Hallelujah! I have spent the last year trying to get some sort of commitment on the issue of MSA Diversity for Mortgage Bankers. While we may not like the answer as it relates to our business models, it is better to have direction than to not have direction.
Patrice Ficklin (Head of Fair Lending for CFPB) and Stephen Rosenbaum (Chief of the Civil Rights Division for the Department of Justice), were talking to each other at the Fair Lending Conference I am presently attending.
I walked up to them and asked if they could help me with an issue. I said that the banking industry has clearly defined CRA assessment areas and as mentioned in a panel this morning, mortgage bankers are about to be highly scrutinized for Redlining and Disparate Impact. As such our industry would really like to understand what our assessment area is. I asked them if it is MSA, State? Patrice stated that they first look at the production of a particular company and then ask for the business plan. If they see that the area of production is mainly in the well-served communities and less so in the under-served communities, they will ask for a business justification. Now remember that business justifications are backed by lots of empirical data so if you go down this road, it still doesn’t mean they will accept it.
To get more clarity, I asked both of them this question. Let’s say a lender has the majority of their production and production offices in the well-served markets. I said that I have been telling our clients that it may be time to put in place an MSA diversity plan that would broaden their production into the under-served areas of their MSA as well to prevent issues with the CFPB and the DOJ. They both said, you are giving them good advice and you call tell them we both said that.
So there you have it folks! Over the next few weeks I will write a series on how to approach an MSA Diversity action plan. I did this successfully for 6 years of my career and I hope to cut through the expensive learning lessons that I had, to assist all of you. Please stay tuned as I think this will save you a lot of time and headaches.
