For instance, the 2015 NCUA Call Report and the 2015 Nationwide Mortgage Licensing System & Registry (NMLS) Mortgage Call Report data include 489 credit unions and 161 non-depository institutions that originated at least 25 closed-end mortgages that are not found in the 2015 HMDA data. The Bureau received no comments specifically addressing the revisions to proposed comment 13(b)-1, and so is finalizing it as proposed. Prior to Reg B, discriminatory lending practices such as redlining for mortgages was prevalent in the U.S. Regulation B makes such practices illegal. See revised Regulation C 1003.2(e). 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. The date Start Printed Page 45690for removal of the 2004 URLA from the Regulation B appendix is discussed further in the Effective Date section below. (ii) Section 1002.12(b) relating to record retention. In support, one of the commenters cited a report finding that 10 million Americans change their racial and ethnic identifications between U.S. Census surveys. 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. In addition, the Bureau is adopting new 1002.5(a)(4)(v) and (vi) in response to comments, as discussed below. This compensation may impact how and where listings appear. Scope. Transactions not covered. at 66314 (amendments to appendix B to Regulation C, effective January 1, 2018). A creditor may devise its Start Printed Page 45697own disclosure so long as it is substantially similar. 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). include documents scheduled for later issues, at the request The offers that appear in this table are from partnerships from which Investopedia receives compensation. A small financial institution commenter advocated for eliminating the Regulation B requirement to collect and retain race and ethnicity information. 1375, 2035-39 (2010) (codified at 12 U.S.C. About the Federal Register [16] [18] When it comes to credit transactions, a creditor cannot discriminate: Regulation B also mandates that lenders provide oral or written notice of rejection to failed applicants within 30 days of receiving their completed applications. 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. Without a corresponding record retention requirement, a creditor might collect but not retain the information, thus preventing the use of the information for these purposes. Dodd-Frank Act Section 1022(b) Analysis, B. Start Printed Page 45687Thus, the Bureau concludes that retaining 1002.13 serves the purposes of ECOA to promote the availability of credit to all creditworthy applicants without regard to protected characteristics. documents in the last year, 87 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 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. documents in the last year, 121 The other commenter asserted that collection of applicant demographic information requires significant time and resources for Regulation B-only creditors and that the information is virtually never used. In addition, many community banks in rural areas are already exempt from HMDA reporting because they do not have a branch or home office in an MSA. The documents posted on this site are XML renditions of published Federal on That is, the CFPB interprets FDCPA section 808 (1) to permit collection of an amount only if: (1) the agreement creating the debt expressly permits the charge and some law does not prohibit it; or (2) some law expressly permits the charge, even if the agreement creating the debt is silent. The Bureau published a final rule on October 28, 2015, amending Regulation C, with many of the amendments taking effect January 1, 2018. It creates consumer protections and rights and imposes responsibilities on banks as users of consumer reports and entities furnishing information to the consumer reporting agencies. 38. documents in the last year, by the International Trade Commission The Bureau also proposed to remove the outdated 2004 URLA from the Regulation B appendix, add generic model forms for compliance with 1002.13, and maintain approval of the 2016 URLA through a freestanding approval notice. 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). to the courts under 44 U.S.C. The proposal was published in the Federal Register on April 4, 2017.[22]. 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). Reg. [6] Creditors can ask about the number of children, their ages, and the borrower's financial obligations relating to the children. at 43132 (1003.3(c)(11) and (12)). Sec. The Bureau received no comments opposing and one comment supporting the proposed amendments and so is finalizing the Regulation B appendix to provide alternative model forms as proposed. Section 1002.13 sets forth the scope, required information, and manner for the mandatory collection of certain protected applicant-characteristic information under Regulation B. 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. 80 FR 66128, 80 FR 66140, and 66144 (Oct. 28, 2015). No commenters provided such data. The final rule may have benefits to consumers, to the extent that lending entities voluntarily choose to collect disaggregated race and ethnicity information. The creditor must note the monitoring information on the basis of visual observation or surname, if the applicant chooses not to provide the information. The Enterprises, not the Bureau, mandate the adoption of the 2016 URLA. One industry commenter requested clarification that use of the 2016 URLA complies with Regulation B. Federal Reserve. 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, which, as related to 1002.13, is limited to modifications that harmonize the collection requirements of Regulation B and Regulation C. For the reasons discussed above, the Bureau is adopting 1002.13(a)(1)(i) and comments 13(a)-7 and 13(a)-8 as proposed. ), Federal agencies are generally required to seek the Office of Management and Budget (OMB)'s approval for information collection requirements prior to implementation. The amendment to 1002.13(b) in the 2017 ECOA Proposal would not impose any new obligation on creditors to collect an applicant's ethnicity and race on the basis of visual observation or surname but, rather, would limit such collection to the aggregate ethnicity and race categories, even if the creditor permits an applicant to self-identify using the disaggregated categories. 1691b; Public Law 111-203, 124 Stat. (b) Obtaining information. 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. developer tools pages. See revised Regulation C 1003.3(c)(10). The applicant(s) shall be asked but not required to supply the requested information. 