Member Complaint Response Pricing Reviews FDIC – Assessing an Risk Institution’s Inherent using a risk-based methodology •Examine the structure; credit products; any changes to the institution or its loan •Evaluate bank’s products; policies and procedures; and demographic information fair lending compliance program •Consider bank’s institutional inherent risks •Identify that Equate to Increased Pricing Risk “Red Flags” disparities between target/control groups •Raw monitoring of pricing discretion •Unmonitored/insufficient of clear, written pricing policies •Lack of documentation for/tracking of exceptions •Lack incentives by office or originator •Financial •Complaints Conducting a Pricing Review Review bank policies and procedures bank personnel •Interview and evaluate loan data •Gather statistical analysis: •Conduct no analysis –Bank-specific: “one-size-fits-all” are developed based on pricing criteria –Models bank’s at the portfolio level –Generally, The Importance of an Effective Compliance Management System Banks should create an effective compliance management system that includes: written policies that detail the specific discretion afforded to employees and third –Clear, parties and tracking of exceptions to policy –Documentation robust monitoring system that is conducted regularly (i.e., quarterly basis) and at both –A the portfolio and broker/dealer level appropriate corrective action –Taking Post-Origination Fair Lending Risks - OCC OCC Fair Lending Risk Assessments in every supervisory cycle •Conducted on entire life cycle of the loan •Focus servicing, loss mitigation, and foreclosure activities •Includes quality of risk management –Evaluate bank’s of post-closing staff and third parties –Training and litigation –Complaints
Member Complaint Response Pricing Reviews – FDIC Assessing an Institution’s Inherent Risk •Examine using a risk-based methodology •Evaluate the bank’s structure; credit products; any changes to the institution or its loan products; policies and procedures; and demographic information •Consider bank’s fair lending compliance program •Identify institutional inherent risks “Red Flags” that Equate to Increased Pricing Risk •Raw disparities between target/control groups •Unmonitored/insufficient monitoring of pricing discretion •Lack of clear, written pricing policies •Lack of documentation for/tracking of exceptions •Financial incentives by office or originator •Complaints Conducting a Pricing Review Review bank policies and procedures •Interview bank personnel •Gather and evaluate loan data •Conduct statistical analysis: –Bank-specific: no “one-size-fits-all” analysis –Models are developed based on bank’s pricing criteria –Generally, at the portfolio level The Importance of an Effective Compliance Management System Banks should create an effective compliance management system that includes: –Clear, written policies that detail the specific discretion afforded to employees and third parties –Documentation and tracking of exceptions to policy –A robust monitoring system that is conducted regularly (i.e., quarterly basis) and at both the portfolio and broker/dealer level –Taking appropriate corrective action Post-Origination Fair Lending Risks - OCC OCC Fair Lending Risk Assessments •Conducted in every supervisory cycle •Focus on entire life cycle of the loan •Includes servicing, loss mitigation, and foreclosure activities –Evaluate quality of bank’s risk management –Training of post-closing staff and third parties –Complaints and litigation
FairHOWP060216.docx