August 6, 2025 • 47 mins
Imagine a world where nobody's watching. Would you still do the right thing? This thought-provoking question lies at the heart of our enlightening conversation with Jon Seward, former Department of Justice fair lending enforcement leader and current Of Counsel with Mitchell Sanders.
Drawing from over two decades of experience as the architect of the DOJ's combating redlining initiative, Jon delivers a powerful warning to credit unions that might be tempted to relax their fair lending compliance efforts during the current administration: the regulatory pendulum always swings back.
"When the feds are back in the picture, they're going to be looking at what we do now," Jon emphasizes, explaining that future enforcement actions will examine years of data spanning multiple administrations. Credit unions that maintain strong fair lending practices even without federal scrutiny will be better positioned than those that took their "foot off the compliance pedal."
Looking toward future enforcement priorities, Jon predicts increased focus on underwriting disparities, particularly regarding assistance provided to marginally qualified borrowers across different demographic groups. He also provides practical guidance on automated underwriting systems and manual override practices.
For credit union mortgage lenders navigating this complex regulatory environment, the message resonates clearly: maintaining robust fair lending compliance isn't just about avoiding problems, it's about serving communities effectively, building a stronger business, and remembering that behind every statistic is a real person whose life is impacted by these decisions.
How is your credit union maintaining fair lending practices when nobody's watching? Join the conversation and discover why doing the right thing is always good business. Tune into the latest ONpoint Podcast for the full scoop.
Sponsored by Consolidated Analytics
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
The views and opinions expressed in this
podcast do not necessarilyreflect the views or positions
of Acuma, its board of directors, its management staff or its
members.
The podcast discussionpresented is conversational in
nature and for generalinformation only.
Speaker 2 (00:32):
Hello, welcome to Actors On Point podcast, a
series focused on sharing thestories of people who are making
a positive impact in the creditunion mortgage industry.
I'm your host, Peter Benjamin.
Before we get to our episode,just a quick word from our
sponsor.
Speaker 3 (00:43):
This episode is brought to you by Consolidated
Analytics, helping credit unionsmake smarter mortgage decisions
, from origination to servicingand beyond.
With expert valuation, riskmanagement and compliance
solutions, they provide theinsights you need to protect
your members and grow yourportfolio with confidence.
Whether it's due diligence or acollateral risk assessment,
(01:04):
they help you navigate themarket with ease.
Learn more atconsolidatedanalyticscom.
Speaker 2 (01:10):
Welcome to the fifth episode of our compliance
miniseries, where each episodewill feature an intimate
conversation with people who Iconsider to be experts in their
field and supporters of thecredit union movement.
As a reminder, each of theseepisodes, it's our goal to take
a deep dive into variouscompliance topics that are
impacting and reshaping thecredit union mortgage industry.
(01:33):
Our next guest in theCompliance Miniseries is John
Seward, of Council with MitchellSanders.
John, how are you doing today?
Speaker 4 (01:43):
I'm doing great, peter.
Thank you, it's great to bewith you.
Speaker 2 (01:46):
No, it's our pleasure .
Over the last really few monthswe've had the opportunity of
getting to know you.
We've had you at both ourSavannah workshop and our
Seattle workshop and it's trulybeen an honor to hear from you
and learn your story, but, moreimportantly, for you to share
(02:11):
your expertise with our members.
And I think today's episode isgoing to be even more important
for all of our listeners to kindof hear your valuable words of
wisdom but more to come on that.
So you know, really thepleasure's all ours.
But, as always, I got to pause.
I need to bring Justin into theconversation.
(02:35):
Justin, how are you doing today?
And please tell me what is thelatest greatest happening over
at Acuma?
Speaker 5 (02:44):
I'm good, peter.
How are you living the dream?
Thank you, I love it.
All right, I mean over here atAcuma we are six weeks six weeks
roughly from our make your markannual conference, which is
going to be September 21st tothe 24th.
That's taking place in Denver,colorado.
If you haven't heard that bynow, we've not done a good job.
(03:06):
I'm looking forward to thatagenda, the speakers, the
sessions, the attendees, thestuff up your sleeve.
We just have so much planned.
There's a few things, just afew things.
One of these days we're goingto have to drop like breadcrumbs
(03:26):
.
You know we'll call them thehidden acumas.
Speaker 2 (03:31):
I can't do that, man.
I mean we always have asurprise, or 10.
That happens with every annualconference, because you know we
have to again.
There's a reason why we havethem coming back, because they
they always want to know what'speter gonna do next yeah, that
is always a great question.
(03:51):
I think the team asks that toosometimes I tell you, the
running joke is how, whenever Igo into a meeting, it's how can
I screw things up or what?
What else can I actuallyeveryone's plate?
Speaker 5 (04:02):
There you go.
I like that.
That's right, sort of.
I don't know how I feel rightnow, but later I'll feel great.
But no registration's open.
So if you haven't registered,head over to the Acuma website
register.
Come make your mark with us inDenver.
It is going to be a spectacularevent.
You do not want to miss this, Iagree.
(04:23):
Other than that, we have ournetworking and educational
opportunities that are justgoing on year round.
So our next network meeting isthe volume based network that
they are having their Q3 meetingin just over two weeks, so
that's going to be taking placeon August 21st.
And then our webinar series,our fast tracks and inside
tracks and our lovely on pointpodcast.
(04:45):
They just keep the fun going,hands down.
Speaker 2 (04:49):
All right, man, anything else?
Um no, I didn't mean to trickyou up, it was just asking.
Speaker 5 (04:57):
I mean it was like a loaded question.
I was unsure, I was like, oh,did I forget?
Speaker 2 (05:00):
anything.
Speaker 5 (05:02):
No no, it's going to be a great one, so we look
forward to seeing all of ourmembers out to something soon
Awesome.
Thank you very much, all right,john.
Speaker 2 (05:12):
So one really excited to have you here.
And a couple of things, a fewabout, I want to say.
I don't think it was a year ago, but close to you know, I
reached out to Daniela Caceres,who is a partner at your firm to
(05:41):
our events, you know, becauseyou know she's a mutual
acquaintance and you know Ithink very highly of her and you
know she's, you know, a subjectmatter expert on a lot of
things within our industry.
And she said hey, we recentlybrought on John and he is the
foremost expert in, you know,fair lending and redlining.
(06:02):
You have to talk to him andhe's going to blow you out of
the water and if you're going tohave someone speak at your
conference it has to be him.
I said, make the intro couldhave been more right and on
(06:27):
point with that introduction andI've always been meaning to
thank her for it and one day Iwill.
I don't know if she drinks beeror what, but maybe I'll buy her
that beer or whatever.
But I couldn't be more thankfulfor that because the value that
you have brought to ourcommunity and just sharing your
(06:50):
knowledge, like I said at ourworkshops, has been instrumental
.
I've had a lot of conversationswith our members, but also like
Michael Christians, who is aregular at our events but also
contributed to a lot of ourstuff.
Again, we're just blown away byyour knowledge, which is one of
the reasons why you're heretoday as contributing to our
(07:11):
compliance podcast.
So, to that point, you knowit's.
I think it's important for us tokind of take a step back.
You know and get to know you abit more and, as I mentioned
prior to this podcast, prior tothe recording, you know and get
to know you a bit more and, as Imentioned prior to this podcast
, prior to the recording, youknow, one of the first questions
I always ask is you know?
