*HomeU.S. Government Accountability Office*
Menu

      close


          
          
                          	
				
				
	
	
					Reports & Testimonies
									
																				
				
				
	
	
								Reports & Testimonies
													
																												
																						
							
																Recommendations Database
							
																												
																						
							
																Month in Review
							
																												
																						
							
																Order Copies
							
																												
																						
							
																Restricted Reports
							
																												
																						
							
																View Topics
							
																												
																						
							
																View Agencies
							
																												
																						
							
																Bid Protests & Appropriations Law
									
																				
				
				
	
	
								Bid Protests & Appropriations Law
													
																												
																						
							
																Bid Protests
							
																												
																						
							
																Appropriations Law
							
																												
																						
							
																Federal Vacancies Reform Act
							
																												
																						
							
																Other Legal
							
																												
																						
							
																About
									
																				
				
				
	
	
								About
													
																												
																						
							
																What GAO Does
							
																												
																						
							
																U.S. Comptroller General
							
																												
																						
							
																Careers
							
																												
																						
							
																Contact UsFor Congress
                                
                          
        
                Press Center
                                
                          
        
                Careers
                                
                          
        
                BlogSearch Breadcrumb
        Home
                            Reports & Testimonies
                            Fair Lending: Data Limitations and The Fragmented U.S. Financial Regulatory Structure Challenge Federal Oversight and Enforcement Efforts
    Fair Lending:
                          Data Limitations and the Fragmented U.S. Financial Regulatory Structure Challenge Federal Oversight and Enforcement Efforts **GAO-09-704**
        Published: Jul 15, 2009. Publicly Released: Jul 15, 2009.Jump To:
    Jump ToElder Abuse
          Services for Older Adults
          State and Local-Level Drivers and Trends
          State and Local Fiscal Projections
          Federal Borrowing
          Managing the Debt
          Summary of Funding Provisions
          Auditing the Government's Books
          Unpacking the Financial Report
          Highlights
          Recommendations
          Background
          About This Work
          About This Work
          Trends
          About the Center
          Why It's High Risk
          What Remains To Be Done
          Key Reports
          Newest COVID-Related Reports
          AI Use Cases
          Flood Insurance
          Past Pandemic-Related Reports
          CARES Act Oversight Reports
          All COVID-19 Reports
          Report Suspected Fraud
          Subjects
          How to Get Notified
          Past Reports
          Public Health Threats
          Explore the FY 2022 and 2023 Funds
          Lessons Learned
          Agency Reports
          Recent Reports
          Recommendations
          Supplemental Material
          Full Report
          Additional Data
          View Decision
          Downloads
          Previously Identified Actions
          Related Pages
          Associated Agencies
          Tough Choices and Opportunities Ahead
          Americas Fiscal Future Key Areas
          Retirement Security Key Areas
          Current List
          About The High Risk List
          Area Ratings
          Previous High Risk Products
          Search Federal Vacancies
          Past Federal Vacancies
          Violation Letters
          About the Yellow Book
          Advisory Council
          Related Resources
          Comment Letters
          Related Publications
          Contacts and Resources
          Major Issues Facing the Nation
          Meeting Strategic Challenges
          Additional Resources
          Resources
          GAO Contacts
          Mission Teams
          Operations and Staff Offices
          Organization Chart
          Why a Career at GAO?
          Am I Qualified?
          Company Culture
          Reasonable Accommodations
          Video Gallery
          Paid Internships
          Student Volunteers
          Professional Development Program
          Advancement
          Executive Candidate Program
          Summer Associates
          Externships
          Benefits
          Contacts
                    Skip to Highlights
Highlights
  The Fair Housing Act (FHA) and the Equal Credit Opportunity Act (ECOA)--the "fair lending laws"--prohibit discrimination in lending. Responsibility for their oversight is shared among three enforcement agencies--the Department of Housing and Urban Development (HUD), Federal Trade Commission (FTC), and Department of Justice (DOJ)--and five depository institution regulators--the Federal Deposit Insurance Corporation (FDIC), Board of Governors of the Federal Reserve System (Federal Reserve), National Credit Union Administration (NCUA), Office of the Comptroller of the Currency (OCC), and Office of Thrift Supervision (OTS). This report examines (1) data used by agencies and the public to detect potential violations and options to enhance the data, (2) federal oversight of lenders that are identified as at heightened risk of violating the fair lending laws, and (3) recent cases involving fair lending laws and associated enforcement challenges. GAO analyzed fair lending laws, relevant research, and interviewed agency officials, lenders, and consumer groups. GAO also reviewed 152 depository institution fair lending examination files. Depending upon file availability by regulator, GAO reviewed all relevant files or a random sample as appropriate.