18. 35. Until the ACFR grants it official status, the XML 12 U.S.C. 2458 0 obj <>stream The Bureau believes that the provision to change the model forms for collecting race and ethnicity data will have modest benefits to firms collecting these data, by providing updated model forms, and reducing confusion regarding the outdated 2004 URLA. With the introduction of the 2016 URLA the Bureau believes that permitting collection of applicant demographic information in this narrowly tailored circumstance may be beneficial for some financial institutions because it would allow them to use more easily standard forms for collection of applicant demographic information without identifying at the time of collection which applicants are the primary and first co-applicant. However, there are certain times when such information can be collected from the applicant. 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. documents in the last year, 37 (b) Securities credit (1) Definition. In December 2011, the CFPB restated the Federal Trade Commission's implementing regulation at 12 CFR Part 1006 (76 Fed. ii. Home Mortgage Disclosure (Regulation C), 79 FR 51731 (Aug. 29, 2014). [27] Regulation CC contains four subparts. documents in the last year, 1408 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. 3501 et seq. [32] The Bureau is therefore not requiring the collection of disaggregated categories for Regulation B-only creditors. Moreover, the cited studies conclude only that some applicants may self-identify as different races over time and that visual observation of race is not always accurate. Commenters also noted that it would facilitate use of the 2016 URLA. [39] that agencies use to create their documents. The spouses of rejected married applicants also have the right to this information. Information required by Regulation C. Regulation C, 12 CFR part 1003, generally requires creditors covered by the Home Mortgage Disclosure Act (HMDA) to collect and report information about the race, ethnicity, and sex of applicants for certain dwelling-secured loans, including some types of loans not covered by 1002.13. Two industry groups suggested that the Bureau remove 1002.13 altogether. One industry commenter also noted that the 2016 URLA includes a form for the collection of applicant demographic information for additional borrowers and does not necessarily limit the collection to the applicant and the first co-applicant, even though Regulation C requires financial institutions to provide the ethnicity, race and sex information only for the applicant and first co-applicant. 1. Appendix B to this part provides for two alternative data collection model forms for use in complying with the requirements of 1002.13(a)(1)(i) and (ii) to collect information concerning an applicant's ethnicity, race, and sex. 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. are not part of the published document itself. The Bureau solicited comment on its proposal to allow creditors to collect applicant race and ethnicity information using, at the creditor's option, either aggregate or disaggregated categories. A Rule by the Consumer Financial Protection Bureau on 10/02/2017. The information must be retained pursuant to the requirements of 1002.12. I'd first recommend that you go review this section and the applicable Official Staff Commentary. A number of commenters recommended alternative approaches to proposed 1002.13(a)(1)(i). Subpart A--Collection of Checks and Other Items By Federal Reserve Banks. electronic version on GPOs govinfo.gov. While final 1002.5(a)(4) provides a narrow exception to the general limitations in 1002.5(b) through (d), these alternative proposals would create a much broader exception to the general limitations on collecting such information in Regulation B. 4, 2017). When a creditor collects ethnicity and race information pursuant to 1002.13(a)(1)(i)(B), the creditor must comply with any restrictions on the collection of an applicant's ethnicity or race on the basis of visual observation or surname set forth in appendix B to 12 CFR part 1003. The rule change therefore will not require Regulation B creditors that are not HMDA reporters (Regulation B-only creditors) to change their 1002.13 compliance practices, but would allow them to adopt voluntarily new practices for collecting applicant information, including practices that would permit such creditors to transition to the 2016 URLA. An industry service provider also supported a uniform standard based on the requirements in revised Regulation C in order to reduce the costs of supporting dual collection methods. hb```l~1DFFAFFfFFAAFg=5v_-09# O;$pIr$;[S3kX}],FO"em b?yrYZZFGD(A(fU6'UWlQ+\s0 $Hie+H[qUReJ,'$( b0ptxt0 @` vqm9@i#1;s{/8pqoFGiM [j iq+:Hc` c0 5 03/01/2023, 159 5. Principal residence. 8. Both ECOA and title X of the Dodd-Frank Act are consumer financial laws. One commenter noted that Regulation B 1002.12(b)(1) provides a 25-month record retention period for most transactions, but a 12-month period for business credit transactions, and that the Bureau's proposal would create a longer retention period for business credit for which a creditor voluntarily collected applicant demographic information under proposed 1002.5(a)(4). Inadvertent notation. 2. The regulation covers topics such as: Prohibition on kickbacks and unearned fees Mortgage origination and servicing disclosures Affiliated business arrangements Title insurance Escrow accounts List of homeownership counseling organizations Mortgage loan servicing requirements Force-placed insurance @*EtJ '_whyb.v'Yc:E| t%]C@bkBZSAqqu`2B6G\#; The authority citation for part 1002 continues to read as follows: Authority: 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. The consumer and the financial institution (including an account for which an access device has been issued to the consumer, for example); ii. Accounts covered. The rule amends the Regulation B appendix to provide two options: A model form for collecting aggregate applicant race and ethnicity information and a cross-reference to the Regulation C appendix model form for collecting disaggregated applicant race and ethnicity information. Procedures for providing disclosures. During this period, a creditor adopting the practice of permitting applicants to self-identify using disaggregated ethnic and racial categories as instructed in the revised Regulation C appendix shall be deemed to be in compliance with Regulation B 1002.13(a)(i). The Bureau is adopting comment 13(a)-8 as proposed. 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