AL 96-3
Subject:  Fair Lending:  
         Pilot Testing Program

TO:  Chief Executive Officers and Compliance Officers of all
     National Banks, Department and Division Heads, and all
     Examining Personnel


Attached is a summary of results from a pilot program conducted
by the OCC to assess the use of "testers" in identifying fair
lending violations at national banks.  The study, which began in
1994, sought to test how national banks and their mortgage
subsidiaries handled mortgage loan applicants during the pre-
application stage of the lending process.  The project also
evaluated the testing methods used by the other banking
regulators, fair housing organizations, private-sector vendors,
and others with testing experience.

The pilot program was conducted as a series of matched-pair tests
at eight national banks.  The results showed no violations of
fair lending laws. The OCC has determined that it may use
matched-pair testing on a case-by-case basis in the future when
information from examiners, consumers, or the media indicates
that a bank may be engaged in illegal discrimination,
particularly at the pre-application stage.

For more information on the OCC's fair-lending testing program,
please contact Russ Bailey, Fair Lending Team Leader on (202)
874-4446. A copy of the pilot program summary may also be
obtained on the agency's internet site, found at
http:\\www.occ.treas.gov, and on the OCC Information Line, at
(202) 479-0141. 


                                                 
Bert A. Otto
Acting Deputy Comptroller
 for Compliance Management
Date: April 18, 1996

Attachment:
(Fair Lending Pilot Testing Program