(07:32):
It's an important questionbecause we often forget the
things that make us who we are.
We always focus on the workaspect.
We always focus on, you know,the, the accomplishments.
We always focus on the thingsthat we do day to day, but we,
(07:54):
we, we often forget that there'salways the things that drive us
, always the things thatmotivate us, the, the things
that are in the next room thatare making way too much noise,
right?
So the big question is you knowwho is John and?
Speaker 4 (08:13):
so thank you, peter.
Thank you for the kind words.
I'm humbled to hear thosethings and thank you for the
(08:41):
question.
Because I am in the camp ofpeople's fair lending
enforcement program for twodecades I've probably brought
more fair lending matters thananybody in the country.
I'm the architect of thedepartment's combating redlining
initiative, but I never definemyself as what I do for a living
(09:05):
and so kind of.
Who is John?
Well, I'm a family guy wholoves playing games and I love
music games as a hobby andprobably within the next year
(09:29):
I'm going to turn that musicgame hobby into a professional
team building business because Ilove the way music unifies
people in such a divided worldand so um.
So I'm a family guy who lovesplaying games and loves music.
(09:49):
That's awesome.
Speaker 2 (09:51):
That is.
That is awesome.
I can't wait to learn moreabout that in the near future.
Now, and I and your family isis is, I think, important for
all of us, and I think that thatwas one of the reasons why we
started this podcast, and it's alot of the messaging that we do
within these conversations andin many ways, it ties into this
(10:19):
conversation today.
You know, fair lending andredlining because it's all of it
really is connects, and sotoday's conversation is really
going to focus on, you know,fair lending, compliance and how
it all can change.
(10:41):
I guess that's maybe that's agood way of framing it up, how
it can change, but also why westill need to, I guess,
prioritize it, consider itimportant.
And so, for your edification,john, obviously, as you know,
(11:01):
credit unions are our main focus.
Credit union mortgage lendersare our main focus.
You know credit unions are ourmain focus, credit union
mortgage lenders are our mainfocus and, as you know, the past
few years, you know, fairlending has a bit been a big
focus for credit unions andthat's been a big target on
credit unions backs Right andwith this new administration,
the, the, and I'm concerned thatcredit unions are considering
(11:27):
going away or thinking thatmaybe we can ease up on that
focus.
I guess the first questionreally is why should credit
unions continue to prioritizethat fair lending compliance
(11:48):
even during this newadministration, during these
changes and everything that'shappening in DC?
I mean, I think you can agreeit's like a moving target right
now.
Speaker 4 (11:59):
Yeah, no, it's a great question and you know, I
think of it.
As you know, there's a pendulumthat swings back and forth, and
I've been doing fair lendingenforcement work for so long
that I've seen it swing, youknow, from Clinton to Bush, to
(12:20):
Obama, to Trump to Biden, and Ithink that when lenders get
caught up in what is the youknow, what do I have to do or
not do in this particular swingof the pendulum, then they spend
too much time trying to catchup when the pendulum swings back
(12:44):
the other way.
And so what I try to encouragelenders to do is really have
some core beliefs that drivetheir business and including in
those core principles those corebeliefs that fair lending is
(13:04):
actually good for your business.
And so that's what I try toencourage.
But in terms of why lendersshould continue to prioritize
fair lending compliance in thisenvironment, where it's very
clear that the federalregulatory and enforcement
agencies are not going to makethis much of a priority is that
(13:30):
I think that state regulatorsand state attorneys general will
very likely fill the void orattempt to fill the void left by
the feds.
We have seen so manyprofessionals leaving the CFPB,
(13:51):
leaving the regulatory agencies,leaving the Department of
Justice and many of them aregoing to these state supervisory
and enforcement agencies andothers are going to private
consumer protection groups, andso I think that, in the absence
(14:15):
of the feds, you're going to seea lot more activity from the
(14:39):
states.
So that's one.
Two, as I kind of alluded to,you're also going to see private
groups that a private groupthreatened to bring a redlining
case against them, to file aredlining lawsuit.
This lawsuit was seeking moremonetary damages than DOJ or
(15:09):
CFPB ever settled for againstlenders of much greater size.
The fact that the feds aren'tin this space doesn't mean that
there aren't other entities thatare looking to act as private
(15:33):
attorneys general, as thestatute provides.
The most important reason is, Ireally think, that prioritizing
fair lending can increasebusiness and profitability.
I listened to one of yourpodcasts on HMDA and I thought
(16:00):
it was fantastic.
I would encourage people whohaven't listened to it to listen
to it, because at the heart ofthat discussion was this you
know HMDA shouldn't be thoughtof as this compliance burden,
but actually, you know, avaluable opportunity to see
(16:23):
where we can increase ourbusiness, and I think that when
you have that paradigm shift, itreally drives lenders in a
different kind of way, becauseif it's just, oh, I have to do
this, you're going to do thebare minimum.
But if you look at it as a toolthat is going to make your uh,
(16:48):
whatever kind of lender you aremore profitable, then you're
going to look at it um you know,a lot more closely and and to
see where those valuableopportunities are.
And I'll, I'll I'll close withuh with with a story that, when
I used to work for theDepartment of Justice, at the
(17:09):
end of a red lining consentorder, I would go and meet with
the senior officials of a lenderand I would ask you know, tell
me what worked well under thisconsent order and what things
you did that you just felt likeyou had to do because it was
(17:30):
required.
And the general story that Iwould get was they would say hey
, john, at the beginning of thiswe didn't like you too much
because we didn't appreciatethat we were targeted.
We didn't feel like what wewere doing was that, you know,
(17:50):
against the law.
But having gone through thesesteps, we have realized that
there were a number ofimprovements that we could make
to how we serve, you know, ourcustomers and our communities.
And invariably they would saythat we are a stronger bank or
(18:14):
lending institution at the endof this thanactively.
Look at the steps that arerequired in many of these
(18:35):
consent orders.
They will have the tools to dothose things proactively to
increase their business andbecome more profitable.
Speaker 2 (18:49):
And one thank you very much for the kind words
about our Honda podcast.
But kind of going back to astatement that you made and
please forgive me if this is astupid question but the consumer
groups and you know thepotential lawsuits that they
could bring against a creditunion.
(19:10):
You know what happens and let'srole play.
Speaker 5 (19:15):
Okay.
Speaker 2 (19:18):
You know, you have these people formerly at the CPP
and they go to these consumergroups and they take these cases
against a credit union andobviously you're on the opposite
side and you're defending thecredit union, but then it goes
to a federal court.
What happens when the federalcourt just I don't know, I don't
(19:42):
want to say it doesn't care or,or you know, it doesn't really
take fair lending.
That seriously, I mean what?
What happens then?
I mean, is it just does it everget to that state or or or?
Is the law the law like what Imean, or am I thinking of it
(20:02):
like incorrectly?
Speaker 4 (20:05):
So, so let me, let me answer it this way I think and
(20:28):
I've brought every kind thereare ways that you could increase
your business with qualifiedborrowers, and both sides may
disagree on some of the evidencethat is being considered, but
at the end of the day it is.
(20:49):
We can do these things toincrease our business, and so
why would we spend conceivablymillions of dollars litigating
this in a court of law when wecan take that money, invest it
in improving our practices andoffering subsidies, if we need
(21:13):
to offer subsidies?
And so what is that?
30, 31 years?
