Written applications. The Bureau received no comments on proposed comment 13(c)-1, and so is finalizing comment 13(c)-1 as proposed. An application for an open-end home equity line of credit is not subject to this section unless it is readily apparent to the creditor when the application is taken that the primary purpose of the line is for the purchase or refinancing of a principal dwelling. Specifically, Subpart payors.ADefines terms and provides for administrative enforcement Subpart BSpecifies availability schedules, or time frames within which banks must make funds [42] The Bureau proposed to amend 1002.5(a)(4) to authorize creditors to collect such information under certain additional circumstances. [26] (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 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 collect applicant demographic information early in the collection process, when they have determined that the loan would be dwelling secured and primarily for a business or commercial purpose but may not yet have determined whether it meets the definition of a home purchase loan, refinancing, or home improvement loan under revised Regulation C. Collection of applicant demographic information at that point in the application process may allow for more consistent collection and may be easier to integrate into the application process when compared with collection after HMDA coverage has been determined. 41. Regulation J. Although these entities need not make any changes to their race and ethnicity collection procedures, they may desire to do so in the future by adopting the 2016 URLA. Once people know the reason for the denial, there is a strong incentive to correct the credit reports and reapply. 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. Commenters also noted that it would facilitate use of the 2016 URLA. Proposed 1002.5(a)(4) provides authorization to collect applicant demographic information, but does not require collection in the circumstances described. The Bureau also proposed to amend comment 12(b)-2 to require retention of applicant demographic information obtained pursuant to 1002.5(a)(4). Investopedia does not include all offers available in the marketplace. The creditor must note the monitoring information on the basis of visual observation or surname, if the applicant chooses not to provide the information. 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. Transactions not covered. legal research should verify their results against an official edition of Home Mortgage Disclosure (Regulation C), 79 FR 51731 (Aug. 29, 2014). Reg. An industry service provider suggested the Bureau standardize the treatment of co-applicants between 1002.13 and Regulation C. The commenter noted that the two rules imposed different requirements where there are multiple applicants, stating that while 1002.13 requires a financial institution to collect information from any applicant who is a natural person, the revised Regulation C appendix instructs a financial institution to provide applicant demographic information for only the applicant and the first co-applicant listed on the collection form. A credit union trade association explicitly opposed the alternative, asserting that its members would be unduly burdened by mandatory collection of disaggregated race and ethnicity information. headings within the legal text of Federal Register documents. on The Bureau is finalizing the amendments to 1002.12(b)(1)(i) and comment 12(b)-2 as proposed. %%EOF Adverse action is also a negative action that impacts employment. The Bureau believes that most creditors will voluntarily adopt a consistent collection method because uniform practices are generally easier and less costly for creditors to implement. The Bureau received some comments on the topic. The Bureau acknowledges that the preamble to the proposed rule stated that 1002.12(b)(1) required retention of certain records for 25 months and did not acknowledge the different 12 month period for business credit provided for in 1002.12(b)(1). 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). The documents posted on this site are XML renditions of published Federal documents in the last year, 662 Dodd-Frank Act Section 1022(b) Analysis, B. We also reference original research from other reputable publishers where appropriate. Unlike financial institutions covered by Regulation C, creditors subject to 1002.13 but not to Regulation C are required only to collect and retain, but not to report, the required protected applicant-characteristic information. Because the Enterprises have not announced a cutover date for the mandatory use of the 2016 URLA, the Bureau is finalizing January 1, 2022, as the effective date for the removal of the 2004 URLA from the Regulation B appendix. documents in the last year, 87 Persons such as loan brokers and correspondents do not violate the ECOA or Regulation B if they collect information that they are otherwise prohibited from collecting, where the purpose of collecting the information is to provide it to a creditor that is subject to the Home Mortgage Disclosure Act or another Federal or state statute or regulation requiring data collection. for better understanding how a document is structured but daily Federal Register on FederalRegister.gov will remain an unofficial . If a creditor takes an application through an electronic medium that allows the creditor to see the applicant, the creditor must treat the application as taken in person. Regulation B protects consumers and prohibits lenders from discriminating based on age, gender, ethnicity, nationality, or marital status. Hubungi Kami. 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. The regulation requires written applications for the types of credit covered by 1002.13. Federal Reserve. documents in the last year, 83 78121)(December 16, 2011). 23. The current Regulation B appendix includes the 2004 URLA as a model form for use in complying with 1002.13. 35. documents in the last year, 983 Regulation B of the Equal Credit Opportunity Act (ECOA) describes lending acts and practices that are specifically prohibited, permitted, or required. For the reasons provided below, the Bureau is adopting the revisions to 1002.13(b) concerning the collection of ethnicity and race information on the basis of visual observation or surname as proposed. 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. Will Kenton is an expert on the economy and investing laws and regulations. 