When a provider of consumer credit faces a fair lending investigation or litigation, the stakes are especially high. Accusations that an institution's policies or practices are discriminatory can do lasting damage to a company's reputation. Ballard Spahr's litigators and regulatory attorneys have pooled their knowledge and skills to help clients respond to new legal requirements and claims of violations.
Our attorneys have many years of experience in successfully defending cases alleging fair lending violations. When the U.S. Justice Department, the CFPB, and federal and state regulators increased their focus on fair lending, we created a Fair Lending Task Force, combining our litigation strength with our skill in providing regulatory guidance in one team that handles the full range of fair lending issues.
The task force monitors how fair lending issues are proceeding both in the courts and before the regulatory agencies, as well as the enforcement actions of both federal and state agencies. Our attorneys provide thoughtful advice on the preventive measures that can be taken to minimize risk, and perform in-depth fair lending risk assessments. We understand the statistical analyses that underlie fair lending assessments and discrimination claims, and routinely work with statisticians to design fair lending analyses and interpret the results for our clients.
The following list of select matters highlights our team members' broad experience in fair lending litigation and compliance.
Litigation and Investigations
- Represented one of the largest wholesale subprime mortgage lenders in an Equal Credit Opportunity Act and Fair Housing Act putative class action alleging discrimination under a "disparate impact" theory based on discretionary fees charged to borrowers by third-party mortgage brokers. After successfully moving for order requiring joinder of the third-party mortgage brokers, the case was resolved through a favorable settlement.
- In another fair lending action against the same mortgage lender, obtained a voluntary dismissal of ECOA and FHA claims brought by the NAACP, which alleged, inter alia, theories of intentional discrimination through asserted "steering" and "reverse redlining."
- Represented GMAC in arguing before the Sixth Circuit in an ECOA case concerning automobile financing practices, and obtained a seminal decision reversing the district court's certification of a class under Rule 23(b)(2). Coleman v. General Motors Acceptance Corp., 296 F.3d 443 (6th Cir. 2002) (holding that compensatory damages under the ECOA are not recoverable by a 23(b)(2) class).
- Represented numerous clients in fair lending litigation before state regulatory agencies including the Pennsylvania Human Relations Commission and the New Jersey Attorney General's Civil Rights Division.
- Defended clients in numerous individual and putative class actions arising from federal and state fair lending laws.
- Assisted a large bank in responding to a fair lending investigation by the New York Department of Financial Services.
- Represented clients in the HUD and state investigation of fair lending complaints.
- Negotiated favorable resolutions of state attorney general and district attorney investigations of different subprime and near prime lending programs.
Compliance and Examinations
- Successfully defended bank clients in fair lending compliance examinations asserting violations of federal and state law, including, but not limited to, violations of adverse action notification and spousal and other signature requirements.
- Advised a large national bank on matters relating to threatened CFPB enforcement arising from dealer finance charge participation.
- Initiated efforts to improve client website, branch, and ATM accessibility to reduce risk of claims of discrimination based on disability or handicap.
- Conducted a complete fair lending risk assessment and statistical analysis for the indirect auto finance operation of a large national bank.
- Provided fair lending advice to a large national auto finance company.
- Counsel clients on HMDA data reporting obligations and analysis of HMDA data.
- Worked with statistical firms to develop, conduct, and analyze results of statistical analyses of mortgage loan origination data (HMDA data combined with additional loan and consumer data), and recommended actions to address results.
- Regularly counsel mortgage lending clients (both bank and nonbank) on fair lending issues in the origination and servicing of mortgage loans. Topics involve issues such as loan pricing policies, loan originator compensation policies, and underwriting guidelines, and include implications under the new CFPB mortgage rules.
- Conducted a complete fair lending risk assessment for a large credit card issuer.
- Counseled major card issuers on the fair lending implications of different cross-border private label, co-branded, and bankcard credit card programs, variously directed to Canadian and/or Mexican residents.
- Provided fair lending advice to providers of private student loans, student loan refinance programs, education consolidation loans, and so-called human capital contracts on numerous issues, including borrower and school eligibility criteria.
- Provided assessments of the fair lending risk inherent in certain subprime and super-prime lending programs being considered by different bank and nonbank clients.
- Drafted fair lending policies and procedures for a variety of clients, covering areas from origination to collections.
- Advised clients on the best ways of structuring compliance management systems and self-testing and other self-correction programs in order to maximize the ability to preserve various privileges afforded under federal and state law.
- Counseled clients on record retention requirements under federal and state fair lending laws, including extended retention requirements applicable to investigations and enforcement proceedings.
- Counsel clients in responding to inquiries from community groups regarding fair lending practices.
- Advised clients responding to fair lending challenges to prescreening, targeted marketing, and single-source marketing programs.
- Assisted different clients with the design, implementation, and "rehabilitation" of so-called special-purpose credit programs offered under the ECOA and Regulation B.
- Advised numerous financial institution clients on the fair lending consequences of limited and full-scale foreign language marketing, origination, and servicing efforts.
- Reviewed the weight given to and/or the factors used in different credit scoring and judgmental underwriting systems for compliance with federal and state fair lending laws.
- Counseled regional bank clients on the fair lending implications of branch closure and branch expansion programs.
- Advised numerous clients on CRA credit available for various lending, investment, and community service programs.