Recommendations
      Matter for Congressional Consideration
        Matter
                                                  Status
                                                  CommentsTo facilitate the capacity of federal enforcement agencies and depository institution regulators as well as independent researchers to identify lenders that may be engaged in discriminatory practices in violation of the fair lending laws, Congress may wish to consider the merits of additional data collection and reporting options. These varying options pertain to obtaining key underwriting data for mortgage loans, such as credit scores as well as LTV and DTI ratios, and personal characteristic (such as race, ethnicity and sex) and relevant underwriting data for nonmortgage loans.
                                                                                        Closed – Implemented
                                                                                        Consistent with GAO's suggestions, Congress amended the Home Mortgage Disclosure Act (HMDA) in its Dodd-Frank Wall Street Reform and Consumer Protection Act, which became public law in July, 2010. Among other things the amendments require lenders to gather data on the credit score of mortgage loan applicants. As a result, the potential exists that the enforcement agencies and depository institution regulators will be better equipped to identify potential lending discrimination for mortgage lending.To help ensure that all potential risks for fair lending violations are thoroughly investigated and sufficient time is available to do so, Congress may wish to consider extending the statute of limitations on ECOA violations.
                                                                                        Closed – Implemented
                                                                                        Consistent with GAO's recommendation, Congress extended the statute of limitations for Equal Credit Opportunity Act actions from two to five years pursuant to section 1085(7) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The act became public law in July 2010.As Congress debates the reform of the financial regulatory system, it may wish to take steps to help ensure that consumers are adequately protected, that laws such as the fair lending laws are comprehensive and consistently applied, and that oversight is efficient and effective. Any new structure should address gaps and inconsistencies in the oversight of independent mortgage brokers and nonbank subsidiaries, as well as address the potentially inconsistent oversight provided by depository institution regulators.
                                                                                        Closed – Implemented
                                                                                        Consistent with GAO's suggestions, Congress included improvements in its supervision of holding company subsidiaries and examination and enforcement of mortgage brokers in its Dodd-Frank Wall Street Reform and Consumer Protection Act, which became public law in July 2010. Specifically, the Act requires the Federal Reserve to examine non-bank subsidiaries that are engaged in activities that the subsidiary bank can do (e.g. mortgage lending) on the same schedule and in the same manner as bank exams, and gives regulators the authority to examine and enforce regulators for all mortgage-related businesses, such as mortgage brokers and other non-bank financial companies. As a result, the potential exist that the enforcement agencies and banking regulators will be better equipped to comprehensively and consistently apply the fair lending laws.Recommendations for Executive Action
        Agency Affected
                                                  Recommendation
                                                  StatusDepartment of Justice
                                                                                        To help strengthen fair lending oversight and enforcement, DOJ, FDIC, Federal Reserve, FTC, HUD, NCUA, OCC, and OTS should work collaboratively to identify approaches to better assess the potential risk for discrimination during the preapplication phase of mortgage lending. For example, the agencies and depository institution regulators could further consider the use of testers, perhaps on a pilot basis, as well as surveys of mortgage loan borrowers and applicants or alternative means to better assess the potential risk for discrimination during this critical phase of the mortgage lending process.
                                                                                        Closed – Implemented
In September 2009, the Joint Agency Task Force on Discrimination in Lending established a working group with representatives from each of the enforcement agencies and depository institution regulators to respond to our recommendation. The working group is to discuss the use of testers and surveys as a means to assess discrimination in the preapplication phase and share information on how each agency currently identifies potential preapplication discrimination. In addition, the working group has expanded its efforts to seek input from non-governmental agencies regarding additional information and suggestions on potential methods for identifying preapplication discrimination. As a result, the potential exist that the enforcement agencies and depository institution regulators will be better equipped to identify potential lending discrimination during the preapplication phase of mortgage lending.Office of the Comptroller of the Currency
                                                                                        To help strengthen fair lending oversight and enforcement, DOJ, FDIC, Federal Reserve, FTC, HUD, NCUA, OCC, and OTS should work collaboratively to identify approaches to better assess the potential risk for discrimination during the preapplication phase of mortgage lending. For example, the agencies and depository institution regulators could further consider the use of testers, perhaps on a pilot basis, as well as surveys of mortgage loan borrowers and applicants or alternative means to better assess the potential risk for discrimination during this critical phase of the mortgage lending process.
                                                                                        Closed – Implemented
In September 2009, the Joint Agency Task Force on Discrimination in Lending established a working group with representatives from each of the enforcement agencies and depository institution regulators to respond to our recommendation. The working group is to discuss the use of testers and surveys as a means to assess discrimination in the preapplication phase and share information on how each agency currently identifies potential preapplication discrimination. In addition, the working group has expanded its efforts to seek input from non-governmental agencies regarding additional information and suggestions on potential methods for identifying preapplication discrimination. As a result, the potential exist that the enforcement agencies and depository institution regulators will be better equipped to identify potential lending discrimination during the preapplication phase of mortgage lending.Federal Reserve System
                                                                                        To help strengthen fair lending oversight and enforcement, DOJ, FDIC, Federal Reserve, FTC, HUD, NCUA, OCC, and OTS should work collaboratively to identify approaches to better assess the potential risk for discrimination during the preapplication phase of mortgage lending. For example, the agencies and depository institution regulators could further consider the use of testers, perhaps on a pilot basis, as well as surveys of mortgage loan borrowers and applicants or alternative means to better assess the potential risk for discrimination during this critical phase of the mortgage lending process.
                                                                                        Closed – Implemented
In September 2009, the Joint Agency Task Force on Discrimination in Lending established a working group with representatives from each of the enforcement agencies and depository institution regulators to respond to our recommendation. The working group is to discuss the use of testers and surveys as a means to assess discrimination in the preapplication phase and share information on how each agency currently identifies potential preapplication discrimination. In addition, the working group has expanded its efforts to seek input from non-governmental agencies regarding additional information and suggestions on potential methods for identifying preapplication discrimination. As a result, the potential exist that the enforcement agencies and depository institution regulators will be better equipped to identify potential lending discrimination during the preapplication phase of mortgage lending.Federal Deposit Insurance Corporation
