Unknown Sponsor Bank
In early March 2022, the Department of Justice revealed an expanded redlining initiative using Home Mortgage Disclosure Act (HMDA) data to investigate banks and non-depository lenders for patterns of mortgage discrimination. The initiative notably targets not only traditional banks but also non-depository lenders, which may include fintechs operating through bank partnerships or under their own lending licenses. By bypassing prudential regulators and pursuing cases directly, the DOJ signaled a more aggressive posture on fair lending enforcement. For BaaS sponsor banks that enable fintech mortgage or lending products, this raises the risk profile of partnerships where lending patterns could be construed as discriminatory. The initiative is part of a broader Biden-era enforcement push on fair lending and access to credit.
Verified from source: The DOJ launched a 'Combatting Redlining' Initiative (CRI) utilizing HMDA LAR data in industry-wide sweeps to assess potential redlining by both depository and non-depository institutions, bypassing prudential regulators. The article confirms DOJ investigations into mortgage lending discrimination targeting banks and non-depository lenders.
- BaaS sponsor banks enabling fintech mortgage lending face heightened DOJ scrutiny on redlining and fair lending patterns
- Non-depository fintech lenders partnering with banks may be drawn into DOJ investigations via HMDA data analysis
- Sponsor banks should proactively audit lending patterns and geographic distribution across fintech partner channels