Specifically, the Consumer Financial Protection Bureau will target discriminatory lending practices, including a new focus on peer-to-peer lending groups. The Wharton School of Business at the University of Pennsylvania found evidence of significant racial disparities in this new type of credit market. According to the report “Loan listings with blacks in the attached picture are 25% to 35% less likely to receive funding than those of whites with similar credit profiles.” The report further found that “[d]espite the higher average interest rates charged to blacks, lenders making such loans earn a lower net return compared to loans made to whites with similar credit profiles because blacks have higher relative default rates. These results provide insight into whether the discrimination we find is taste-based or statistical.”

So far the CFPB has issued a compliance bulletin that holds lenders accountable for what the bureau calls “disparate impact” lending practices that, while seemingly above board, actually hide discriminatory lending in reality. The agency also created a “tips and warning signs” web page that educates lenders on discriminatory lenders. “We want consumers to avoid the marketplace’s silent pickpocket—discrimination,” CFPB Director Richard Cordray said in a statement. “We cannot afford to tolerate practices, intentional or not, that unlawfully price out or cut off segments of the population from the credit markets. That’s why the CFPB is educating consumers about their fair lending rights and pursuing lenders whose practices are discriminatory.”

If suspect you or a loved one has been the victim of discriminatory lending practices, or if you have questions or concerns about a current mortgage, contact the attorneys at Lord & Faris for a free consultation.

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