Summary of the NCUA Webinar on Fair Lending Exams

In March, the NCUA issued a letter to federal credit unions: 13-FCU-02 2013 Fair Lending Examination Program and Compliance Assistance. The letter explains which laws govern fair lending (ECOA, HMDA, and FHA) and what types of visits the NCUA will pay to certain credit unions. To further explain the revamped examination process, the NCUA held a free webinar last week to clarify the rules that credit unions will be held accountable to and the process that the NCUA will use to determine which credit unions are reviewed and what type of review they will receive.

During the webinar, the NCUA did clarify that these examinations are not new, but the responsibility of the examination program has been moved to a different department (Office of Consumer Protection). The NCUA also stated that not all federal credit unions will be examined as this is a risk based examination program. The risk factors that are evaluated are:

  • HMDA Information: The NCUA will review HMDA reports submitted by federal credit unions to determine if the information in the report falls outside of the normal range for pricing, denials, withdrawals, or lending terms when the information is compared to other institutions (this does include banks).
  • Fair Lending Violations: If a credit union has received fair lending findings or violations during a recent safety and soundness examination.
  • General Compliance Risks: If the credit union receives moderate or high-risk ratings on compliance issues during the most recent safety and soundness examination, this could contribute to their selection.

Once the risk factors are evaluated, the NCUA can take 2 courses of action. The first is to conduct a fair lending examination. If selected for this examination, the credit union should expect to receive a notification from the NCUA discussing the time of the examination and any materials that will be needed. The examination will be similar to a safety and soundness exam. There will be an onsite team, written reports (supplementary facts, findings, loan exceptions, and potentially a Document of Resolution (DOR)), and a chance for dialogue between the NCUA and the credit union. Federal credit unions selected for an examination will be HMDA outliers (the HMDA report shows lending data inconsistent with the majority of HMDA reports) and demonstrate a higher potential for fair lending risk.

If the credit union has a higher potential for fair lending risks but is not an HMDA outlier, then that credit union will be party to an off-site supervision contact. The credit union will receive a written notification for this process as well, including a list of required materials/documents. The off-site supervision contact will include a review of lending policies, procedures, audit assessments, and compliance assessments. The off-site supervision contact will also include an evaluation of the accuracy of the HMDA report filed by the credit union. Once the contact is concluded, the credit union should expect to receive oral and written reports of the results, and any recommendations that the NCUA has for the credit union.

During the webinar, the NCUA addressed some important questions that every credit union should know:

  • The fair lending examination questionnaire was adopted from the FFIEC’s fair lending guide. The questionnaire can be found here.
  • The best way to determine your risk to evaluate your HMDA report. These exams can be triggered by incorrect HMDA reports, so it is important for each credit union (that files) to ensure that their HMDA report is accurate.
  • Most credit unions will not receive an exam/offsite contact (only about 50-75 per year). Also, the credit union will only receive one or the other, not both.
  • The findings listed in the reports are unable to be appealed. However, NCUA’s Office of Consumer Protection will handle and resolve all concerns/disputes.
  • The examinations will not impact the (previously issued) CAMEL rating of a credit union. However, the fair lending exams and offsite contact information will be available for safety and soundless examiners to review and could impact the CAMEL rating at that point in time.
  • The NCUA expects credit unions to be reviewed approximately every 3 years. However, if a DOR was issued as a result of an exam, the NCUA will follow up to monitor the progress of the credit union.
  • Business lending products can be reviewed during a fair lending examination.

While the NCUA’s fair lending examinations will only be conducted at federally chartered credit unions, this information is important to all credit unions. The NCUA did note that other agencies (state, CFPB, and DOJ) have authority to conduct fair lending examinations for state chartered credit unions (and CUSOs that participate in lending). The NCUA fair lending examination guide is a great resource for all credit unions to use to determine if they are in compliance with the fair lending laws.

The NCUA will be posting a recorded version of the webinar in a few weeks. In the mean time, the NCUA has posted some resources (fair lending guide, best practices, and FAQs) for credit unions, available here:


Questions? Contact the Compliance Hotline: 1.800.546.4465,

Posted in Around the NW, Compliance News, NCUA.