The first three implement the EFA Act, and the fourth implements Check 21. Section 1002.13 sets forth the scope, required information, and manner for the mandatory collection of certain protected applicant-characteristic information under Regulation B. While use of the model forms is optional, if a creditor uses the appropriate model form, or modifies a form in accordance with the instructions provided in the Regulation B appendix, that creditor is deemed to be acting in compliance with 1002.5(b) through (d).[38]. The Enterprises also made available a Demographic Information Addendum, which is identical in form to section 7 of the 2016 URLA. Your institution is required to establish procedures to ensure that it complies with the requirements of Regulation CC and to provide a copy of these procedures to all employees who perform duties affected by the regulation. A creditor that receives an application to refinance an existing extension of credit made by that creditor for the purchase of the applicant's dwelling may request the monitoring information again but is not required to do so if it was obtained in the earlier transaction. Regarding the provision to allow certain creditors to voluntarily collect demographic information, the Bureau believes the financial institutions that will most likely exercise such options will be low-volume, low-complexity institutions that have made a one-time investment in HMDA collection and reporting and would like to utilize that collection process already in place. Yes. Based on the applicant's race, marital status, nationality, gender, age, or religion, Against an applicant whose income comes from a public assistance program, Against an applicant who, in good faith, exercised his or her rights under the, The spouse will be permitted to use the account, The spouse will be contractually liable for the account, The applicant is relying on the spouse's income as a basis for repayment of the credit requested, The applicant resides in a community property state or relies on property located in such a state as a basis for repayment of the credit requested. Some or all of these institutions may also not have been required to report HMDA data. The Bureau proposed that the 2004 URLA be removed on the cutover date the Enterprises designate for use of the 2016 URLA or January 1, 2022, whichever comes first. The Bureau received several comments on the proposal concerning the 2015 HMDA Final Rule. 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). 0 The information must be retained pursuant to the requirements of 1002.12. The Bureau received no comments specifically addressing the revisions to proposed comment 13(b)-1, and so is finalizing it as proposed. 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. Regulation B 1002.5(a)(4)(i) and (ii) as finalized in this rule correspond to those provisions in revised Regulation C and permit the collection of applicant demographic information necessary to facilitate that optional reporting. 19. This appendix also contains a data collection model form for collecting information concerning an applicant's ethnicity, race, and sex that Start Printed Page 45695complies with the requirements of 1002.13(a)(1)(i)(A) and (ii). The Bureau did not propose these changes in the 2017 ECOA Proposal. The Bureau declines to consider the proposals to eliminate altogether the requirement to collect applicant demographic information on the basis of visual observation or surname in 1002.13 or to provide further instructions on how to collect such information as both proposals go beyond the issues on which the Bureau solicited comment. Second, for creditors collecting aggregate applicant demographic information pursuant to 1002.13(a)(1)(i)(A) and (ii), the Bureau proposed to amend the Regulation B appendix to add a model form. A mortgage loan application must be documented using the URLA in the mortgage loan file for the loan to be eligible for sale to the Enterprises. 6. 44. Appendix B to 12 CFR part 1003 provides a data collection model form for collecting information concerning an applicant's ethnicity, race, and sex that complies with the requirements of 1002.13 (a) (1) (i) (B) and (ii). "Federal Fair Lending Regulations and Statutes: Equal Credit Opportunity (Regulation B)," Page 1. The Bureau received approximately 36 comments on the 2017 ECOA Proposal during the comment period from consumer advocacy groups, national and State trade associations, banks, individuals, and industry service providers. The primary difference between these proposals and the collection permitted by final 1002.5(a)(4)(i), (ii), and (iii) would be the removal of the five-year timeframe. Collecting information on behalf of creditors. The Enterprises, currently under the conservatorship of the Federal Housing Finance Agency (FHFA), prepare and periodically revise the URLA used by many lenders for certain dwelling-related loans. 2. It is possible that the NMLS omits some non-depository institutions that originated at least 25 closed-end mortgages, did not report HMDA data, and are subject to Regulation B. An applicant's age can be requested if it appears that they cannot legally sign a contract. Only official editions of the 1691 et seq. Sc~|~??lW@l Federal Register issue. The Bureau proposed to revise the Regulation B appendix to provide two additional model forms for use in complying with 1002.13. The RFA defines a small business as a business that meets the size standard developed by the Small Business Administration pursuant to the Small Business Act. Until the ACFR grants it official status, the XML Purpose, What Is the Consumer Credit Protection Act (CCPA)? on There are three reasons, however, that this rule will likely have a limited effect on fair lending analysis. The Bureau did not intend to extend the record retention period under Regulation B for business credit transactions through the proposal and this final rule does not do so. No commenters provided such data. Investopedia requires writers to use primary sources to support their work. . Refinancings. Demographic information collected under Regulation B by those institutions with larger loan volumes may be used in statistical analysis that supports fair lending supervision and enforcement. 