California adds fair lending teeth to routine mortgage exams
The five statutes on the checklist: the federal Equal Credit Opportunity Act, the federal Fair Housing Act, the California Fair Employment and Housing Act, the Holden Act, and the Unruh Civil Rights Act. Between them, they cover discrimination across race, color, national origin, religion, sex, familial status, disability, marital status, sexual orientation, and other protected categories at every stage of lending.
The real change is in the consequences. A violation of any of those nondiscrimination laws now counts as a violation of the Banking Law, the California Credit Union Law, or the CRMLA. Willful CRMLA violations are already punishable as misdemeanors. The commissioner can also pursue enforcement under Division 24 of the Financial Code.
The law builds in flexibility. The DFPI can accept a federal or GSE examination – from Fannie Mae or Freddie Mac – in place of its own, unless the commissioner decides that review falls short. Institutions that showed full compliance in their most recent exam can be exempted or examined less often.
Affiliates are in scope too. If an exam turns up documented evidence of unlawful activity between a lender and an affiliate, the commissioner can examine the affiliate on the same terms.
Exam reports stay confidential, shared only with the institution, law enforcement, and other regulators. Institutions pay for their own reviews, with fees capped at reasonable expenses.
