The Fair-Lending 'Effects Test' Is Gone. Most of Your Exposure Isn't.

As of July 21, the fair-lending "effects test" is gone.

The CFPB's final rule eliminates disparate-impact liability under ECOA. For a lot of lenders, that reads like relief — one less standard to defend against.

For a mortgage book, mostly not. The exposure didn't disappear. It fragmented.

What actually survived July 21:

→ Intentional discrimination is still illegal — under ECOA and the Fair Housing Act. Untouched.

→ Disparate impact still lives under the FHA. The rule amends Regulation B. It doesn't touch the Fair Housing Act — or the Supreme Court's 2015 Inclusive Communities decision, which covers loans secured by a home. For the core of a mortgage book, that exposure is very much alive.

→ The states moved toward more enforcement, not less. 21 state attorneys general opposed the rule. Massachusetts already settled with a lender for $2.5M over AI-driven underwriting — model overrides with no documented guardrails. "The algorithm did it" was not a defense.

→ The rule itself may not survive. Advocacy groups sued the CFPB in late May to vacate it entirely. Build your compliance around "disparate impact is gone," and you're building on a standard a court could reverse.

Then the part most coverage is missing: days before the rule took effect, the FTC warned that steering your AI away from the accurate answer — to dodge a disparate-impact outcome — can itself be a deceptive practice.

So you're still expected to be fair — and now warned to be accurate. The only posture that satisfies both is a decision you can reproduce and defend on demand.

The map changed. The destination didn't.

Full breakdown — what moved, what didn't, and 5 things to do now: read the full article.

The real question isn't what changed July 21. It's this: which regulators does your book answer to now — and can you defend every decision to all of them?

— Stephen Schrump, CEO, PitchPoint Solutions