In 31 years, only one case hasgone to contested litigation,
(21:41):
and that was because it was atthe very beginning of the first
Trump administration, and thelender thought maybe we can, you
know, maybe because thesepolitical winds have shifted,
maybe we'll fare well by notsettling this.
(22:01):
And so it went into litigation.
The lender filed a motion todismiss.
The government opposed it.
The court said no, thegovernment has a case we're
going to dismiss, we're notgoing to dismiss the case.
And then that case was settled.
And so I think that in manyconsumer protection cases, even
(22:29):
fair lending cases, there arereasons that, if the sides can,
the lender to increase itsbusiness in a profitable way.
Speaker 2 (22:53):
OK, and thank you for that.
So I think you touched on thefirst Trump administration and I
think that kind of leads me tothe next question, which is the
second Trump administration, andwithout getting political, and
(23:13):
I think we all can agree thatthe second term or the second
term of this administration ismost certainly different than
the first of this administration, is most certainly different
than the first.
So, to that point, you know how, how is the second Trump
administration impacting fairlending, supervision and
(23:35):
enforcement?
Speaker 4 (23:37):
So I think that that, um, what's very different in
this administration from theTrump?
From the ongoing litigationwith respect to the CFPB, where
(24:08):
they're trying to fire 80 to 90%of the staff.
They've rescinded rules andguidance, they've dismissed
court cases, their efforts todefund the agency through the
budget appropriation process,and so there seems to be this
(24:34):
effort to dismantle theinfrastructure of that agency.
The same thing with the CivilRights Division, but in a
different way.
So, in, in with CFPB, they justtried to out and out, uh, fire
80 to 90% of the staff.
Well, with the civil rightsdivision of the justice
department, uh, at this point intime, I've seen estimates that
(24:59):
70% of the attorneys have left.
And they have left because, youknow, here's a division of the
Justice Department that, since1957, has had the mission of
protecting the civil rights ofmarginalized communities.
(25:21):
And so, whether that's inhousing, lending, education,
employment, policing, voting,the mission has always stayed
the same going to seek toenforce civil rights laws on
behalf of marginalizedcommunities.
But look for instances ofreverse discrimination to see
(25:52):
whether white males have beendiscriminated against.
And so, for the civil rightsdivision, the attorneys who
choose to work there aretypically people that come from
the top law schools, the top oftheir class.
(26:15):
It is one of the mostprestigious jobs you can get if
you want to do civil rights work.
And these people could havebeen making millions of dollars
doing other things, but theychose to work at the civil
rights division because of thismission.
And then, once you so, forexample, when I was hired a
(26:35):
million years ago, uh, 800people applied and they hired
four of us.
And that is kind of typical forhow difficult it is to get one
of these jobs.
And but it's the mission thatbrings people there.
And when you change thatmission, attorneys have been
(26:56):
leaving in droves the missionthat's caused this exodus from
the Civil Rights Division ortrying to out and out fire
people at the CFPB.
If you don't have people leftto do the work, then there's no
work that's going to be done andyou reshape the federal
(27:43):
standpoint.
Speaker 2 (27:43):
I forgot who I asked, but it was someone I asked
recently and whether it was onour policy podcast or on our
compliance podcast but or one ofour compliance episodes.
You know, with everythinghappening, and whether you look
at, you know the CFPP or youknow the executive orders that
(28:05):
the administration's putting out, you know there's a lot of
things that are transpiringwithin the government.
You know, and, of course, whenyou look at, you know the
deregulation.
Will it ever get to the pointwhere there's so much
(28:25):
deregulation that things like Idon't want to say fair lending,
because that, in the root ofeverything, is a fundamental law
that we have but does it everget to a point where it's
stripped down to the point whereit's almost non-existent?
Speaker 4 (28:49):
So we've never seen that before.
I think that what will happengoing forward?
So, as I described, I think thatthis administration has really
dismantled the infrastructure ofthese protections and so, when
(29:15):
the pendulum swings back, who isgoing to be left to really
enforce these laws as they hadbeen before?
And I think that that whatyou're likely to see is a lot
more cooperation between thestates and the feds once the
(29:41):
feds are back in the game.
So I don't think that it willever go away because, as we've
talked about, you know, thestates are going to step in,
private groups are going to stepin, but when the feds are back
in the game, I think thatthere's going to be a lot of
coordination between the statesand the feds moving forward.
(30:04):
And I think that what's bad forthe industry is because the
states are going to spend somuch time ramping up and
developing more expertise to dowork that had been done by the
feds.
Once you put that investment ofresources and training into
(30:30):
place, the likelihood is you'renot going to move away from that
later on, and so, when thependulum swings back, you're
going to have all of thisattention from the states as
well as by the feds, and thatwill be even more, uh, even more
eyes looking over the shouldersof lenders than existed, you
(30:53):
know, uh, a year or two ago.
Speaker 2 (30:55):
I mean, and I think that's I mean.
I think that that's anotherconversation that we've had.
A lot is, you know when, whenpendulum does swing back and
I'll use I'll, I'll use your,your phrase, but when there is a
new, new administration,because you know,
administrations come and go,what happens when this is a
(31:21):
democratic administration, youbetter believe that this,
everything that the currentadministration is doing is to
come back in force Right, rightis doing is to come back and
force right, right.
But to kind of say what you'resaying, the states are already
(31:43):
investing in ramping up theirenforcement practices and then
when you pair that with a CFPB,that's going to jump back from,
you know, 200 employees back totheir I'll just round up 2000
employees.
I mean that's going to be atough spot for all of us.
(32:04):
I mean I don't want to saytough spot, but you get what I'm
saying.
It's that right there is.
I don't want to say a recipefor disaster, but it's going to
be a tough time for us and we'llgo back to the regulation by
enforcement, but it's going tobe on two sides state and Fed.
Speaker 4 (32:27):
Yes, and that's why I and well, let me say something
quickly about when the feds comeback into the picture at DOJ,
in order for it to bring alawsuit, it has to prove a
(32:47):
pattern or practice ofdiscrimination, and so it's not
like, oh, you did one bad thing,we're going to sue you.
(33:10):
It's a pattern or practice, andso it's not like, oh, you did
one bad occupy.
They're going to be looking at,you know, five years of HMDA
data, which is going to givethem the last year of the Biden
administration and three and ahalf, four years of the Trump
administration to look at, andthey will see, they will be able
(33:31):
to make comparisons as to, well, here's what the lender did,
here's what its peers did,here's what the market did as a
whole, and it will be veryapparent to see which lenders
decided oh, we can take our footoff the compliance pedal and
see how that compared to whattheir peers did and what the
(33:53):
market as a whole did.
And so you want to think aboutfor these next few years that
when the feds are back in thepicture, they're going to be
looking at what we do now, asopposed to you know what we're
doing three years from from now,Um and and so there's a lot of.
(34:16):
I think that there's a hugeupside in lenders taking
proactive steps now when thefeds aren't looking over their
shoulder, because when the fedscome back they can say look, you
weren't looking over myshoulder, but look at what I did
, and I think that that willgain a lot of favor and take the
(34:40):
target off your back becauseyou've demonstrated that you
know you're committed to theseprinciples of fair lending and
consumer protection.
Speaker 2 (34:50):
No, it's interesting, right?
So I was talking to someoneyesterday and they're getting
ready to go through an audit andthey called me because they
were looking for again they'reabout a month out from an audit.
(35:11):
And they called me becausethey're looking for month out
from an audit.