                                                                                        To help strengthen fair lending oversight and enforcement, DOJ, FDIC, Federal Reserve, FTC, HUD, NCUA, OCC, and OTS should work collaboratively to identify approaches to better assess the potential risk for discrimination during the preapplication phase of mortgage lending. For example, the agencies and depository institution regulators could further consider the use of testers, perhaps on a pilot basis, as well as surveys of mortgage loan borrowers and applicants or alternative means to better assess the potential risk for discrimination during this critical phase of the mortgage lending process.
                                                                                        Closed – Implemented
In September 2009, the Joint Agency Task Force on Discrimination in Lending established a working group with representatives from each of the enforcement agencies and depository institution regulators to respond to our recommendation. The working group is to discuss the use of testers and surveys as a means to assess discrimination in the preapplication phase and share information on how each agency currently identifies potential preapplication discrimination. In addition, the working group has expanded its efforts to seek input from non-governmental agencies regarding additional information and suggestions on potential methods for identifying preapplication discrimination. As a result, the potential exist that the enforcement agencies and depository institution regulators will be better equipped to identify potential lending discrimination during the preapplication phase of mortgage lending.Federal Trade Commission
                                                                                        To help strengthen fair lending oversight and enforcement, DOJ, FDIC, Federal Reserve, FTC, HUD, NCUA, OCC, and OTS should work collaboratively to identify approaches to better assess the potential risk for discrimination during the preapplication phase of mortgage lending. For example, the agencies and depository institution regulators could further consider the use of testers, perhaps on a pilot basis, as well as surveys of mortgage loan borrowers and applicants or alternative means to better assess the potential risk for discrimination during this critical phase of the mortgage lending process.
                                                                                        Closed – Implemented
In September 2009, the Joint Agency Task Force on Discrimination in Lending established a working group with representatives from each of the enforcement agencies and depository institution regulators to respond to our recommendation. The working group is to discuss the use of testers and surveys as a means to assess discrimination in the preapplication phase and share information on how each agency currently identifies potential preapplication discrimination. In addition, the working group has expanded its efforts to seek input from non-governmental agencies regarding additional information and suggestions on potential methods for identifying preapplication discrimination. As a result, the potential exist that the enforcement agencies and depository institution regulators will be better equipped to identify potential lending discrimination during the preapplication phase of mortgage lending.Department of Housing and Urban Development
                                                                                        To help strengthen fair lending oversight and enforcement, DOJ, FDIC, Federal Reserve, FTC, HUD, NCUA, OCC, and OTS should work collaboratively to identify approaches to better assess the potential risk for discrimination during the preapplication phase of mortgage lending. For example, the agencies and depository institution regulators could further consider the use of testers, perhaps on a pilot basis, as well as surveys of mortgage loan borrowers and applicants or alternative means to better assess the potential risk for discrimination during this critical phase of the mortgage lending process.
                                                                                        Closed – Implemented
In September 2009, the Joint Agency Task Force on Discrimination in Lending established a working group with representatives from each of the enforcement agencies and depository institution regulators to respond to our recommendation. The working group is to discuss the use of testers and surveys as a means to assess discrimination in the preapplication phase and share information on how each agency currently identifies potential reapplication discrimination. In addition, the working group has expanded its efforts to seek input from non-governmental agencies regarding additional information and suggestions on potential methods for identifying preapplication discrimination. As a result, the potential exist that the enforcement agencies and depository institution regulators will be better equipped to identify potential lending discrimination during the preapplication phase of mortgage lending.National Credit Union Administration
                                                                                        To help strengthen fair lending oversight and enforcement, DOJ, FDIC, Federal Reserve, FTC, HUD, NCUA, OCC, and OTS should work collaboratively to identify approaches to better assess the potential risk for discrimination during the preapplication phase of mortgage lending. For example, the agencies and depository institution regulators could further consider the use of testers, perhaps on a pilot basis, as well as surveys of mortgage loan borrowers and applicants or alternative means to better assess the potential risk for discrimination during this critical phase of the mortgage lending process.
                                                                                        Closed – Implemented
In September 2009, the Joint Agency Task Force on Discrimination in Lending established a working group with representatives from each of the enforcement agencies and depository institution regulators to respond to our recommendation. The working group is to discuss the use of testers and surveys as a means to assess discrimination in the preapplication phase and share information on how each agency currently identifies potential preapplication discrimination. In addition, the working group has expanded its efforts to seek input from non-governmental agencies regarding additional information and suggestions on potential methods for identifying preapplication discrimination. As a result, the potential exist that the enforcement agencies and depository institution regulators will be better equipped to identify potential lending discrimination during the preapplication phase of mortgage lending.Office of Thrift Supervision
                                                                                        To help strengthen fair lending oversight and enforcement, DOJ, FDIC, Federal Reserve, FTC, HUD, NCUA, OCC, and OTS should work collaboratively to identify approaches to better assess the potential risk for discrimination during the preapplication phase of mortgage lending. For example, the agencies and depository institution regulators could further consider the use of testers, perhaps on a pilot basis, as well as surveys of mortgage loan borrowers and applicants or alternative means to better assess the potential risk for discrimination during this critical phase of the mortgage lending process.
                                                                                        Closed – Implemented
In September 2009, the Joint Agency Task Force on Discrimination in Lending established a working group with representatives from each of the enforcement agencies and depository institution regulators to respond to our recommendation. The working group is to discuss the use of testers and surveys as a means to assess discrimination in the preapplication phase and share information on how each agency currently identifies potential preapplication discrimination. In addition, the working group has expanded its efforts to seek input from non-governmental agencies regarding additional information and suggestions on potential methods for identifying preapplication discrimination. As a result, the potential exist that the enforcement agencies and depository institution regulators will be better equipped to identify potential lending discrimination during the preapplication phase of mortgage lending.

