Fair-lending experts warn that the Justice Department is shifting its focus from instances of blatant discrimination to cases where minorities and women are treated unfairly.
The change, which has occurred gradually over the past year, could have a profound impact on bank compliance efforts, these experts said.
"Lenders need to understand that their practices will be looked at more broadly," said Andrew L. Sandler, a partner in the Washington office of the Skadden, Arps, Slate, Meagher & Flom law firm. "It is not just whether lending practices treat all groups equally but whether lending practices are fair to consumers in general."
The new emphasis was spelled out at a recent Consumer Bankers Association conference by Bill Lan Lee, the acting assistant attorney general for civil rights at the Justice Department.
Rather than reviewing whether banks illegally deny credit to minorities and women or charge them different rates than whites, the department will examine "unfair, deceptive, or fraudulent lending practices," he said. In addition to fair-lending laws, this would require using state anti-fraud laws and working with the Federal Trade Commission and state attorney generals.
Also topping the agenda are judgment-based overrides of credit-scoring models and marketing efforts aimed at getting consumers to use their homes as collateral for high-rate equity loans, he said.
"The groups protected by the fair-lending laws are often the same as those that historically have been the victims of consumer fraud and abuse," Mr. Lee said. "There is no good reason why practices that may violate more than one set of laws should be partially investigated.
"Further, we think this approach, if successful in unearthing violations, will be more effective because of the broader remedies available under the combination of statutes."
Jo Ann S. Barefoot, a partner at the consulting firm KPMG Barefoot Marrinan, said the explosion of new financial services is leaving some consumers feeling abused, either because they failed to research their borrowing options or because they were taken advantage of by an unscrupulous bank.
As a result, the Justice Department wants to leverage the fair-lending laws to crack down on perceived abuses, she said.
To stay out of trouble, it no longer is enough for a bank to rely on a clean exam from regulators, she said. The Justice Department has previously shown that it is willing to prosecute banks that have passed fair-lending exams, she said.
"The bank has to be totally pro-active," she said. "Banks have to transform their compliance functions into true risk management. They can no longer be driven by technical compliance."
Warren Traiger, a partner at the New York law firm Butler, Fitzgerald & Potter, said he expects the government will crack down further on overages, which are bonuses paid to loan officers that convince consumers to accept mortgages with higher rates or points.
Banks that use overages necessarily treat consumers differently, Mr. Traiger said. As a result, they are susceptible to charges of discrimination, he said.