Resurgence Of Redlining Scrutiny

The regulatory agencies as well as the Department of Justice have been signaling for some time their interest in redlining. Redlining, of course, is the practice of avoiding lending in certain areas based on racial composition and is a violation of both the ECOA and the FHA. Although it may be difficult to imagine in an economy such as ours which is struggling to recover, any lending institution avoiding making loans, the absence of lending in sensitive geographies (i.e. minority census tracts) absent of sufficient explanations may be all that is required to peak an examiner's interest and draw at least a tentative conclusion concerning the bank's lending practices.

An important point to bear in mind is the current quantitative nature of fair lending reviews. Although more subjective reviews such as file comparisons are still routinely done by examiners, in today's environment fair lending reviews of any real significance likely will take on elements of