And they called me becausethey're looking for fair lending
and humda training so they canprove to the auditors that they
took this training.
I'm like, well, you're themight mean that in the back of
my mind I'm thinking you're alittle late on that, like you.
(35:33):
Why take this training a monthout, like just so you can show
to them that you took thistraining before they came in?
I mean, this needs to be partof your regular practice, like
you need to have policies,procedures, you need to have
everything related to this.
You know it's, it's an everydaything.
(35:53):
Why do it now just to show themthat you took it in, that you
have it?
It doesn't make sense, but itkind of relates back to
everything you just said.
It's a pattern of practice,right?
Are you consistent with thisand not just before they come in
(36:13):
and audit you, right, exactly?
So last question before we needto transition, and I do have
one more question after thislast question, as weird as that
sounds.
So thinking about you know,your pendulum and a crystal ball
type question in a crystal balltype question, you know, are
(36:34):
there future hot issues orthings like that that that we
need to think about, you know,for when that pendulum starts
swinging back like are therecertain things that we really
need to focus on?
Speaker 4 (37:00):
Yeah, in the interest of time, I'm just going to
focus on one.
I think that if I was in my oldposition of directing DOJ's
Fair Landing Enforcement Program, I think that the specific
issues that I would really belaser focused on is what happens
in the underwriting space.
I think you know, and I thinkthere will be a lot.
(37:20):
There may be a lot of focus ondenial disparities, and I think
that.
So I think that redlining willnot go away, but it's not going
to be the single issue focus asit was in the previous
administration.
But I think it could be tied tothis kind of underwriting
(37:41):
analysis and and in this and oneof the reasons that I would
focus on it is because there arelenders that may misread the
tea leaves that now, if thefocus is making sure white males
haven't been discriminatedagainst, well, we're going to
give them some preferentialtreatment, and you know my 20
(38:03):
some odd years of fair lendinganalysis has showed that.
You know they haven't fared toobad in the past.
But I think that there may besome lenders that are going to
give preferential treatment whenthey're making underwriting
decisions to white males,because that's the current focus
(38:26):
of making sure this group ofpeople are not discriminated
against.
And so, in your typicalunderwriting analysis or denial
disparity analysis, people whoare very qualified, they're
going to get loans.
People who are not qualified,they're not going to get loans.
But those marginally qualifiedborrowers, that's where the
(38:51):
focus is going to be and thefocus is going to be on you know
what uh quality of assistancedid those marginal borrowers get
or not get, to ultimately makean underwriting decision.
So I would, I would, I wouldsuggest that lenders in in
addition, cause I thinkredlining is it's and, in
(39:13):
addition, because I thinkredlining is it's, it's, it's a
relatively easy analysis toteach new people and I think
they're going to be new peoplein these positions and and new
partnerships.
But I think that, beyondredlining, I think that I would
encourage lenders to look attheir pay close attention to
(39:33):
their underwriting and denialdisparities.
Speaker 2 (39:45):
So I'll ask you a quick question.
So you brought up, you know,underwriting and and I don't
mean for this to come off as aloaded question but you know as
an industry, but as an industrydo we rely too much on automated
(40:11):
underwriting systems for ourdecisioning, when we think of
how we approach our decisionmaking.
Speaker 4 (40:13):
Well, I mean, that's that is kind of a loaded
question.
I'll try to.
I'll try to answer it assuccinctly as I can.
I mean, I think that automatedunderwriting systems that don't
have embedded discriminatoryfactors in it should lead to the
same outcome for similarlyqualified borrowers, and that's
(40:36):
a good thing.
I think that the where you,where lenders, should be uh
concerned and make sure they dosome due diligence around this
for potential discrimination isuh in the overrides that
oftentimes go along with thoseautomated underwriting decisions
(41:00):
and, you know, are thoseoverrides administered in a
non-discriminatory way?
But in terms of, is there toomuch reliance?
Well, automated underwriting ishere to stay.
Terms of is there too muchreliance?
Well, automated underwriting ishere to stay and it's only
(41:22):
going to get more sophisticatedas more advances in AI and like
that.
So I think that it's here tostay and we want to make sure
that it can be used in a waythat allows more expedited, fair
decisions in anon-discriminatory way.
Speaker 2 (41:40):
Okay, thank you for that.
All right, last question, thenwe'll start transitioning.
Similar to the first question,this is all about you.
This is all about getting toknow a little bit more about you
.
But the final question is whatkeeps you going, what keeps you
motivated, what keeps youdriving day to day out?
Speaker 4 (42:01):
I mean I think that the work that I have done
whether it's for DOJ or in a lawfirm helping lenders navigate
these issues At the core ofeverything that I've done, I
never lose sight of the factthat there are people behind
(42:25):
every statistic so much of fairlending is statistics but I
never lose sight of the factthat behind every single data
point, there's a person, aperson's life, and I have.
When I was with the government,I took time to meet with people
and hear their stories abouthow the department's work
(42:49):
impacted their lives in apositive way, and that has
always driven me and I I feellike, if I can share my
expertise in a way that helps alender uh, uh serve its client
base more effectively in anon-discriminatory way, that is
(43:10):
going to positively impactpeople who I will never meet,
and that's what drives me.
Speaker 2 (43:17):
I love it.
I love it.
Well, thank you very much.
All right, john, it's time forus to start transitioning to the
second segment of our podcast.
Again, this is where we, forour compliance miniseries, we're
doing the most fan requested,favorite segment of dad jokes.
So, prior to the recording, Ishould come prepared with two
dad jokes.
So, prior to the recording, Iasked you to come prepared with
two dad jokes.
So here's what we're going todo You're going to do your two
(43:37):
dad jokes, justin will do histwo dad jokes and I will wrap up
with my two dad jokes.
So, john, when you are ready,fire away.
Speaker 4 (43:47):
Okay, when does a joke become a dad joke?
Speaker 2 (43:52):
When.
Speaker 4 (43:53):
When the answer is apparent, I love it.
Speaker 5 (43:57):
Good one.
Speaker 4 (43:57):
And then the last one is a little different format,
but my boss told me to have anice day, so I went home.
I'm here all week, peter.
Speaker 2 (44:19):
All right, justin go.
Speaker 5 (44:22):
A ship carrying red paint and a ship carrying blue
paint both collided with eachother in the middle of the ocean
.
Both crews are marooned.
All right, I like thated.
All right.
Speaker 4 (44:36):
I like that Okay.
Speaker 5 (44:38):
All right.
And then can a frog jump higherthan a house?
Of course it can.
A house can't jump, all right.
Speaker 2 (44:54):
Good, good, good, all right, so my term all right.
Good, good, good, uh, all right, so my turn.
Uh, if honeybees make honey,what kind of bees make milk?
Boobies, all right um, I'mdeveloping a new fragrance for
(45:20):
introverts.
It's called leave me the foo,cologne thank you.
Yes, don't worry, I just addedthe explicit tag no, it's, it's
b-o-o and then b's okay, it'sokay, just in case.
(45:50):
Just in case, all right.
Well, john, thank you very muchfor for taking time out of your
busy schedule to sit down withus on this conversation.
I really enjoyed it.
I say this about all of ourguests, but this is really my
favorite.
Compliance episode Really meansa lot that you would share your
(46:11):
wisdom with us, and I hope ouraudience takes away some good
nuggets from this, because it'ssuch an important topic.
So again, thank you very much.
