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Adverse Action Requirements Enforced Regardless of “Black-Box” Algorithms and Technology

As any mortgage compliance professional will tell loan production, “You can’t put ‘Low FICO’ as a decline reason!’” That’s because the Equal Credit Opportunity Act (ECOA) requires a creditor to provide the declined loan applicant the actual, real-world reason why the consumer’s request for credit was denied. Presumably, the consumer-protection element here is to provide the consumer an opportunity to understand the root-cause of loan denial and an opportunity for the consumer to remedy that cause. So now, in another example of technology outpacing regulatory requirements, on May 26, 2022, the Consumer Financial Protection Bureau (CFPB) issued