These regulations may contain but are not limited to such classifications, differentiations, or other provisions, and may provide for such adjustments and exceptions for any class of transactions, as in the judgment of the Bureau are necessary or proper to effectuate the purposes of ECOA, to prevent circumvention or evasion of ECOA, or to facilitate or substantiate compliance with ECOA. Both the Bureau's consultations with the prudential regulators and its own experience in fair lending enforcement indicate that these data are used. Fair Credit Reporting Act (Reg V) FCRA is intended to ensure consumer reports are accurate and used for permissible purposes. New principal residence. Moreover, because both methods use the same aggregate categories, a creditor can compare information collected under either method by rolling up the disaggregated subcategories into their corresponding aggregate categories. Two of these circumstances are a requirement for creditors to collect and retain certain information about applicants for certain dwelling-secured loans under Regulation B 1002.13 and the similar applicant information that financial institutions are required to collect and report under Regulation C, 12 CFR part 1003, which implements the Home Mortgage Disclosure Act (HMDA). Relative to current Regulation B following the effective date of the 2015 HMDA Final Rule, the final rule provides clear benefits to entities that will be required to collect and report race and ethnicity data under HMDA. Finally, demographic data retained by Regulation B-only creditors is not reported under Regulation C. Consequently, most oversight and analysis of demographic data retained by Regulation B-only creditors will be done only by regulators, whereas researchers and community groups also conduct analysis of HMDA data reported under Regulation C. The Bureau believes the final rule will not impose any costs on consumers. Two industry groups suggested that the Bureau remove 1002.13 altogether. Redlining is an unethical and illegal practice that denies loans or services to people living in majority-minority communities. On October 24, 2012, the CFPB issued a larger participant regulation in the market of consumer debt collection. Transactions not covered. endstream endobj 2434 0 obj <>stream 12 U.S.C. Redlining is the discriminatory practice of denying services (typically financial) to residents of certain areas based on their race or ethnicity. Register, and does not replace the official print version or the official for fair lending practices. Although some entities subject to Regulation B but not Regulation C may choose to voluntarily Start Printed Page 45694begin collecting disaggregated race and ethnicity information, the Bureau believes the most likely reason for this to occur is through adoption of the 2016 URLA, which is not part of the final rule. This appendix contains four model credit application forms, each designated for use in a particular type of consumer credit transaction as indicated by the bracketed caption on each form. The Bureau also proposed comment 5(a)(4)-1 to provide guidance on proposed 1002.5(a)(4) and to highlight the voluntary nature of the rule. Federal Register issue. 15 U.S.C. If a creditor inadvertently obtains the monitoring information in a dwelling-related transaction not covered by 1002.13, the creditor may process and retain the application without violating the regulation. [6] The current Regulation B appendix includes the 2004 URLA as a model form for use in complying with 1002.13. 3. Home Mortgage Disclosure (Regulation C), 79 FR 51731 (Aug. 29, 2014). Only official editions of the Institutions subject to Regulation B but not Regulation C include, for example, institutions that do not have a branch or home office in a Metropolitan Statistical Area (MSA), do not meet an applicable asset threshold, or do not meet an applicable loan volume threshold. In contrast, dwelling-secured loans that are not made primarily for a business or commercial purpose are generally required to be reported even if they do not meet the definition of a home purchase, refinancing, or home improvement loan. 15. Another industry commenter was concerned about how a creditor would decide which collection method to use and whether the instruction could have a discriminatory impact. 5. at 43132 (1003.3(c)(11) and (12)). One industry commenter proposed permitting collection for dwelling-secured loans made primarily for a business or commercial purpose that might be covered loans, regardless of whether or not they are for the purpose of home purchase, refinancing, or home improvement and therefore reportable under revised Regulation C. Under revised Regulation C, dwelling-secured loans made primarily for a business or commercial purpose are only required to be reported if they meet the definition of a home purchase, refinancing, or home improvement loan. Industry commenters proposed two additional, narrowly tailored exceptions that the Bureau is substantially adopting. "Federal Fair Lending Regulations and Statutes: Equal Credit Opportunity (Regulation B)," Page 1. the official SGML-based PDF version on