Speaker 4 (46:22):
Thank you for the invitation, peter, of course,
and Justin.
Speaker 2 (46:25):
Thank you, of course, it was my pleasure.
And, to close out, thank youagain to Consolidated Analytics
for sponsoring today's episodeand to all of you.
We know your time is valuable.
Thank you for tuning into thelatest episode of Acuma's On
Point Podcast.
We hope you enjoyed it.
Until next time.
You won't, my friends.
Speaker 1 (46:43):
Thanks for listening.
We'll see you next time at theAcuma On Point Podcast.
If not already, be sure tosubscribe and give us a
five-star rating For more greatepisodes and information.
Be sure to visit us online atacumaorg and to get the latest
updates.
Head over to our LinkedIn page.
The views and opinions expressed in this
podcast do not necessarilyreflect the views or positions
of Acuma, its board of directors, its management staff or its
members.
The podcast discussionpresented is conversational in
nature and for generalinformation only.
Speaker 2 (00:32):
Hello, welcome to Actors On Point podcast, a
series focused on sharing thestories of people who are making
a positive impact in the creditunion mortgage industry.
I'm your host, Peter Benjamin.
Before we get to our episode,just a quick word from our
sponsor.
Speaker 3 (00:43):
This episode is brought to you by Consolidated
Analytics, helping credit unionsmake smarter mortgage decisions
, from origination to servicingand beyond.
With expert valuation, riskmanagement and compliance
solutions, they provide theinsights you need to protect
your members and grow yourportfolio with confidence.
Whether it's due diligence or acollateral risk assessment,
(01:04):
they help you navigate themarket with ease.
Learn more atconsolidatedanalyticscom.
Speaker 2 (01:10):
Welcome to the fifth episode of our compliance
miniseries, where each episodewill feature an intimate
conversation with people who Iconsider to be experts in their
field and supporters of thecredit union movement.
As a reminder, each of theseepisodes, it's our goal to take
a deep dive into variouscompliance topics that are
impacting and reshaping thecredit union mortgage industry.
(01:33):
Our next guest in theCompliance Miniseries is John
Seward, of Council with MitchellSanders.
John, how are you doing today?
Speaker 4 (01:43):
I'm doing great, peter.
Thank you, it's great to bewith you.
Speaker 2 (01:46):
No, it's our pleasure .
Over the last really few monthswe've had the opportunity of
getting to know you.
We've had you at both ourSavannah workshop and our
Seattle workshop and it's trulybeen an honor to hear from you
and learn your story, but, moreimportantly, for you to share
(02:11):
your expertise with our members.
And I think today's episode isgoing to be even more important
for all of our listeners to kindof hear your valuable words of
wisdom but more to come on that.
So you know, really thepleasure's all ours.
But, as always, I got to pause.
I need to bring Justin into theconversation.
(02:35):
Justin, how are you doing today?
And please tell me what is thelatest greatest happening over
at Acuma?
Speaker 5 (02:44):
I'm good, peter.
How are you living the dream?
Thank you, I love it.
All right, I mean over here atAcuma we are six weeks six weeks
roughly from our make your markannual conference, which is
going to be September 21st tothe 24th.
That's taking place in Denver,colorado.
If you haven't heard that bynow, we've not done a good job.
(03:06):
I'm looking forward to thatagenda, the speakers, the
sessions, the attendees, thestuff up your sleeve.
We just have so much planned.
There's a few things, just afew things.
One of these days we're goingto have to drop like breadcrumbs
(03:26):
.
You know we'll call them thehidden acumas.
Speaker 2 (03:31):
I can't do that, man.
I mean we always have asurprise, or 10.
That happens with every annualconference, because you know we
have to again.
There's a reason why we havethem coming back, because they
they always want to know what'speter gonna do next yeah, that
is always a great question.
(03:51):
I think the team asks that toosometimes I tell you, the
running joke is how, whenever Igo into a meeting, it's how can
I screw things up or what?
What else can I actuallyeveryone's plate?
Speaker 5 (04:02):
There you go.
I like that.
That's right, sort of.
I don't know how I feel rightnow, but later I'll feel great.
But no registration's open.
So if you haven't registered,head over to the Acuma website
register.
Come make your mark with us inDenver.
It is going to be a spectacularevent.
You do not want to miss this, Iagree.
(04:23):
Other than that, we have ournetworking and educational
opportunities that are justgoing on year round.
So our next network meeting isthe volume based network that
they are having their Q3 meetingin just over two weeks, so
that's going to be taking placeon August 21st.
And then our webinar series,our fast tracks and inside
tracks and our lovely on pointpodcast.
(04:45):
They just keep the fun going,hands down.
Speaker 2 (04:49):
All right, man, anything else?
Um no, I didn't mean to trickyou up, it was just asking.
Speaker 5 (04:57):
I mean it was like a loaded question.
I was unsure, I was like, oh,did I forget?
Speaker 2 (05:00):
anything.
Speaker 5 (05:02):
No no, it's going to be a great one, so we look
forward to seeing all of ourmembers out to something soon
Awesome.
Thank you very much, all right,john.
Speaker 2 (05:12):
So one really excited to have you here.
And a couple of things, a fewabout, I want to say.
I don't think it was a year ago, but close to you know, I
reached out to Daniela Caceres,who is a partner at your firm to
(05:41):
our events, you know, becauseyou know she's a mutual
acquaintance and you know Ithink very highly of her and you
know she's, you know, a subjectmatter expert on a lot of
things within our industry.
And she said hey, we recentlybrought on John and he is the
foremost expert in, you know,fair lending and redlining.
(06:02):
You have to talk to him andhe's going to blow you out of
the water and if you're going tohave someone speak at your
conference it has to be him.
I said, make the intro couldhave been more right and on
(06:27):
point with that introduction andI've always been meaning to
thank her for it and one day Iwill.
I don't know if she drinks beeror what, but maybe I'll buy her
that beer or whatever.
But I couldn't be more thankfulfor that because the value that
you have brought to ourcommunity and just sharing your
(06:50):
knowledge, like I said at ourworkshops, has been instrumental
.
I've had a lot of conversationswith our members, but also like
Michael Christians, who is aregular at our events but also
contributed to a lot of ourstuff.
Again, we're just blown away byyour knowledge, which is one of
the reasons why you're heretoday as contributing to our
(07:11):
compliance podcast.
So, to that point, you knowit's.
I think it's important for us tokind of take a step back.
You know and get to know you abit more and, as I mentioned
prior to this podcast, prior tothe recording, you know and get
to know you a bit more and, as Imentioned prior to this podcast
, prior to the recording, youknow, one of the first questions
I always ask is you know?
(07:32):
It's an important questionbecause we often forget the
things that make us who we are.
We always focus on the workaspect.
We always focus on, you know,the, the accomplishments.
We always focus on the thingsthat we do day to day, but we,
(07:54):
we, we often forget that there'salways the things that drive us
, always the things thatmotivate us, the, the things
that are in the next room thatare making way too much noise,
right?
So the big question is you knowwho is John and?
Speaker 4 (08:13):
so thank you, peter.
Thank you for the kind words.
I'm humbled to hear thosethings and thank you for the
(08:41):
question.
Because I am in the camp ofpeople's fair lending
enforcement program for twodecades I've probably brought
more fair lending matters thananybody in the country.
I'm the architect of thedepartment's combating redlining
initiative, but I never definemyself as what I do for a living
(09:05):
and so kind of.
