Fair Lending (FL) 2012

1. Fair Lending (FL) 2012

2. Course Navigation The course runs automatically. However, you can use the navigation buttons in the lower left corner of the screen to move through the course. Below are explanations of each of the buttons actions. You must view every slide in completing the course before selecting the Exit button! NEXT/PREVIOUS SLIDE REWIND SOUND ON/OFF PLAY/PAUSE FAST FORWARD EXIT

3. What’s Covered • Some of the objectives covered in the Fair Lending Compliance Course are: • Understanding the importance of Fair Lending • Recognizing Protected Classes • Reviewing Potential Areas of Lending Discrimination • Reviewing Types of Discrimination and Disparate Treatment • Understanding Consequences of Non-Compliance

4. Introduction to Fair Lending What is fair lending? To promote fair, equitable, and nondiscriminatory access to credit for all consumers. Why is it important to discuss equal treatment and fair lending? • To raise awareness of SCUSA’s policies and federal laws and regulations. • As SCUSA’sassociates and in order to comply with federal regulations, we must not treat customers differently based on a prohibited basis factor.

5. Introduction to Fair Lending What is fair lending? To promote fair, equitable, and nondiscriminatory access to credit for all consumers. Why is it important to discuss equal treatment and fair lending? • To raise awareness of SCUSA’s policies and federal laws and regulations. • As SCUSA’s associates and in order to comply with federal regulations, we must not treat customers differently based on a prohibited basis factor. How can I assist with fair lending? Associates of SCUSA should: - Avoid fair lending problems during interactions with customers and dealers. - Identify and report Fair Lending violations to the Fair Lending Officer.

6. Fair Lending The Four Main Fair Lending Laws: Equal Credit Opportunity Act (ECOA-1974) Fair Housing Act (FHA-1968) Home Mortgage Disclosure Act (HMDA-1975) Community Reinvestment Act (CRA-1977)

7. Equal Credit Opportunity ActRegulation B What is the purpose of ECOA? • The ECOA, which is implemented by Regulation B, requires financial institutions (creditors) to make credit equally available to all creditworthy consumers. ECOA prohibits discrimination in any kind. This applies to any type of credit transaction, including activities before, during, and after the extension of credit.

8. What are prohibited basis classes? • Groups that are forbidden to discriminate upon in any aspect of a credit transaction. ECOA prohibits discrimination against persons in protected classes. • These classes are: • Race or Color • Religion • National Origin • Sex • Marital status • Age (provided the applicant has the capacity to contract) • Receipt of Public Assistance (If all or part of the applicant's income is derived from any public assistance program) • Right to Lodge a Complaint

9. Potential Areas of Lending Discrimination • Application Process • Credit Evaluation/Underwriting • Extension of Credit • Servicing of Accounts • Collection Activities • Modification and Extension of Accounts • Repossession of Collateral

10. What is Overt Impact? • Overt Impact is blatant, obvious discrimination against an applicant or consumer. • Examples are : • Statements made by an SCUSA associate even if they are not acted upon. • A credit associate advises a dealer that a single female applicant will more than likely be turned down because she is not married and is not applying with a spouse. The credit associate is prohibited from considering such information when processing a application.

11. Other Examples of Overt Impact • Policies or procedures that discriminate against one of the prohibited classes. • For example, a collections associate has a common practice of waiving late fees and negotiating deferred payment terms with only customers that speak English. He/she assesses late fees for non-English speaking customers. The collections associate is prohibited from engaging in such discriminatory preference.

12. Disparate Treatment • Disparate treatment includes the practice of unreasonablyexcluding or placing a burden on a specific individual. • SCUSA is committed to assuring that policies and practicesdo not have an unintended adverse effect on applicants.

13. Examples of Disparate Treatment • Charging a higher APR to applicants that have income from Social Security. • Allowing deferments only if the request is submitted in English. • Initiating a collections call campaign that calls customers on public assistance first and/or more often than other customers.

14. Discrimination • Discrimination also extends to more subtle forms of unequal treatment, including providing higher quality of assistance to applicants who are not members of a protected class. • SCUSA associates cannot express any type of preference for one group of persons over another since this showing of a preference could lead to a charge of lending discrimination. • Also, it is a good idea to refrain from telling jokes that might appear derogatory to a certain ethnic group which could give the impression to a member of that group that they would be a less preferable loan applicant. • At SCUSA no one should discriminate against any applicant or customer on any prohibited basis.

15. Avoiding Fair Lending Problems • SCUSA has the following processes in place to avoid Fair Lending problems: • Written Fair Lending Program – see SCUSA Source • Ability to contact the Fair Lending Officer at: Fair Lending Officer@santanderconsumerusa.com • Robust written credit policies

16. Avoiding Fair Lending Problems • SCUSA has the following processes in place to avoid Fair Lending problems: • Strong underwriting standards • Consistency, level of assistance, overrides monitoring, etc. • Policy vs. Practice • Second review process – Denials • Annual Fair Lending Training

17. Consequences of Non-Compliance • Civil Action Lawsuits • Class Action Lawsuits • Reputation Risks • Regulator Scrutiny • Department of Justice Consent Decrees

18. What’s Covered - Summary • Some of the objectives covered in the Fair Lending Compliance Course are: • Understanding the importance of Fair Lending • Recognizing Protected Classes • Reviewing Potential Areas of Lending Discrimination • Reviewing Types of Discrimination and Disparate Treatment • Understanding Consequences of Non-Compliance

19. Fair Lending (FL) 2012

20. To receive proper credit for completing the course, click the “X” in the lower right corner of the screen. You must also complete the end of course quiz.