govinfo.gov, those relying on it for 1375, 2035-39 (2010) (codified at 12 U.S.C. Commentary to the Regulation B appendix includes a discussion of two forms created by the Enterprises that are no longer in use: A 1992 version of the URLA and a 1986 home-improvement and energy loan application form. A creditor that enters information items from a written application into a computerized or mechanized system and makes the credit decision mechanically, based only on the items of information entered into the system, may comply with 1002.12(b) by retaining the information actually entered. Therefore, the Bureau believes any operational costs from adopting the 2016 URLA are part of the normal course of business and are not a cost of the final rule. 1. The primary benefit to lenders from the final rule is the reduced uncertainty and compliance burden from allowing the disaggregated race and ethnicity information collected under Regulation C to be used to comply with Regulation B. Collecting information on behalf of creditors. The requirement to collect, in certain circumstances, applicant demographic information on the basis of visual observation or surname where the applicant does not provide this information has been a longstanding requirement of 1002.13(b). Thus, a small entity that is in compliance with current law need not take any additional action, save those already required by the 2015 HMDA Final Rule. The laws that cover collection policies and procedures are mandated by federal and state governments. Note that the language that follows is taken directly from the regulation, which appears in the References portion of this section. Amend 1002.13 by revising paragraph (a)(1)(i) and paragraph (b) to read as follows: (A) For ethnicity, the aggregate categories Hispanic or Latino and not Hispanic or Latino; and, for race, the aggregate categories American Indian or Alaska Native, Asian, Black or African American, Native Hawaiian or Other Pacific Islander, and White; or. Two commenters opposed the collection of applicant demographic information on the basis of visual observation or surname under any circumstances. With some exceptions, Regulation B 1002.5(b) prohibits a creditor from inquiring about the race, color, religion, national origin, or sex of an applicant or any other person (protected applicant-characteristic information) in connection with a credit transaction. 1375, 1980 (2010) (codified at 12 U.S.C. Regulations B and C both contain an appendix B that provides model forms for use when collecting applicant demographic information required under the regulations. A Rule by the Consumer Financial Protection Bureau on 10/02/2017. documents in the last year, by the International Trade Commission The CFPB protects the following credit applications and transactions for consumers: Credit applications and information requirements, Standards of creditworthiness and investigation procedures. However, if a person buys or builds a new dwelling that will become that person's principal residence within a year or upon completion of construction, the new dwelling is considered the principal residence for purposes of 1002.13. Principal residence. 2011), available at http://www.census.gov/prod/cen2010/briefs/c2010br-02.pdf. Because of the differences between the categories, some creditors required to collect and report race and ethnicity using the disaggregated categories set forth in revised Regulation C may be uncertain whether additional collection using aggregated categories would also be required to satisfy current Regulation B. Federal Register. The notice provides that, although the use of the 2016 URLA by creditors is not required under Regulation B, a creditor that uses the 2016 URLA without any modification that would violate 1002.5(b) through (d) acts in compliance with 1002.5(b) through (d). documents in the last year, 37 Fair Lending Fair Lending Laws and Regulations - PDF provides an abbreviated discussion of federal fair lending laws and regulations based on . Compliance with the applicable servicing criteria is achieved if those policies and procedures are designed to provide reasonable assurance that such vendor's activities comply with such criteria and those policies and procedures are operating effectively. Comments related to the data collection model forms are addressed in the section-by-section analysis of the Regulation B appendix. 