Who is John?
Well, I'm a family guy wholoves playing games and I love
music games as a hobby andprobably within the next year
(09:29):
I'm going to turn that musicgame hobby into a professional
team building business because Ilove the way music unifies
people in such a divided worldand so um.
So I'm a family guy who lovesplaying games and loves music.
(09:49):
That's awesome.
Speaker 2 (09:51):
That is.
That is awesome.
I can't wait to learn moreabout that in the near future.
Now, and I and your family isis is, I think, important for
all of us, and I think that thatwas one of the reasons why we
started this podcast, and it's alot of the messaging that we do
within these conversations andin many ways, it ties into this
(10:19):
conversation today.
You know, fair lending andredlining because it's all of it
really is connects, and sotoday's conversation is really
going to focus on, you know,fair lending, compliance and how
it all can change.
(10:41):
I guess that's maybe that's agood way of framing it up, how
it can change, but also why westill need to, I guess,
prioritize it, consider itimportant.
And so, for your edification,john, obviously, as you know,
(11:01):
credit unions are our main focus.
Credit union mortgage lendersare our main focus.
You know credit unions are ourmain focus, credit union
mortgage lenders are our mainfocus and, as you know, the past
few years, you know, fairlending has a bit been a big
focus for credit unions andthat's been a big target on
credit unions backs Right andwith this new administration,
the, the, and I'm concerned thatcredit unions are considering
(11:27):
going away or thinking thatmaybe we can ease up on that
focus.
I guess the first questionreally is why should credit
unions continue to prioritizethat fair lending compliance
(11:48):
even during this newadministration, during these
changes and everything that'shappening in DC?
I mean, I think you can agreeit's like a moving target right
now.
Speaker 4 (11:59):
Yeah, no, it's a great question and you know, I
think of it.
As you know, there's a pendulumthat swings back and forth, and
I've been doing fair lendingenforcement work for so long
that I've seen it swing, youknow, from Clinton to Bush, to
(12:20):
Obama, to Trump to Biden, and Ithink that when lenders get
caught up in what is the youknow, what do I have to do or
not do in this particular swingof the pendulum, then they spend
too much time trying to catchup when the pendulum swings back
(12:44):
the other way.
And so what I try to encouragelenders to do is really have
some core beliefs that drivetheir business and including in
those core principles those corebeliefs that fair lending is
(13:04):
actually good for your business.
And so that's what I try toencourage.
But in terms of why lendersshould continue to prioritize
fair lending compliance in thisenvironment, where it's very
clear that the federalregulatory and enforcement
agencies are not going to makethis much of a priority is that
(13:30):
I think that state regulatorsand state attorneys general will
very likely fill the void orattempt to fill the void left by
the feds.
We have seen so manyprofessionals leaving the CFPB,
(13:51):
leaving the regulatory agencies,leaving the Department of
Justice and many of them aregoing to these state supervisory
and enforcement agencies andothers are going to private
consumer protection groups, andso I think that, in the absence
(14:15):
of the feds, you're going to seea lot more activity from the
(14:39):
states.
So that's one.
Two, as I kind of alluded to,you're also going to see private
groups that a private groupthreatened to bring a redlining
case against them, to file aredlining lawsuit.
This lawsuit was seeking moremonetary damages than DOJ or
(15:09):
CFPB ever settled for againstlenders of much greater size.
The fact that the feds aren'tin this space doesn't mean that
there aren't other entities thatare looking to act as private
(15:33):
attorneys general, as thestatute provides.
The most important reason is, Ireally think, that prioritizing
fair lending can increasebusiness and profitability.
I listened to one of yourpodcasts on HMDA and I thought
(16:00):
it was fantastic.
I would encourage people whohaven't listened to it to listen
to it, because at the heart ofthat discussion was this you
know HMDA shouldn't be thoughtof as this compliance burden,
but actually, you know, avaluable opportunity to see
(16:23):
where we can increase ourbusiness, and I think that when
you have that paradigm shift, itreally drives lenders in a
different kind of way, becauseif it's just, oh, I have to do
this, you're going to do thebare minimum.
But if you look at it as a toolthat is going to make your uh,
(16:48):
whatever kind of lender you aremore profitable, then you're
going to look at it um you know,a lot more closely and and to
see where those valuableopportunities are.
And I'll, I'll I'll close withuh with with a story that, when
I used to work for theDepartment of Justice, at the
(17:09):
end of a red lining consentorder, I would go and meet with
the senior officials of a lenderand I would ask you know, tell
me what worked well under thisconsent order and what things
you did that you just felt likeyou had to do because it was
(17:30):
required.
And the general story that Iwould get was they would say hey
, john, at the beginning of thiswe didn't like you too much
because we didn't appreciatethat we were targeted.
We didn't feel like what wewere doing was that, you know,
(17:50):
against the law.
But having gone through thesesteps, we have realized that
there were a number ofimprovements that we could make
to how we serve, you know, ourcustomers and our communities.
And invariably they would saythat we are a stronger bank or
(18:14):
lending institution at the endof this thanactively.
Look at the steps that arerequired in many of these
(18:35):
consent orders.
They will have the tools to dothose things proactively to
increase their business andbecome more profitable.
Speaker 2 (18:49):
And one thank you very much for the kind words
about our Honda podcast.
But kind of going back to astatement that you made and
please forgive me if this is astupid question but the consumer
groups and you know thepotential lawsuits that they
could bring against a creditunion.
(19:10):
You know what happens and let'srole play.
Speaker 5 (19:15):
Okay.
Speaker 2 (19:18):
You know, you have these people formerly at the CPP
and they go to these consumergroups and they take these cases
against a credit union andobviously you're on the opposite
side and you're defending thecredit union, but then it goes
to a federal court.
What happens when the federalcourt just I don't know, I don't
(19:42):
want to say it doesn't care or,or you know, it doesn't really
take fair lending.
That seriously, I mean what?
What happens then?
I mean, is it just does it everget to that state or or or?
Is the law the law like what Imean, or am I thinking of it
(20:02):
like incorrectly?
Speaker 4 (20:05):
So, so let me, let me answer it this way I think and
(20:28):
I've brought every kind thereare ways that you could increase
your business with qualifiedborrowers, and both sides may
disagree on some of the evidencethat is being considered, but
at the end of the day it is.
(20:49):
We can do these things toincrease our business, and so
why would we spend conceivablymillions of dollars litigating
this in a court of law when wecan take that money, invest it
in improving our practices andoffering subsidies, if we need
(21:13):
to offer subsidies?
And so what is that?
30, 31 years?
In 31 years, only one case hasgone to contested litigation,
(21:41):
and that was because it was atthe very beginning of the first
Trump administration, and thelender thought maybe we can, you
know, maybe because thesepolitical winds have shifted,
maybe we'll fare well by notsettling this.
(22:01):
And so it went into litigation.
The lender filed a motion todismiss.
The government opposed it.
The court said no, thegovernment has a case we're
going to dismiss, we're notgoing to dismiss the case.
And then that case was settled.
And so I think that in manyconsumer protection cases, even
(22:29):
fair lending cases, there arereasons that, if the sides can,
the lender to increase itsbusiness in a profitable way.
Speaker 2 (22:53):
OK, and thank you for that.
