about the applicant’s protected demographic information. If this is the case, these employees may access the