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Financial Services Law Insights and Observations

CFPB grants financial services company’s request to end no action letter

Federal Issues CFPB No Action Letter ECOA Fair Lending Underwriting

Federal Issues

On June 8, the CFPB announced an order to end a “no-action letter” (NAL) issued to a consumer lending platform in 2020 in response to the NAL recipient’s request to shorten the term of the letter, which the company noted was necessary in order to be able to keep its underwriting models accurate and up-to-date during a period of significant economic change. As previously covered by InfoBytes, the Bureau first issued a NAL to the company in 2017, as part of the CFPB’s Project Catalyst initiative, relating to the Equal Credit Opportunity Act and the company’s loan underwriting and pricing model. Under the NAL, the company was immunized “from being charged with fair lending law violations with respect to its underwriting algorithm, while the ‘no-action letter’ remained in force.” In November 2020, the Bureau issued a second NAL after the first one expired (covered by InfoBytes here).