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Some of you may have noticed that I have not posted in over a month, and I appreciate those who have reached out in concern.  During this time, the writing has not stopped!  In fact, I’ve been writing so much, my fingers have gone numb on occasion!  The difference is that I’ve been writing courses for Fair Lending, Mystery Shopping, and Bias Awareness.  It became clear to me about 6 months ago, that the fair lending courses used by most lenders were inadequate to demonstrate compliance under ECOA, based on the spirit of the regulation.  While there are no definitions regarding what a course should contain, anyone that studies these regulations, like me, can see that the spirit of complying with this law requires much more than a cursory overview, especially for consumer-facing employees.  The goal is to affect behavior, not just check off a box that someone completed a 30 minute to 1-hour course.

Just in case you didn’t know….Fair Lending Training is MANDATORY and must be done every year for both Financial and Non-Financial Institutions.  If your company lends money in any form or fashion then every employee in your company, must take Fair Lending Training.  The only difference in the training is that some employees require more in-depth training than others!  Training should never be “one size fits all”.

Why? The biggest risk in monitoring fair lending is the part that happens before the consumer hits your intake system.  Examples are, advertising, social media, referral conversations, communicating with customers prior to or during an application, what to say and what not to say to a consumer and more!  Your company is required to monitor this interface with the consumer, but doing so is very costly.  This is why you see so many fair lending suits that were detected by the behaviors of the front-end processes of a financial institution.  So, what is the fix?

The fix is to provide training that is geared toward the specific job function of the employee.  For instance, the consumer-facing staff such as originators, processors, tellers or personal bankers need different training than the Underwriter, who needs different training than the administrative assistant.  Each of them interfaces with the consumer differently or not at all.  Fair lending training should be commensurate with the job or function that they are performing.  This training should also demonstrate that your company is attempting to affect the behavior of the employee, especially if they are working directly with a consumer!

Unlike other course developers, I’ve been a top producing originator, trained thousands of originators and processors through my training company, ran sales and operations, developed technology and thoroughly understand Fair Lending regulation.  This unique background means that our new Fair Lending training programs are FAR different and MUCH MORE effective than anything you have experienced.

If your consumer-facing staff does not know the specifics regarding how to change their practices or behavior on the front line, you will most assuredly face fair lending issues.  Just ask any lender who has faced a fair lending suit.  Most of them provided the little minimum courses or “did it themselves” so that they could check off the box on their things to do that year. Yet every fair lending settlement required the lender to ramp up their fair lending training and many times, through a third-party provider.  Certainly, you see that one outcome is a lot less costly than the other!  And the one thing I know for sure is that many of your consumer-facing employees want to do the right thing, just like you want to do the right thing when it comes to regulation.  However, just like you, if they don’t know what they are doing wrong, or how it applies to their position, it is less likely to happen?

Now, I realize that no matter how much training you give to some people, they just will not absorb it or change their behavior.  This is where the monitoring piece of your compliance oversight becomes important, to your overall compliance management system.  However, you have demonstrated to your examiner that you are doing the best that you can, and this goes a long way when they write up your exam results.

I welcome your inquiries at training@fairlendingdiversity.com.

Tammy Butler, Master CMB

Author Tammy Butler, Master CMB

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