29. documents in the last year, by the Food Safety and Inspection Service and the Food and Drug Administration Video and other electronic-application processes. Regulation B creditors will also be able to collect voluntarily certain information about applicants for certain mortgage loan scenarios as provided for in 1002.5(a)(4). documents in the last year, 36 One commenter stated that extending the requirement to collect applicant demographic information on the basis of visual observation or surname to Regulation B-only creditors is outside the scope of ECOA. Before the January 1, 2018, effective date of most provisions of the 2015 HMDA Final Rule, inquiries to collect applicant demographic information using disaggregated ethnic and racial categories are not required by current Regulation C and would not have been allowed under Regulation B 1002.5(a)(2), and therefore creditors would have been prohibited by Regulation B 1002.5(b) from requesting applicants to self-identify using disaggregated ethnic and racial categories before January 1, 2018. The Bureau did not propose changes to Regulation C in this rulemaking. The Bureau believes that, absent this change, entities that currently report race and ethnicity data under Regulation C could conclude that they have different obligations under Regulation B and Regulation C once the 2015 HMDA Final Rule goes into effect on January 1, 2018. on NARA's archives.gov. For Regulation B creditors making mortgage loans subject to 1002.13, the rule will allow creditors to collect the applicant's information using either the aggregate ethnicity and race categories or disaggregated ethnicity and race categories and subcategories, as set forth in appendix B to Regulation C (the Regulation C appendix) as amended by They must tell you the name of the creditor (company or person you owe), the amount you owe and how you can dispute the debt or seek verification of the debt. 1. 5581). The final rule will provide creditors flexibility in complying with Regulation B in order to facilitate compliance with Regulation C and transition to the 2016 URLA. 03/01/2023, 267 Interagency guidance was issued in 2005. Shaakira Gold-Ramirez, Paralegal Specialist, Kathryn Lazarev, Counsel, or James Wylie, Senior Counsel, Office of Regulations, at 202-435-7700 or https://www.consumerfinance.gov/policy-compliance/guidance/. See Fannie Mae, Guide Forms, available at https://www.fanniemae.com/singlefamily/selling-servicing-guide-forms (last visited Sept. 6, 2017) (listing all selling and servicing guide forms); Freddie Mac, Forms and Documents, available at http://www.freddiemac.com/singlefamily/guide/ (last visited Sept. 6, 2017) (same). If the Bureau were to require creditors to adopt a consistent collection method across applications, the Bureau would also need to issue additional guidance in the official commentary concerning how often and under what circumstances a creditor may change its collection method, among other implementation issues. In addition, the Bureau proposed several revisions to 1002.13(b) and (c) and its commentary to align further the collection requirements of Regulation B with revised Regulation C. Section 1002.13(a) sets forth certain protected applicant-characteristic information a creditor must collect for applications on certain dwelling-secured loans. , which is implemented by Regulation B (12 CFR Part 1002 ), applies to all creditors, including credit unions. See revised Regulation C 1003.2(e). 1 Overdraft payment programs and consumer protection. See Fannie Mae, Guide Forms, available at https://www.fanniemae.com/singlefamily/selling-servicing-guide-forms (last visited Sept. 6, 2017) (listing all current selling and servicing guide forms); see also Freddie Mac, Forms and Documents, available at http://www.freddiemac.com/singlefamily/guide/ (last visited Sept. 6, 2017) (same). 4, 2017). the material on FederalRegister.gov is accurately displayed, consistent with The information-collection requirements of this section apply to applications for credit primarily for the purchase or refinancing of a dwelling that is or will become the applicant's principal residence. Section 1002.13 sets forth the scope, required information, and manner for the mandatory collection of certain protected applicant-characteristic information under Regulation B. Section 1002.5(a)(2) further provides that a creditor may obtain information required by a regulation, order, or agreement issued by, or entered into with, a court or an enforcement agency to monitor or enforce compliance with ECOA, Regulation B, or other Federal or State statutes and regulations. 15 U.S.C. Proposed 1002.5(a)(4)(i) and (ii) would permit a creditor that is a financial institution under revised Regulation C 1003.2(g) to collect demographic information of an applicant for a closed-end mortgage loan or an open-end line of credit that is an excluded transaction under revised Regulation C 1003.3(c)(11) or 1003.3(c)(12) if it submits HMDA data concerning those applications and loans or if it submitted HMDA data concerning closed-end mortgage loans or open-end lines of credit in any of the preceding five calendar years.