H.R. 166 — Fair Lending for All Act

This section establishes within the Bureau of Consumer Financial Protection (CFPB) the Office of Fair Lending Testing, headed by a Director appointed by the CFPB Director to a five-year term as a career civil service position who may appoint staff and submit an annual budget estimate to the CFPB Director. The Office, in consultation with the Attorney General and Secretary of Housing and Urban Development, must conduct testing of creditor compliance with the Equal Credit Opportunity Act—which prohibits discrimination in any aspect of credit transactions on prohibited bases such as race, sex, or age—using individuals posing as prospective borrowers without intent to apply for credit; suspected violations are referred in writing to the Attorney General. This section also amends the annual reporting requirement under ECOA section 707 (15 U.S.C. 1691f) to require (1) the CFPB report to include an analysis of such testing conducted pursuant to this section and (2) both the CFPB and Attorney General reports to include summaries of criminal enforcement actions taken under section 706A of the Fair Lending for All Act.

This section revises the prohibition on discrimination in credit transactions under the Equal Credit Opportunity Act (ECOA) to make it unlawful to discriminate against any person on the basis of ZIP code or census tract (new protected characteristics) and to specify that discrimination on the basis of sex includes sexual orientation and gender identity. The section further broadens applicability by (1) replacing "applicant" with "person" or "aggrieved person" throughout; (2) replacing "creditor" with "person" in enforcement provisions; and (3) defining "aggrieved person" to include any person claiming injury from, or believing they will be injured by, a discriminatory credit practice. (Thus, ECOA protections—which previously focused on applicants—now extend to any person in a credit transaction, with expanded standing to sue preemptively.)

This section establishes criminal penalties for knowing and willful violations of the Equal Credit Opportunity Act (ECOA), which prohibits creditors from discriminating in any aspect of a credit transaction on prohibited bases (e.g., race, color, religion, national origin, sex, marital status, age—provided the applicant has the capacity to contract—receipt of public assistance, or exercise of rights under the Consumer Credit Protection Act). It imposes (1) for individual violations, a fine of up to $50,000, imprisonment for up to one year, or both; (2) for a pattern or practice of violations, a fine of up to $100,000 per violation, imprisonment for up to 20 years, or both; and (3) for executive officers or directors who knowingly cause an entity to engage in such a pattern or practice (or direct another agent, senior officer, or director to do so, resulting in personal unjust enrichment), a fine of up to 100% of compensation (including stock options) received during the violation period or the one- to three-year period preceding discovery, imprisonment for up to five years, or both.

This section requires the Consumer Financial Protection Bureau (CFPB) to review loan applications and application processes used by covered persons (i.e., providers of consumer financial products or services) to ensure compliance with the Equal Credit Opportunity Act (ECOA)—which prohibits credit discrimination based on protected characteristics such as race, sex, and age—and other federal consumer financial laws. If a violation is found, the CFPB must prohibit use of the application or process and take appropriate enforcement actions.

This section expands the applicant and borrower data that depository institutions must collect and report under the Home Mortgage Disclosure Act of 1975 (HMDA)—from census tract, income level, racial characteristics, age, and gender—to include ZIP Code, census tract, income level, race, color, religion, national origin, sex, marital status, sexual orientation, gender identity, and age. (As background, HMDA requires reporting of mortgage loan activity, including by location and borrower characteristics, to help detect discriminatory patterns in residential lending.) It also expands privacy protections to cover ZIP Code, census tract, and other categories specified in the revised data requirements, as determined by the Bureau.