The mortgage industry just experienced a seismic shift. Today, July 14, 2025, the Office of the Comptroller of the Currency (OCC) issued Bulletin 2025-16, effectively removing references to disparate impact liability from its Fair Lending booklet. This change, prompted by Executive Order 14281, signals a broader federal push to focus enforcement solely on intentional discrimination and disparate treatment rather than unintentional outcomes.
It's easy to get lost in the hype and to focus only on the here and now. Shifts in fair lending regulations is a strategic opportunity for mortgage lenders (banks, yes, but also Independent Mortgage Bankers (IMBs) and Credit Unions (CUs).
Fair lending enforcement has traditionally operated on three levels:
1. Overt discrimination - Explicitly discriminatory policies or statements.
2. Disparate treatment - Different treatment of similarly situated applicants based on protected characteristics.
3. Disparate impact - Policies that are neutral on their face but disproportionately affect protected groups.
The OCC's announcement effectively removes the third tier from their enforcement toolkit. But here's the crucial insight: all three leave similar data footprints in loan-level analysis.
Competitive advantage, in this case, comes from the ability of lenders to innovate in the face of uncertainty. Smart lenders are recognizing that regulatory uncertainty creates opportunity for those who can demonstrate proactive fair lending practices. Here are some of the best practices:
Whether enforcement focuses on disparate treatment or disparate impact, loan-level data tells the same story. Lenders who embrace transparency and proactive analysis gain several advantages.
First, by taking ownership of your fair lending data analysis, you will gain regulatory compliance confidence. This type of proactive analysis and deep dive will demonstrate proactive monitoring and corrective action.
Second, investor relations could be deepened through data storytelling that show proactive efforts to serve all communities in lenders' market area or footprint.
Third, there is no better way to achieve competitive differentiation than to look at HMDA loan-level data, the same data used for fair lending analysis, and identify where you are better than your competitors. Moreover, you will be able to demonstrate an authentic commitment to community service.
And finally, your analysis will allow you to identify early potential issues before they escalate.
Even with reduced regulatory emphasis on disparate impact, significant challenges remain.
The emerging challenges are the rising litigation risk, secondary market requirements, and reputation management. Private lawsuits under ECOA and Fair Housing Act continue regardless of regulatory enforcement priorities. A strong data foundation remains your best defense.
GSEs and private investors often require robust fair lending analysis regardless of regulatory changes. Understanding your data helps you meet these requirements efficiently. Finally, while the reputation risk due to fair lending violations has been removed from the OCC Fair Lending booklet, the reality is that we live in an era of social media and instant information sharing. Fair lending issues can quickly become reputation crises. Proactive monitoring and authentic commitment to equity protect your brand.
At Polygon Research, we believe transparency improves outcomes. When lenders can see exactly how their decisions impact communities, they make better and more confident decisions. Our approach combines:
As the regulatory landscape continues to evolve, successful lenders are asking themselves three key questions.
To answer this question look at the context of your mortgage lending operation, not just sales.
To answer this question, look where you have gaps but others (peers and competitors) are succeeding. Learn from them and adjsut.
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This question demands that you understand the strategy of your competitors with a laser precision - by product, by location, by demographics (if looking at underserved segments) and so on.
Whether you're a credit union leveraging your member-focused mission, a community bank deepening local relationships, or a regional lender expanding into new markets, the path forward requires:
1. Comprehensive data analysis - Understanding your current lending patterns across all relevant metrics.
2. Strategic planning - Identifying opportunities and risks in your market approach. For example, credit unions are struggling to connect with younger borrowers.
3. Organizational alignment - Ensuring fair lending insights inform business decisions at every level.
4. Continuous monitoring - Building systems that provide ongoing visibility into your lending patterns.
The OCC's disparate impact announcement represents more than a regulatory shift. I's a reminder that the most successful lenders are those who proactively manage their fair lending posture as a strategic advantage rather than a compliance burden.
In an industry where trust is everything, demonstrating authentic commitment to fair lending through transparent, data-driven practices isn't just good compliance - it's good business.
Polygon Research's suite of tools helps lenders understand their data, identify opportunities, and build compelling narratives around their fair lending practices. From HMDA analysis to market intelligence, we provide the transparency and insights you need to stay ahead of the curve.