So I think you touched on thefirst Trump administration and I
think that kind of leads me tothe next question, which is the
second Trump administration, andwithout getting political, and
(23:13):
I think we all can agree thatthe second term or the second
term of this administration ismost certainly different than
the first of this administration, is most certainly different
than the first.
So, to that point, you know how, how is the second Trump
administration impacting fairlending, supervision and
(23:35):
enforcement?
Speaker 4 (23:37):
So I think that that, um, what's very different in
this administration from theTrump?
From the ongoing litigationwith respect to the CFPB, where
(24:08):
they're trying to fire 80 to 90%of the staff.
They've rescinded rules andguidance, they've dismissed
court cases, their efforts todefund the agency through the
budget appropriation process,and so there seems to be this
(24:34):
effort to dismantle theinfrastructure of that agency.
The same thing with the CivilRights Division, but in a
different way.
So, in, in with CFPB, they justtried to out and out, uh, fire
80 to 90% of the staff.
Well, with the civil rightsdivision of the justice
department, uh, at this point intime, I've seen estimates that
(24:59):
70% of the attorneys have left.
And they have left because, youknow, here's a division of the
Justice Department that, since1957, has had the mission of
protecting the civil rights ofmarginalized communities.
(25:21):
And so, whether that's inhousing, lending, education,
employment, policing, voting,the mission has always stayed
the same going to seek toenforce civil rights laws on
behalf of marginalizedcommunities.
But look for instances ofreverse discrimination to see
(25:52):
whether white males have beendiscriminated against.
And so, for the civil rightsdivision, the attorneys who
choose to work there aretypically people that come from
the top law schools, the top oftheir class.
(26:15):
It is one of the mostprestigious jobs you can get if
you want to do civil rights work.
And these people could havebeen making millions of dollars
doing other things, but theychose to work at the civil
rights division because of thismission.
And then, once you so, forexample, when I was hired a
(26:35):
million years ago, uh, 800people applied and they hired
four of us.
And that is kind of typical forhow difficult it is to get one
of these jobs.
And but it's the mission thatbrings people there.
And when you change thatmission, attorneys have been
(26:56):
leaving in droves the missionthat's caused this exodus from
the Civil Rights Division ortrying to out and out fire
people at the CFPB.
If you don't have people leftto do the work, then there's no
work that's going to be done andyou reshape the federal
(27:43):
standpoint.
Speaker 2 (27:43):
I forgot who I asked, but it was someone I asked
recently and whether it was onour policy podcast or on our
compliance podcast but or one ofour compliance episodes.
You know, with everythinghappening, and whether you look
at, you know the CFPP or youknow the executive orders that
(28:05):
the administration's putting out, you know there's a lot of
things that are transpiringwithin the government.
You know, and, of course, whenyou look at, you know the
deregulation.
Will it ever get to the pointwhere there's so much
(28:25):
deregulation that things like Idon't want to say fair lending,
because that, in the root ofeverything, is a fundamental law
that we have but does it everget to a point where it's
stripped down to the point whereit's almost non-existent?
Speaker 4 (28:49):
So we've never seen that before.
I think that what will happengoing forward?
So, as I described, I think thatthis administration has really
dismantled the infrastructure ofthese protections and so, when
(29:15):
the pendulum swings back, who isgoing to be left to really
enforce these laws as they hadbeen before?
And I think that that whatyou're likely to see is a lot
more cooperation between thestates and the feds once the
(29:41):
feds are back in the game.
So I don't think that it willever go away because, as we've
talked about, you know, thestates are going to step in,
private groups are going to stepin, but when the feds are back
in the game, I think thatthere's going to be a lot of
coordination between the statesand the feds moving forward.
(30:04):
And I think that what's bad forthe industry is because the
states are going to spend somuch time ramping up and
developing more expertise to dowork that had been done by the
feds.
Once you put that investment ofresources and training into
(30:30):
place, the likelihood is you'renot going to move away from that
later on, and so, when thependulum swings back, you're
going to have all of thisattention from the states as
well as by the feds, and thatwill be even more, uh, even more
eyes looking over the shouldersof lenders than existed, you
(30:53):
know, uh, a year or two ago.
Speaker 2 (30:55):
I mean, and I think that's I mean.
I think that that's anotherconversation that we've had.
A lot is, you know when, whenpendulum does swing back and
I'll use I'll, I'll use your,your phrase, but when there is a
new, new administration,because you know,
administrations come and go,what happens when this is a
(31:21):
democratic administration, youbetter believe that this,
everything that the currentadministration is doing is to
come back in force Right, rightis doing is to come back and
force right, right.
But to kind of say what you'resaying, the states are already
(31:43):
investing in ramping up theirenforcement practices and then
when you pair that with a CFPB,that's going to jump back from,
you know, 200 employees back totheir I'll just round up 2000
employees.
I mean that's going to be atough spot for all of us.
(32:04):
I mean I don't want to saytough spot, but you get what I'm
saying.
It's that right there is.
I don't want to say a recipefor disaster, but it's going to
be a tough time for us and we'llgo back to the regulation by
enforcement, but it's going tobe on two sides state and Fed.
Speaker 4 (32:27):
Yes, and that's why I and well, let me say something
quickly about when the feds comeback into the picture at DOJ,
in order for it to bring alawsuit, it has to prove a
(32:47):
pattern or practice ofdiscrimination, and so it's not
like, oh, you did one bad thing,we're going to sue you.
(33:10):
It's a pattern or practice, andso it's not like, oh, you did
one bad occupy.
They're going to be looking at,you know, five years of HMDA
data, which is going to givethem the last year of the Biden
administration and three and ahalf, four years of the Trump
administration to look at, andthey will see, they will be able
(33:31):
to make comparisons as to, well, here's what the lender did,
here's what its peers did,here's what the market did as a
whole, and it will be veryapparent to see which lenders
decided oh, we can take our footoff the compliance pedal and
see how that compared to whattheir peers did and what the
(33:53):
market as a whole did.
And so you want to think aboutfor these next few years that
when the feds are back in thepicture, they're going to be
looking at what we do now, asopposed to you know what we're
doing three years from from now,Um and and so there's a lot of.
(34:16):
I think that there's a hugeupside in lenders taking
proactive steps now when thefeds aren't looking over their
shoulder, because when the fedscome back they can say look, you
weren't looking over myshoulder, but look at what I did
, and I think that that willgain a lot of favor and take the
(34:40):
target off your back becauseyou've demonstrated that you
know you're committed to theseprinciples of fair lending and
consumer protection.
Speaker 2 (34:50):
No, it's interesting, right?
So I was talking to someoneyesterday and they're getting
ready to go through an audit andthey called me because they
were looking for again they'reabout a month out from an audit.
(35:11):
And they called me becausethey're looking for month out
from an audit.
And they called me becausethey're looking for fair lending
and humda training so they canprove to the auditors that they
took this training.
I'm like, well, you're themight mean that in the back of
my mind I'm thinking you're alittle late on that, like you.
(35:33):
Why take this training a monthout, like just so you can show
to them that you took thistraining before they came in?
I mean, this needs to be partof your regular practice, like
you need to have policies,procedures, you need to have
everything related to this.
You know it's, it's an everydaything.
(35:53):
Why do it now just to show themthat you took it in, that you
have it?
It doesn't make sense, but itkind of relates back to
everything you just said.
It's a pattern of practice,right?
Are you consistent with thisand not just before they come in
(36:13):
and audit you, right, exactly?