[31]. Regulation B's prohibition of advertising that would discourage potential applicants from applying for loans is a crucial part of redlining cases. For Regulation B creditors making mortgage loans subject to 1002.13, the rule will allow creditors to collect the applicant's information using either the aggregate ethnicity and race categories or disaggregated ethnicity and race categories and subcategories, as set forth in appendix B to Regulation C (the Regulation C appendix) as amended by the 2015 HMDA Final Rule. on Both certain depository institutions and credit unions with less than $10 billion in assets and covered persons with more than $10 billion in assets currently report data under HMDA and thus will receive these benefits. The Bureau believes the final rule will provide modest benefits to such institutions, by saving on one-time adjustment costs required to shift in and out of collection. Sc~|~??lW@l If an applicant applies through an electronic medium without video capability, the creditor treats the application as if it were received by mail. If the debt collector does not provide . The regulation also requires creditors to notify applicants of action taken on their applications; to report credit history in the names of both spouses on an account; to retain records of credit applications; to collect information about the applicant's race and other personal characteristics in applications for certain dwelling-related loans; The revisions and additions read as follows: 1. The Enterprises, under the conservatorship of the FHFA, issued a revised and redesigned URLA on August 23, 2016 (2016 URLA). i. During this period, a creditor adopting the practice of permitting applicants to self-identify using disaggregated ethnic and racial categories as instructed in the Regulation C appendix is also deemed to be in compliance with Regulation B 1002.13(a)(1)(i) even though applicants are asked to self-identify using categories other than those explicitly provided in that section. This PDF is This feature is not available for this document. A general description of the regulation, by section, follows. Specifically, section 1022(b)(2)(A) of the Dodd-Frank Act calls for the Bureau to consider the potential costs of a regulation to consumers and covered persons, including the potential reduction of access by consumers to consumer financial products or services; the impact on depository institutions and credit unions with $10 billion or less in total assets as described in section 1026 of the Dodd-Frank Act; and the impact on consumers in rural areas. The Bureau believes that such guidance would add complexity and compliance burden on creditors without furthering the purposes of ECOA, and so declines to do so as part of this rulemaking. (12 USC 5514(a)(1)(B)). Definition. with the applicable provisions of Regulation B described below. [16] Questions regarding ethnicity, race, sex, marital status, and age may be listed, at the creditor's option, on the application form or on a separate form that refers to the application. 13. The Bureau does not believe that these comments are relevant to the 2017 ECOA Proposal and do not provide a basis to change the approach proposed by the Bureau in the 2017 ECOA Proposal. For applications subject to 1002.13(a)(1), a creditor may choose on an application-by-application basis whether to collect aggregate information pursuant to 1002.13(a)(1)(i)(A) or disaggregated information pursuant to 1002.13(a)(1)(i)(B) about the ethnicity and race of the applicant. [18] In light of proposed 1002.5(a)(4), the Bureau also proposed to amend 1002.12(b)(1)(i) to require retention of certain protected applicant-characteristic information obtained pursuant to proposed 1002.5(a)(4). 1. A place where you can easily find solutions and ask questions With respect to the open-end line of credit threshold for HMDA reporting, the Bureau adopted amendments to Regulation C that temporarily increases the open-end line of credit threshold to 500 until January 1, 2020. 16. 210.2 Definitions.*. A synopsis of some of the more important points of Regulation B follows, and an examination program is provided for a more thorough review. The Bureau considered the comments, and adopts a modified final rule as described below in the section-by-section analysis. For example, an applicant who puts down his home as collateral will have additional information collected for monitoring compliance. =+f=?z)0p0+~#zSsTib5MuC={0z7&8J8],?8A eMa`?P2EDJaq{%c It also provides that the information must be retained pursuant to the requirements of 1002.12. Section 1002.13(c) sets forth disclosures a creditor must provide to an applicant when collecting the information set forth in 1002.13(a). [25] Two commenters supported the proposal regarding record retention, noting that it would facilitate Start Printed Page 45686monitoring of fair lending laws and serve ECOA's purposes and that it seemed appropriate given the proposed amendments to 1002.5(a)(4). The regulation requires written applications for the types of credit covered by 1002.13. The commenter disputed the Bureau's assessment that the potential alternative would impose substantial costs on Regulation B-only creditors. In the case of a two-to four-unit dwelling, the application is covered if the applicant intends to occupy one of the units as a principal residence. Register documents. Implemented by Regulation B. . The consumer advocacy groups stated that mandatory disaggregated collection would ensure uniform data collection practices and facilitate fair lending analysis, including identifying potential discrimination against racial and ethnic subgroups. In addition, the Bureau proposed to add commentary for 1002.5(a)(4) to provide guidance and proposed amendments to comment 5(a)(2)-2 to make conforming changes and further align Regulation B and revised Regulation C. 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