Inside 2025’s Fair Lending Trends: From AI to CRA Rollbacks

Get to Know the Shifts and What They Mean for You

In 2025, the landscape of fair lending in the United States is undergoing major transformations, influenced by changes in regulation, advancements in technology, and evolving political dynamics.

While certain reforms aim to expand and modernize credit access, others signify substantial setbacks—particularly for communities that have long faced barriers to financial inclusion.

Let’s take a closer look at what’s changed and what it could mean for borrowers:

📉 Reversals in the Community Reinvestment Act (CRA)

A major turning point this year has been the rollback of the 2023 revisions to the Community Reinvestment Act (CRA) by U.S. banking regulators.

Those revisions were designed to bring the CRA into the digital age by acknowledging the role of online banking and extending financial services beyond brick-and-mortar branches to better reach low-income neighborhoods.

However, after lobbying from financial institutions and a federal court ruling in Texas that stalled the new rules, regulators opted to return to the original 1995 framework.

This move narrows the scope of CRA evaluations to the immediate areas surrounding physical branches, disregarding the increasingly important digital banking environment.

It remains crucial to closely monitor this type of regulation.

🧠 AI Technology and the Risk of Bias in Algorithms

The adoption of artificial intelligence (AI) and machine learning in credit decisions continues to raise alarms about potential biases embedded in these technologies.

Automated credit scoring and pricing tools may inadvertently reproduce systemic racial and economic disparities.

To address this, the Consumer Financial Protection Bureau (CFPB) has reinforced the requirement that lenders must explain the specific reasons behind credit denials—even if those decisions are driven by complex AI models.

Moreover, advocacy groups and fintech companies are pushing the CFPB and the Federal Housing Finance Agency (FHFA) to issue concrete guidance on responsible AI use, aiming to eliminate discriminatory outcomes and promote fairness in lending.

This area of AI is expected to undergo further changes in the coming years, especially given its continuous evolution across all industries.

🏛️ Rollout of Section 1071 of the Dodd-Frank Act

Section 1071 of the Dodd-Frank Act, which mandates the collection of demographic data on small business lending, is scheduled to go into effect in July 2025 for large-scale lenders.

The aim is to expose inequalities in credit access, especially for businesses owned by women and minorities.

Even though the rule has faced court challenges, it remains in place, with extended compliance deadlines for high-volume small business lenders.

⚖️ Shift Away from Disparate Impact Enforcement

In April 2025, the White House issued a directive instructing federal agencies to cease applying the concept of disparate impact in their enforcement efforts, including in fair lending cases.

This policy shift focuses enforcement on clear, intentional acts of discrimination, moving away from addressing practices that lead to unequal outcomes—even when no intent to discriminate is shown.

🏦 Industry-Led Efforts to Advance Fair Lending

Despite regulatory headwinds, numerous banks and financial institutions are taking the initiative to uphold fair lending values. As noted by Ncontracts, institutions are adopting a variety of forward-thinking practices, such as

• Upgrading systems and procedures to exceed minimal compliance requirements
• Leveraging proxy data to pinpoint service gaps in underbanked communities
• Reevaluating branch locations in lower- and middle-income neighborhoods
• Launching proactive equity-based initiatives in anticipation of future rules

These measures reflect a growing internal commitment to financial equity—even when external guidelines remain uncertain.

🔮 Final Thoughts: A Complex Mix of Hurdles and Openings

The 2025 fair lending environment in the U.S. is defined by both obstacles and opportunities.

With regulatory protections scaling back, the chances of discriminatory lending practices rise—posing the greatest risk to disadvantaged groups.

Yet, the increased scrutiny of algorithmic decision-making and the implementation of demographic reporting on small business loans point toward a future with more transparency and accountability.

Maintaining fairness in lending will require coordinated efforts between government agencies, financial institutions, and community stakeholders to ensure credit access remains inclusive and just for all Americans.

Written by

Gabriel Gonçalves