So last question before we needto transition, and I do have
one more question after thislast question, as weird as that
sounds.
So thinking about you know,your pendulum and a crystal ball
type question in a crystal balltype question, you know, are
(36:34):
there future hot issues orthings like that that that we
need to think about, you know,for when that pendulum starts
swinging back like are therecertain things that we really
need to focus on?
Speaker 4 (37:00):
Yeah, in the interest of time, I'm just going to
focus on one.
I think that if I was in my oldposition of directing DOJ's
Fair Landing Enforcement Program, I think that the specific
issues that I would really belaser focused on is what happens
in the underwriting space.
I think you know, and I thinkthere will be a lot.
(37:20):
There may be a lot of focus ondenial disparities, and I think
that.
So I think that redlining willnot go away, but it's not going
to be the single issue focus asit was in the previous
administration.
But I think it could be tied tothis kind of underwriting
(37:41):
analysis and and in this and oneof the reasons that I would
focus on it is because there arelenders that may misread the
tea leaves that now, if thefocus is making sure white males
haven't been discriminatedagainst, well, we're going to
give them some preferentialtreatment, and you know my 20
(38:03):
some odd years of fair lendinganalysis has showed that.
You know they haven't fared toobad in the past.
But I think that there may besome lenders that are going to
give preferential treatment whenthey're making underwriting
decisions to white males,because that's the current focus
(38:26):
of making sure this group ofpeople are not discriminated
against.
And so, in your typicalunderwriting analysis or denial
disparity analysis, people whoare very qualified, they're
going to get loans.
People who are not qualified,they're not going to get loans.
But those marginally qualifiedborrowers, that's where the
(38:51):
focus is going to be and thefocus is going to be on you know
what uh quality of assistancedid those marginal borrowers get
or not get, to ultimately makean underwriting decision.
So I would, I would, I wouldsuggest that lenders in in
addition, cause I thinkredlining is it's and, in
(39:13):
addition, because I thinkredlining is it's, it's, it's a
relatively easy analysis toteach new people and I think
they're going to be new peoplein these positions and and new
partnerships.
But I think that, beyondredlining, I think that I would
encourage lenders to look attheir pay close attention to
(39:33):
their underwriting and denialdisparities.
Speaker 2 (39:45):
So I'll ask you a quick question.
So you brought up, you know,underwriting and and I don't
mean for this to come off as aloaded question but you know as
an industry, but as an industrydo we rely too much on automated
(40:11):
underwriting systems for ourdecisioning, when we think of
how we approach our decisionmaking.
Speaker 4 (40:13):
Well, I mean, that's that is kind of a loaded
question.
I'll try to.
I'll try to answer it assuccinctly as I can.
I mean, I think that automatedunderwriting systems that don't
have embedded discriminatoryfactors in it should lead to the
same outcome for similarlyqualified borrowers, and that's
(40:36):
a good thing.
I think that the where you,where lenders, should be uh
concerned and make sure they dosome due diligence around this
for potential discrimination isuh in the overrides that
oftentimes go along with thoseautomated underwriting decisions
(41:00):
and, you know, are thoseoverrides administered in a
non-discriminatory way?
But in terms of, is there toomuch reliance?
Well, automated underwriting ishere to stay.
Terms of is there too muchreliance?
Well, automated underwriting ishere to stay and it's only
(41:22):
going to get more sophisticatedas more advances in AI and like
that.
So I think that it's here tostay and we want to make sure
that it can be used in a waythat allows more expedited, fair
decisions in anon-discriminatory way.
Speaker 2 (41:40):
Okay, thank you for that.
All right, last question, thenwe'll start transitioning.
Similar to the first question,this is all about you.
This is all about getting toknow a little bit more about you
.
But the final question is whatkeeps you going, what keeps you
motivated, what keeps youdriving day to day out?
Speaker 4 (42:01):
I mean I think that the work that I have done
whether it's for DOJ or in a lawfirm helping lenders navigate
these issues At the core ofeverything that I've done, I
never lose sight of the factthat there are people behind
(42:25):
every statistic so much of fairlending is statistics but I
never lose sight of the factthat behind every single data
point, there's a person, aperson's life, and I have.
When I was with the government,I took time to meet with people
and hear their stories abouthow the department's work
(42:49):
impacted their lives in apositive way, and that has
always driven me and I I feellike, if I can share my
expertise in a way that helps alender uh, uh serve its client
base more effectively in anon-discriminatory way, that is
(43:10):
going to positively impactpeople who I will never meet,
and that's what drives me.
Speaker 2 (43:17):
I love it.
I love it.
Well, thank you very much.
All right, john, it's time forus to start transitioning to the
second segment of our podcast.
Again, this is where we, forour compliance miniseries, we're
doing the most fan requested,favorite segment of dad jokes.
So, prior to the recording, Ishould come prepared with two
dad jokes.
So, prior to the recording, Iasked you to come prepared with
two dad jokes.
So here's what we're going todo You're going to do your two
(43:37):
dad jokes, justin will do histwo dad jokes and I will wrap up
with my two dad jokes.
So, john, when you are ready,fire away.
Speaker 4 (43:47):
Okay, when does a joke become a dad joke?
Speaker 2 (43:52):
When.
Speaker 4 (43:53):
When the answer is apparent, I love it.
Speaker 5 (43:57):
Good one.
Speaker 4 (43:57):
And then the last one is a little different format,
but my boss told me to have anice day, so I went home.
I'm here all week, peter.
Speaker 2 (44:19):
All right, justin go.
Speaker 5 (44:22):
A ship carrying red paint and a ship carrying blue
paint both collided with eachother in the middle of the ocean
.
Both crews are marooned.
All right, I like thated.
All right.
Speaker 4 (44:36):
I like that Okay.
Speaker 5 (44:38):
All right.
And then can a frog jump higherthan a house?
Of course it can.
A house can't jump, all right.
Speaker 2 (44:54):
Good, good, good, all right, so my term all right.
Good, good, good, uh, all right, so my turn.
Uh, if honeybees make honey,what kind of bees make milk?
Boobies, all right um, I'mdeveloping a new fragrance for
(45:20):
introverts.
It's called leave me the foo,cologne thank you.
Yes, don't worry, I just addedthe explicit tag no, it's, it's
b-o-o and then b's okay, it'sokay, just in case.
(45:50):
Just in case, all right.
Well, john, thank you very muchfor for taking time out of your
busy schedule to sit down withus on this conversation.
I really enjoyed it.
I say this about all of ourguests, but this is really my
favorite.
Compliance episode Really meansa lot that you would share your
(46:11):
wisdom with us, and I hope ouraudience takes away some good
nuggets from this, because it'ssuch an important topic.
So again, thank you very much.
Speaker 4 (46:22):
Thank you for the invitation, peter, of course,
and Justin.
Speaker 2 (46:25):
Thank you, of course, it was my pleasure.
And, to close out, thank youagain to Consolidated Analytics
for sponsoring today's episodeand to all of you.
We know your time is valuable.
Thank you for tuning into thelatest episode of Acuma's On
Point Podcast.
We hope you enjoyed it.
Until next time.
You won't, my friends.
Speaker 1 (46:43):
Thanks for listening.
We'll see you next time at theAcuma On Point Podcast.
If not already, be sure tosubscribe and give us a
five-star rating For more greatepisodes and information.
Be sure to visit us online atacumaorg and to get the latest
updates.
Head over to our LinkedIn page.
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