Appeal of Fair Lending Referral (Fourth Quarter 2017)

Background

A bank supervised by the Office of the Comptroller of the Currency (OCC) appealed to the Ombudsman the supervisory office’s (SO) determination that the OCC has information suggesting the bank engaged in a pattern or practice of discrimination on the basis of race, color, or national origin, in violation of the Fair Housing Act (FH Act). Under Executive Order 12892,1 the OCC is required to notify the U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of Justice (DOJ) of the potential violation.

Discussion

The bank asserted that there was insufficient or unreliable information suggesting a pattern or practice of discrimination to warrant a referral of the matter to the DOJ and HUD.

Supervisory Standards

The Ombudsman conducted a comprehensive review using Executive Order 12892, “Leadership and Coordination of Fair Housing in Federal Programs: Affirmatively Furthering Fair Housing,” January 17, 1994, as the primary supervisory standard. A secondary supervisory standard applied was “Identifying Lender Practices that May Form the Basis of a Pattern or Practice Referral to the Department of Justice,” 1996.

Conclusion

The Ombudsman determined that, at this stage, the OCC is only required to have information suggesting a pattern or practice of FH Act violations pursuant to Executive Order 12892 and the OCC is not required to meet the evidentiary standards that would be applicable in a court of law. Further, the DOJ would conduct its own investigation, as such, it directs the regulatory agencies that they need not have overwhelming proof of an extensive pattern or practice of discrimination before making a referral.

The Ombudsman concurred with the SO’s determination that pursuant to Executive Order 12892, the OCC shall notify HUD and the DOJ that it has facts or information suggesting that the bank engaged in violations of the FH Act and that such violations indicate a possible pattern or practice of discrimination.

1 Executive Order 12892 states that the OCC shall notify HUD when it has facts or information suggesting a violation of the FH Act. When such information indicates a possible pattern or practice of discrimination in violation of the FH Act, the OCC shall forward the information to the DOJ.