          See All 8 RecommendationsFull Report
    Highlights
              Full Report (102 pages)
              Accessible Text
Office of Public Affairs
    
      Chuck Young
            
            Managing Director
      
            youngc1@gao.gov
      
            (202) 512-4800
Topics
    
      Justice and Law EnforcementBanking regulationData collectionDiscriminationFederal credit unionsFederal regulationsFederal reserve banksIndependent regulatory commissionsInvestigations by federal agenciesLending institutionsMortgage programsPrices and pricingRegulatory agenciesReporting requirementsRisk managementSmall businessDocumentationLoans
                                                      Multimediahandshake
          Blog Post
              Racial Disparities in Federal Employment, Lending, and Housing
            Wednesday, July 1, 2020
      
            Over the past several years, GAO has been asked to examine various racial inequalities in economic...
 Receive GAO Updates
  Stay informed as we add new reports & testimonies.

    GAO Logo
      U.S. Government Accountability Office


                                   Column 1
                            Press Center
                              Contact Us
                              Inspector General
                              Restricted Reports
                              Column 2
                            Copyright & Terms of Use
                              Privacy Policy
                              Accessibility
                              Sitemap
                              Column 3
                            FOIA Requests
                              Scam Alerts
                              No FEAR Act Data
                              Health Care Advisory Committees