Asset Securitization Report: Will FHFA’s fair-lending office fill enforcement void?

Asset Securitization Report, June 18, 2019: Will FHFA’s fair-lending office fill enforcement void?

WASHINGTON — When the Federal Housing Finance Agency opened a fair-lending monitoring office last August, there was little fanfare. But the launch of the Office of Fair Lending Oversight stood in contrast to different moves by officials elsewhere in the Trump administration.

Today the FHFA’s Office of Fair Lending Oversight is still somewhat under the radar. It has five employees, technically falls within the agency’s Division of Housing Mission and Goals. and has left some observers unclear about its mission. But the new office has offered hope to consumer advocates who were alarmed at efforts by the Consumer Financial Protection Bureau and Department of Housing and Urban Development to cut back on fair-lending enforcement.

The FHFA’s creation of an office dedicated to fair-lending oversight occurred just months after then-CFPB Director Mick Mulvaney announced a restructuring of the consumer bureau’s fair-lending office, which formerly had had independent enforcement capability. Those enforcement powers were stripped under the realignment and transferred to the agency’s general supervision and enforcement division.

At least some of the employees staffing the new FHFA office formerly worked at the CFPB, according to LinkedIn pages. Housing advocates say that even if the new office does not prioritize enforcement, it still has the potential to strengthen fair-lending monitoring.

Yet it would be difficult for the FHFA’s Office of Fair Lending Oversight to replace tools that have been weakened at other agencies under the Trump administration without a “more public-facing component,” said Jesse Van Tol, the chief executive of the National Community Reinvestment Coalition.

“Can it fill a void? I don’t know,” he said. “It’s certainly not filling a void right now, given that we haven’t heard anything from this office.” He added that it would not fill that void “without enforcement powers or without some sort of public mechanism that would flag some kind of an issue.”

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