Fair Lending & Fair Servicing

Financial institutions’ increasing use of complex models, novel technologies (including AI) and alternative data, as well as the emergence of innovative loan products and servicing practices, have intensified the spotlight on compliance with fair lending and servicing laws.

The emphasis on fair lending and servicing by the Consumer Financial Protection Bureau (CFPB) — along with other federal regulators and state attorneys general — has created a prolonged period of tight government scrutiny. Orrick counsels the nation’s top banks, mortgage lenders, auto lenders, credit card issuers, fintech companies, and other consumer finance providers in traditional and emerging areas of fair lending and fair servicing.

Our team of experienced attorneys has been directly involved in major developments across fair lending and servicing policy, regulation, enforcement, and litigation. We are well-positioned to help clients handle the known issues, and more importantly, anticipate future trends and prepare strategies to address novel challenges.

We routinely represent and advise clients on a variety of significant matters, including:

Government enforcement actions, investigations, and other administrative proceedings
Federal and state agency fair lending and servicing examinations
Complex civil litigation involving intricate regulatory issues
Risk assessments and regulatory compliance reviews, including leveraging qualitative and quantitative support drawn from regression analyses, Bayesian Improved Surname Geocoding (BISG) proxy methodology and matched pair reviews
Comprehensive regulatory counseling and compliance advice to mitigate fair lending risk under the Equal Credit Opportunity Act (ECOA), Fair Housing Act (FHA), Section 1981 and other federal and state anti-discrimination and fair lending laws
Forward-looking fair lending compliance and monitoring programs, including those in emerging areas such as the alternative financial services space and the use of technology and innovation in lending
Issues related to the intersection of emerging technologies and innovation with fair lending and servicing laws and regulations, including alternative data, artificial intelligence and machine learning

Engagements
Representing numerous entities in concurrent investigations and enforcement actions by federal and state regulators, including the Department of Justice (DOJ), Department of Housing and Urban Development (HUD), CFPB, prudential banking regulators and state attorneys general, related to allegations of discriminatory lending practices

Representing numerous banks and nonbanks in escalated state and federal government supervisory activity regarding origination and servicing practices

Representing financial institutions in housing discrimination complaints filed by individuals and consumer advocacy groups with local and state civil rights commissions and HUD, including complaints referred to DOJ

Advising lenders on fair lending risk from digital media, marketing, and advertising

Conducting fair lending and fair servicing risk assessments for financial institutions, including entities offering mortgages, auto loans, credit cards, student loans and personal loans

Representing bank and nonbank indirect auto creditors in both public and nonpublic settlements with the CFPB and the DOJ over alleged fair lending violations

Representing banks in putative class actions and complex litigation alleging discrimination in various loan products, including allegations of redlining and discrimination in pricing and underwriting

Representing specialty lenders in multi-agency fair lending supervision, investigations and internal reviews

Defending numerous financial institutions in fair lending protests to transactional applications filed with the federal banking agencies

Defending complex litigation brought by several municipalities alleging discriminatory lending practices with negative impacts on the municipality