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Appeal of Fair Lending Referral (Fourth Quarter 2018)

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 that the bank engaged in a pattern or practice of discrimination on the basis of race, color, national origin, or sex in violation of the Fair Housing Act (FH Act) and its implementing regulation, requiring notification to the U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of Justice (DOJ) under Executive Order 12892.1

Discussion

The appeal disagrees with the OCC’s conclusion and requests reconsideration of its decision to notify the DOJ and the 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 juncture, the OCC is required to have only information suggesting a possible pattern or practice of the 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 conducts its own investigation and 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 determination to refer this matter to the HUD and the DOJ. The Ombudsman also concurred that pursuant to Executive Order 12892, the OCC shall notify the 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.

1Executive Order 12892 states that the OCC shall notify HUD when it has facts or information suggesting a violation of the FH Act. Where 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.