NCUA Explains Fair Lending Exam Program’s Latest Developments

The National Credit Union Administration (NCUA) released Letter to Federal Credit Unions 13-FCU-02 Tuesday, which outlines a number of developments in the NCUA’s Fair Lending Examination Program, including new educational and compliance tools to help federal credit unions comply with fair lending laws and the institution of off-site supervision contacts in certain instances.

While the NCUA did not issue the fair lending laws, as the regulator for federally chartered credit unions, it is responsible for enforcing the rules. The fair lending laws and regulations include:

  • Equal Credit Opportunity Act (Regulation B);
  • Home Mortgage Disclosure Act (Regulation C); and
  • Fair Housing Act (FHA).

As it has done in past years, for 2013, the NCUA will select a number of federal credit unions for a fair lending examination. Most federal credit unions will not be selected for a fair lending examination or an off-site supervision contact this year, as those that are chosen will have demonstrated the potential for a higher fair lending risk based on criteria discussed below. For the selected federal credit unions that fit the criteria, the Office of Consumer Protection (OCP) will provide advance written notification of the exam or off-site supervision contact.

The NCUA uses the following factors in determining whether or not a federal credit union demonstrates the potential for higher fair lending risk that could lead to a fair lending exam or an off-site supervision contact:

  • HMDA Outliers – If a review of the Home Mortgage Disclosure Act (HMDA) report indicates that the credit union’s lending practices fall outside the normal range for pricing, denials, withdrawals or lending terms when compared to other financial institutions, the credit union is considered an HMDA outlier.
  • Fair Lending Violations – A federal credit union is more likely to be tabbed for an exam if it has received fair lending findings or violations in recent safety and soundness exams.
  • General Compliance Risks – Also weighed is whether the credit union has received moderate or high risk ratings on compliance issues in recent safety and soundness exams.
  • Other Factors – Other considerations include whether a federal credit union demonstrates the potential for higher fair lending risk because of volume, type(s), or complexity of products and services offered.

Federal credit unions that demonstrate the potential for higher fair lending risk but are not considered an HMDA outlier will receive an off-site fair lending supervision contact.

Numerous resources are available to clarify the process. The NCUA provided a Fair Lending Guide, which is designed to assist credit union in developing or evaluating their fair lending compliance programs. The guide includes an overview of fair lending laws and regulations; credit union operational requirements; issues to consider when developing fair lending compliance policies; and checklists for testing compliance with laws and regulations, or developing a fair lending policy for compliance.

The NCUA’s Office of Consumer Protection will host a fair lending webinar on Thursday, April 4, from 10 to 11:30 a.m. PDT. The webinar will provide an overview of NCUA’s 2013 fair lending examination program, including: how the fair lending off-site supervision contact process works; fair lending tips and best practices that credit unions should consider; and questions and answers. Participants may submit questions in advance at (the subject line of the email should read: “Fair Lending Webinar”). Click here for more information.


Questions? Contact the Compliance Hotline: 1.800.546.4465,

Posted in Compliance News, Federal, NCUA.