1.Digital Marketing Risks and Redlining Concerns

Regulators highlighted concerns that digital marketing practices, while often efficient, may unintentionally exclude majority-minority areas, thereby increasing redlining risks. Westra Miller, Managing Counsel at the Federal Reserve Board, provided an in-depth discussion on how marketing patterns can inadvertently exclude communities. For example, marketing strategies that focus on branch proximity or use filters such as geography, income, or loan amount can limit outreach to majority-minority areas.

This issue becomes more pronounced when predictive analytics and algorithms are used, as these tools may operate independently and produce unintended discriminatory effects. Although specific platforms were not named, Miller’s remarks underscored the need for vigilance in managing digital marketing tools.

2.Inclusive Advertising and Third-Party Risk Management

Another critical focus was the importance of inclusive advertising. Regulators noted that both digital and print advertisements should feature diverse human models to better reflect the communities lenders and brokers serve. This aligns with provisions in Regulation B and the Fair Housing Act, which encourage inclusive representation in marketing materials.

Additionally, regulators urged lenders to evaluate third-party vendor practices. Vendors should be able to provide periodic reports demonstrating the “reach” of marketing campaigns to ensure they are not excluding protected groups. Understanding how vendors’ algorithms operate is essential for managing third-party risks effectively.

3.Enforcement of Longstanding Policies: HMDA and More

Beyond marketing, regulators discussed the continued importance of robust compliance with longstanding laws such as the Home Mortgage Disclosure Act (HMDA). A representative from the Consumer Financial Protection Bureau (CFPB) highlighted that HMDA enforcement actions during the previous Trump administration targeted systemic deficiencies in compliance management systems, serving as a reminder that data accuracy and reporting remain critical areas of focus.

DOJ Deputy Chief Tamica Daniel emphasized that the department applies the same legal analysis across all financial institutions, including banks, credit unions, and mortgage companies. She also stressed that brokers and lenders must act quickly when regulators raise concerns about risk factors, such as branch locations or marketing practices. Delaying corrective action, whether in response to internal reviews or regulatory audits, can exacerbate compliance risks.

4.Regulatory Guidance on Risk Mitigation

One of the session’s key themes was the need for thoughtful marketing practices that align with fair lending laws. Regulators encouraged brokers and lenders to regularly assess their marketing strategies to ensure they are reaching all segments of the community. This includes reviewing filters and criteria used in digital marketing campaigns, monitoring outreach activities, and ensuring marketing materials are inclusive and representative.

5.Looking Ahead: The Trump Administration’s Potential Impact

As the industry prepares for a shift in leadership under the Trump administration, it remains uncertain how these regulatory priorities may evolve. New agency leadership could result in changes to enforcement practices and fair lending oversight. However, the webinar’s guidance makes one thing clear: brokers and lenders must continue to prioritize fair lending compliance by proactively managing risks, addressing identified issues promptly, and ensuring marketing efforts are inclusive and aligned with community needs.

6.Proactive Compliance in an Evolving Landscape

The 2024 Interagency Fair Lending Webinar serves as a reminder that while the regulatory landscape may change, the core principles of fair lending remain steadfast. Proactive compliance, transparency, and inclusivity in marketing and outreach will be key for brokers and lenders navigating the challenges ahead.