prospective applicants, including by redlining majority Black and Hispanic communities in the Memphis, Tennessee-Mississippi-Arkansas Metropolitan Statistical Area,” says the CFPB news release. Those practices included discouraging prospective applicants from applying for credit, the regulators alleged. The consent order called for Trustmark to create a $3.85 million subsidy for majority Black and Hispanic neighborhoods in Memphis, dedicate at least four mortgage loan officers or community lending specialists in those neighborhoods and pay a $5 million civil penalty to the CFPB and Comptroller of the Currency, the DOJ announced at the time. “Enforcement of fair lending laws is a priority for the Civil Rights Division,” Assistant Attorney General Kristen Clarke of the Civil Rights Division says in the news release. “Our fair lending laws enable us to hold banks and lenders accountable when they fail to serve communities of color in our country. Having fair access to mortgage lending opportunities is the cornerstone on which families and communities can build wealth. This settlement makes clear our commitment to ensuring equal access to lending opportunities for all communities, regardless of race or national origin.” The panelists say that several other fair lending probes have been opened and more are expected. Venable Partner Leonard Gordon, who previously served as director of the FTC’s New York-based Northeast Regional Office, says that the level of cooperation between the FTC and CFPB has been unprecedented, and that the cross-pollination is particularly targeting big tech companies. Digital Redlining The Biden administration believes that enforcement of fair lending rules and redlining concerns have not been adequately addressed in the past four years, says Pompan. A broad mandate exists across enforcement agencies to learn about internet-based discriminatory practices, particularly marketing platforms that use artificial intelligence (AI). Regulators continued on page 30 When a company does face an enforcement action, it is critical to quickly assess exactly what is being alleged and not be reactive, says Alexandra Megaris, a Venable partner in the New York office. The instinct might be to push back or to quickly meet the critical deadlines of a Consumer Financial Protection Bureau (CFPB) Criminal Investigative Demand, she says. But it is most important to clearly understand the end goal that would consider a “spectrum of outcomes,” she adds. Those internal discussions should include what a company wants and what they could accept, as well as everything in between. In some cases, Megaris says as an example, a company will know that the investigation has some merit, so how a company reacts will set the tone with the CFPB staff. Handling Enforcement Actions Alexandra Megaris The CFPB is not always right or invincible, which is something that companies also should keep in mind. The CFPB has been known to bring cases based on what the staff and leaders think the law should be, and weaknesses in the arguments are brought out in trial. If a decision is made to go to court, judges are neutral, “calling balls and strikes,” Venable Partner Leonard Gordon says. “The bureau from top to bottom has strong views on the way companies should behave,” Gordon says. However, he adds, history has shown that impartial judges have proven to be fair and not always agree. Bureau officials will need to be careful about balancing consent orders with the number of cases they bring to trial. Litigation is much different than being a government investigative body, Gordon points out. “If they are going for the death penalty in all cases,” Gordon says, “they are going to bring fewer.” Leonard Gordon REVERSE MORTGAGE / MARCH-APR I L 2022 29
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