[David] Alice. Good to have. Good. By the way, folks, if you haven’t been on Facebook, friends with Alice, take a look at her fishing picture. She and her husband, she caught a beautiful brown out fly fishing that is just picture, we’re not gonna put it up on the podcast, but it was fun to see. Alice, what you got.
[Alice] Thanks. Right along the lines, I think we’re similar topic to what we’ve been covering in each of the other segments. The 23rd, the president signed restoring equality of opportunity and meritocracy. This is the executive quarter. I have to read it every time. So this makes some subtle changes and I’m the type of person I go in I read the executive order. Here’s the exact paragraph that’s getting removed. That’s what I like to, being in compliance for so many years. I got down to the exact words. So title six of the essentially, going back to these are changes to the Civil Rights Act of 1964. Title six is related to the impact of federal funded programs and then Title VII was about employment. So I’m gonna leave the employment aside, let all the HR people figure that out, essentially about three paragraphs, and another paragraph had a couple words edited. Essentially in these three paragraphs, this is where you’re reading about the changes to the enforcement of disparate impact. So, for those of you who don’t know what that means, , I’m gonna give you an example of an audit that so I’ve lived this as the enforcement of these policies and this was years ago at a bank. So we were a National bank. Regional bank, I should say. And we did 43,000 loans that year and we had a HUD auditor in who found one loan that he thought we should have made. It was a denied loan, and he thought we should have done this loan. Now this was a borrower who had misled us and we found out late in the process that he had four rental properties all at a loss, and his debt ratio was like 200%. There was like jumping out at the page, this person doesn’t qualify doesn’t have the ability to make the payment, but we spent, he proceeded to spend four weeks going through over 400 loans to try and find the comparison to that. The way the disparate impact laws are audited is the regulator would find the one loan that, in this case anyway that they felt should have been done and then go to find what’s a loan similar to that, that was approved that should have, was done, was similar to this and you approved this person, but you denied this person and was that based on any reason? Was it therefore denied because of some prohibited basis as mentioned in the Civil Rights Act? So when you start looking at saying that’s the craziness that this paragraph eliminates is having to go through that kind of reverse engineering of disparate impact cases. That part I understand, but to Marc Helm’s point earlier at the federal level, you need to set standards and so another story that fits in this, in my opinion is I use the example of, does a loan officer tell a borrower, I must have your credit report before I can take your application. Now, no company can have that policy, right? because the door has to be open, always have to say, you are welcome to apply. Then I would order your credit report, and then if it’s bad, then I would issue a denial. But most companies, it’s very difficult to operate like that. Take an application and create all that fallout, but the fact remains that, that’s an example that gets found out through HMDA data reporting that if a company has a problem, they’re discouraging people from applying by saying policies that aren’t accurate. That’s where using data and finding out a company has a problem is a valid issue that can be found at lenders if there’s truly some intention to try and discourage groups of applicants. So, I have a lot of mixed feelings, but I think Marc Helm said it best by, there has to be still a standard to operate and this disparate impact was very muddy. It’s been changed multiple times, over various administrations and so eliminating it, I’m not concerned with, as long as someone creates another method for clarity and creates another standard that can be used to make sure lenders are doing things consistently because the individual borrower gets told I have to run your credit report before I can take your application. They don’t know they’ve been mistreated. So the concept that the borrower is gonna know, Hey, I was just. To go, Sue. They don’t know that takes a collective effort within looking at data to understand as a lender, if the policy is discouraging, a disproportionate group or d number of people. So that’s my two examples I thought might help people who don’t live this day to day. Go, okay, here’s one side, here’s another side. And there’s a lot to consider in this.
[David] Good stuff. Excellent. Good stuff, Alice. Perfect. Love the report.
Alice Alvey, Master CMB
She handles development of their World Class Training program designed to support UHM partners and organizational effectiveness.
Prior to UHM, Alice served as Senior Vice President at Indecomm leading the Indecomm-Mortgage U division, Internal QA and Compliance and SaaS technologies. Indecomm acquired Mortgage U in 2013, where Alice was President/Co-founder, providing training and consulting since 1996. Prior to MU she served as SVP of Operations at a national bank overseeing operations for wholesale, retail and correspondent from underwriting through servicing, and compliance.
She has been in the trenches of mortgage lending operations from application through servicing for over 30 years. Her authoring work in training content, policies and procedures and the FHA/VA Practical guides illustrates her ability to bridge regulatory requirements with day-to-day operations.
Alice has been a weekly contributor to the Lykken on Lending show since its beginning in April 2009 and has made her weekly contributions to 450+ episodes!