11. B prohibited practices (12 C.F.R. (vi) A creditor that is collecting information regarding the ethnicity, race, and sex of an applicant or first co-applicant may collect information regarding the ethnicity, race, and sex of a second or additional co-applicant for a covered loan under 12 CFR 1003.2(e) or for a second or additional co-applicant for a loan described in paragraphs (a)(4)(i) through (v) of this section. Similarly, because the substance and form of section 7 of the 2016 URLA is substantially similar to the form the Bureau provides as a model form in Regulation C, the 2016 URLA may be used in complying with 1002.13. Comment 5(a)(4)-1 provides that information regarding ethnicity, race, and sex that is not required to be collected pursuant to Regulation C may nevertheless be collected under the circumstances set forth in 1002.5(a)(4) without violating 1002.5(b). In July 2014, the Bureau proposed amendments to Regulation C to implement the Dodd-Frank Act changes to require collection, recording, and reporting of additional information to further HMDA's purposes, and to modernize the manner in which covered institutions report HMDA data. The Enterprises have announced that they will cease accepting older versions of the URLA at a date to be determined and require firms that sell to the Enterprises to use the 2016 URLA form. documents in the last year, 121 The Bureau did not receive any comments on the analysis or data. Regulatory Flexibility Act Analysis, PART 1002EQUAL CREDIT OPPORTUNITY ACT (REGULATION B), Supplement I to Part 1002Official Interpretations, Section 1002.5Rules Concerning Requests for Information, Section 1002.13Information for Monitoring Purposes, https://www.federalregister.gov/d/2017-20417, MODS: Government Publishing Office metadata, https://www.consumerfinance.gov/policy-compliance/guidance/, https://www.fanniemae.com/singlefamily/selling-servicing-guide-forms, http://www.freddiemac.com/singlefamily/guide/, http://www.census.gov/prod/cen2010/briefs/c2010br-02.pdf, https://www.fanniemae.com/content/guide/selling/b1/1/01.html;, http://www.freddiemac.com/singlefamily/guide/bulletins/snapshot.html, https://www.fanniemae.com/singlefamily/uniform-residential-loan-application, https://www.fanniemae.com/content/news/urla-announcement-august-2016.pdf, https://www.fanniemae.com/content/guide_form/urla-demographic-addendum.pdf, https://www.fanniemae.com/content/news/urla-announcement-november-2016.pdf;, https://www.fanniemae.com/content/faq/urla-ulad-faqs.pdf. 3. The Bureau is issuing this final rule pursuant to its authority under section 703 of ECOA, as amended by section 1085 of the Dodd-Frank Act. As further discussed in the Section 1022(b) analysis below, the Bureau believes that the additional burden would have few benefits. 2. The authority citation for part 1002 continues to read as follows: Authority: ECOA section 703 serves as a source of authority to establish rules concerning the taking and evaluation of credit applications, collection and retention of applicant demographic information concerning the applicant or co-applicant, use of designated model forms, and substantive requirements to carry out the purposes of ECOA. Transactions not covered. One industry commenter supporting the proposal stated that mandating disaggregated collection for all creditors would be unduly burdensome. documents in the last year, 822 The rule is effective on January 1, 2018, except that the amendment to Appendix B to Part 1002 revising paragraph 1 and removing the existing Uniform Residential Loan Application form in amendatory instruction 6 is effective January 1, 2022. The President of the United States issues other types of documents, including but not limited to; memoranda, notices, determinations, letters, messages, and orders. Use the PDF linked in the document sidebar for the official electronic format. (In this document, applicant demographic information refers to information about an applicant's ethnicity, race, or sex information, while certain protected applicant-characteristic information refers to all information collected under 1002.13, including age and marital status.) 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). Various consumer advocacy groups also opposed proposed comment 13(a)-8, arguing that the instruction could encourage creditors to develop and maintain haphazard, inaccurate, and inconsistent data collection methods. 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. 5. Regulation B of the Equal Credit Opportunity Act (ECOA) describes lending acts and practices that are specifically prohibited, permitted, or required. Consumer Finance Protection Bureau. As discussed below in the section-by-section analysis for 1002.13, the Bureau is amending 1002.13(b) to permit, but not require, creditors to collect the information set forth in 1002.13(a) from a second or additional co-applicant. Sections with amendments are marked with an asterisk (*). 2430 0 obj <> endobj [41] The Bureau believes that rural areas might benefit from the provision to allow collection of disaggregated race and ethnicity information more than urban areas. Reg B mandates that lenders provide explanations to rejected applicants within 30 days of receiving their completed applications. 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. The Bureau believes that the interim final rule will benefit consumers and covered persons by updating and recodifying Regulation B to reflect the transfer of authority to the Bureau and certain other changes mandated by the Dodd-Frank Act. Under Section 1002.5Rules concerning requests for information: b. Current 1002.13(a)(1) requires that creditors collect information regarding the applicant's ethnicity and race using two aggregate ethnicity categories (Hispanic or Latino and Not Hispanic or Latino) and five aggregate race categories (American Indian or Alaska Native, Asian, Black or African American, Native Hawaiian or Other Pacific Islander, and White). If the debt collector does not provide . The Bureau is adopting comment 13(a)-8 as proposed. Computerized decisions. 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. Interagency guidance was issued in 2005. The notice must explain why the applicant was rejected or give instructions for how the applicant can request this information. alteration, or termination of credit; collection procedures. documents in the last year, 940 3501 et seq. 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. A creditor that accepts an application by telephone or mail must request the monitoring information. endstream endobj startxref [5] First, Regulation B-only creditors will not be required to permit applicants to self-identify using disaggregated ethnicity and race categories, likely resulting in few creditors adopting disaggregated ethnicity and race categories. *. Under 1002.13(a)(1), creditors that receive an application for credit primarily for the purchase or refinancing of a dwelling occupied (or to be occupied) by the applicant as a principal residence, where the extension of credit will be secured by the dwelling, must collect certain protected applicant-characteristic information, including specified race and ethnicity categories. The criteria for being a financial institution and reporting transactions under HMDA are different in some ways from the criteria for reporting under the NMLS Mortgage Call Report and reporting transactions under it. 1. informational resource until the Administrative Committee of the Federal better and aid in comparing the online edition to the print edition. on procedures. Regulation C implements HMDA and sets out specific requirements for the collection, recording, reporting, and disclosure of mortgage lending information, including a requirement to collect and report applicant demographic information. An industry service provider suggested the Bureau standardize the treatment of co-applicants between 1002.13 and Regulation C. 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