Positioning Your Business For Success Mystery Shoppers Presented by: Tammy Butler, Master CMB

“What you don’t know can kill You-Dave Ramsey”

Recorded Examples-Source CFPB/DOJ •Manager instructed loan officers and processors under her supervision that mortgage applications from minorities and others viewed as "protected class" must be " turned down" in 21 days and that "borderline" customers should be turned down quickly, while applications from White applicants were not subject to this shorter review period. •When asked for an explanation for the explicitly race-based denial policy, the manager stated, "I think it's lawsuits, it's lawsuits, and we just dodged a really large bullet." •A loan officer asked the manager whether loan officers should help marginally qualified applicants improve their credit scores so their applications would be approved. The manager cautioned against doing so stating that "you are gonna spend two weeks trying to get it re-scored and get that credit score up and by that time they're mad and sending you mean letters." ●A loan officer commented that "they need to get their credit up" and "stop paying their damn bills late" and then laughed. ●In discussing the Bank's hiring of an African-American employee, a loan processor cautioned, "don't use then “n” word." A few moments later, a Bank employee quipped "what's up, niggas!" Both of these comments were followed by laughter in the room.

The Basics Who Are They? How Is it Done? How is Info Used? • Regulators • Consumer Advocacy Groups • Your Competition • Industry Analysts • Your Company •Over the Phone •In Person •Through Social Media Interaction ●Texting • Regulatory Compliance • Basis for Complaints to HUD or the CFPB • Market Knowledge/Intel • Market Condition Analysis

HMDA Data Targeted General Market Who Is Chosen & Why?

Science Behind the Shopping Testing for Disparate Treatment Financial Profiles are Similar Minority Shopper is Given a Slightly Better Profile LO is Contacted the Same Way Exact Communication Techniques re: Follow up Will Ask Similar Types of Questions Each interaction and Answer is Carefully Documented, Directly After the Meeting.

What Testers are Unlikely to do Negotiate for a better rate/cost. Give you “deep information” like a social security number, or birthdate. Authorize a credit pull. Pay for any services. State any preference for loan options Indicate that they are working with a real estate agent

Ways to Protect you & Your Team Training, Training, Training! Test Your Branch Employees If You Run a Team, Test Your “Firewall” Employees-Improper Screening Be Present & Keep Your Ears Open Automate Proper Follow-Up Controls-i.e. Mortgage Coach Track Fall Out Clients/Leads Why did they not apply? Where did the go? Did Employees Follow up?

Thank You! Contact Us for: ●Mystery Shopping Training •Fair Lending Training-Staff & Board •Pricing Policy & Procedures Creation & Review •Pricing Engine Configuration Review •Fair Lending Policy •CMS Development for Fair Lending •Redlining Evaluation & Remediation •Community Needs Analysis & Peer Analysis •Disparate Impact Reviews Tammy Butler, Master CMB, LSS Black Belt tammybutler@fairlendingdiversity.com www.fairlendingdiversity.com 847-276-0399