Here’s what the agency’s latest circular says and what it means for housing providers.
June 21, 2022 |
Updated June 21, 2022
Recent guidance from the Consumer Financial Protection Bureau (CFPB) suggests that the financial services watchdog will be keeping a close eye on the way users of consumer credit reports notify applicants of an adverse action. On May 26, 2022, Consumer Financial Protection Circular 2022-03 reaffirmed the responsibilities of creditors who take adverse action against applicants when credit decisions are based on complex algorithms that do not accurately identify the reasons for a rejection.
Though the guidance in question does not pertain to housing providers and the leasing process specifically, it does indicate that the CFPB is taking the subject of adverse action notification seriously. Housing providers should review their screening procedures to ensure that adverse action notices include the primary reason or reasons that an applicant is being denied and that those reasons do not conflict with federal, state or local screening restrictions.
The CFPB intends to use Consumer Financial Protection Circulars to promote consistency, alignment and deeper understanding amongst federal and state agencies responsible for enforcing consumer finance law. The CFPB has announced that it has identified a number of issues that would benefit from clear and consistent enforcement and that the Consumer Financial Protection Circulars will help achieve these goals. The National Apartment Association (NAA) will continue to track the CFPB’s posturing on this and many other issues pertaining to the rental housing industry.
For more information on NAA’s regulatory advocacy with the CFPB, please reach out to Sam Gilboard, Senior Manager of Public Policy.