Hi! It’s Tory Haggerty from Tuscan Club University’s Fair Lending School and welcome to another Fair Lending Short.
In this fair lending short, we are going to talk about fair lending interviews.
I’ve been part of more than 100 fair lending audits in my career, and I’ve reviewed countless reports on data, lending performance, ratios, and every other type of metric you can imagine. Numbers tell a compelling story, but they can only take you so far.
If the only tool you have in your toolbox is a hammer, everything looks like a nail. It’s time to expand your fair lending toolbox.
Examiners have been using this trick forever, but that doesn’t mean you can’t too. It’s the fair lending interview.
What is a fair lending interview? It’s you as an audit or compliance professional sitting down with a lender and asking them basic questions on how they do their job.
Before you can do the interview, you need to do your homework. You need to read policies, understand procedures, know how loans are underwritten, know how they are priced, understand the policy exception and denial process, and other basic areas of how lenders do their jobs.
Then, you sit down and play dumb for a half hour. You ask questions such as how do you underwrite loans? Is there a minimum credit score? Is there a maximum debt-to-income ratio we will accept? How do you get policy exceptions approved? How do you price the different loan types?
The answers you get from your lender should match what you learned from policy. You also want to listen for any actions that could lead to discrimination as well.
The reason fair lending interviews are such a wonderful tool is it lets you know if lenders actually know, understand, and follow policy. I once asked a lender how loans were priced, and within 30 seconds I learned that lender has not seen a rate sheet since the 1900s.
Most fair lending interviews are boring. They rattle off procedures and you learn very little. That’s what you want. But, sometimes you learn something really critical that you would never learn from data.
One final piece of advice – don’t call them fair lending interviews. People get freaked out for no reason. Just say you want to learn more about how lenders do their job.
Thanks for reading!
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