2. These can be useful 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. A large number of industry commenters supported the proposed amendments to 1002.13(a)(1)(i). Commenters noted that the five-year timeframe for 1002.5(a)(4)(i), (ii), and (iii) was realistic and would provide enough time to allow institutions to keep their systems updated, but not so long that it would be unlikely the institution would become a HMDA reporter again. The Bureau did not propose these changes to Regulation B. Fannie Mae, Uniform Residential Loan Application, https://www.fanniemae.com/singlefamily/uniform-residential-loan-application# (last visited Sept. 6, 2017). Section 1002.12(b)(1) provides that creditors must retain records for 12 months for business credit, except as provided in 1002.12(b)(5). Until the ACFR grants it official status, the XML 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. Covered institutions will report the disaggregated information provided by applicants. In the 2017 ECOA Proposal, the Bureau proposed to amend comment 13(b)-1 to reference the data collection model forms the Bureau proposed to provide in the Regulation B appendix. The fifth model form, the 2004 URLA, is described in the Regulation B appendix as appropriate for residential mortgage transactions and contains a model disclosure for use in complying with current 1002.13. 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. documents in the last year. 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. 10. Through this proposed change, creditors taking applications for loans subject to 1002.13(a)(1) but not required to submit HMDA data under Regulation C would have the option of either maintaining their current collection practices or transitioning to the revised Regulation C collection practices and the 2016 URLA. A small financial institution commenter advocated for eliminating the Regulation B requirement to collect and retain race and ethnicity information. Regulation B covers the actions of a creditor before, during, and after a credit transaction. 43. 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. Prohibited basis under Regulation B refers to a borrower's race, color, religion, national origin, sex, marital status, or age. 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. The Bureau believes that making collection of disaggregated race and ethnicity an option for all entities covered by Regulation B will pose little or no additional burden on those entities who are not HMDA reporters. New Documents The Enterprises, not the Bureau, mandate the adoption of the 2016 URLA. Moreover, the commenter did not address the limited usefulness of disaggregated race and ethnicity data from lenders with a very low volume of loan originations. 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. endstream endobj startxref 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. 03/01/2023, 43 Press Release, Uniform Mortgage Data Program, Fannie Mae and Freddie Mac at the direction of the FHFA, URLA Implementation Guidance and Update, (Nov. 1, 2016), available at https://www.fanniemae.com/content/news/urla-announcement-november-2016.pdf;; Uniform Mortgage Data Program, Fannie Mae and Freddie Mac at the direction of the FHFA, Uniform Residential Loan Application (URLA)/Uniform Loan Application Dataset (ULAD) FAQs, at 6 (Nov. 1, 2016), available at https://www.fanniemae.com/content/faq/urla-ulad-faqs.pdf. P}j]+VuuYZcU? Such entities likely serve primarily customers in rural areas. However, revised Regulation C will not require or permit covered institutions to use the disaggregated subcategories when collecting and reporting the applicant's ethnicity and race based on visual observation or surname.[13]. on 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). For complete information about, and access to, our official publications These changes will primarily benefit institutions that may be near the loan volume reporting threshold, such that they may be required to report under HMDA and Regulation C in some years and not others, or may be uncertain about their reporting status. 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. The Bureau is adopting 1002.5(a)(4)(vi) to address the commenter's suggestion by clarifying that the collection of applicant demographic information for additional borrowers is permitted. Creditors subject to the Home Mortgage Disclosure Act should be aware, however, that data collection may be called for under Regulation C (12 CFR part 1003), which generally requires creditors to report, among other things, the sex and race of an applicant on brokered applications or applications received through a correspondent. The Bureau is now publishing final amendments to Regulation B. Having considered the comments received and for the reasons discussed above, the Bureau is finalizing 1002.5(a)(4)(i) through (iv) generally as proposed with minor wording changes for clarity, finalizing new 1002.5(a)(4)(v) and (vi), and finalizing the conforming amendments to comment 5(a)(2)-2 and new comment 5(a)(4)-1 as proposed. But an application for both a temporary loan to finance construction of a dwelling and a permanent mortgage loan to take effect upon the completion of construction is subject to 1002.13. [11] Many HMDA reporters are also subject to the collection requirements of 1002.13. 1691b. 2. 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 this clarification will simplify collection practices and reduce compliance burden by aligning Regulation B and Regulation C. The clarification will also allow Regulation B-only creditors to maintain their existing practices under 1002.13 if so desired. The Bureau did not propose these changes in the 2017 ECOA Proposal. iii. In light of the revisions to 1002.13(a)(1)(i), the amendment to the Regulation B appendix to provide two additional model forms, and the fact that the Bureau separately approved use of the 2016 URLA in the Bureau Approval Notice, the Bureau proposed to remove the 2004 URLA as a model form in Regulation B. Similarly, an industry commenter stated that the collection methods used in Regulation B and Regulation C should match. Federal Reserve. The current and revised Regulation C appendix include instructions and a data collection model form for collecting applicant demographic information. If the transaction is subject to 1002.13 or the creditor is collecting information pursuant to 1002.5(a)(4), however, the creditor is required to enter and retain the data on personal characteristics in order to comply with the requirements of that section. 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. [4], The HMDA requirement to collect and report applicant information was recently updated through a final rule amending Regulation C, published in October of 2015 (2015 HMDA Final Rule). Sec. The final rule may have benefits to some Regulation B-only creditors. 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. All lenders are required to comply with Regulation B, which protects applicants from discrimination. The Bureau does not believe that consumers will experience any costs or benefits from this provision except to the extent that financial institutions achieve cost savings and pass any such cost savings on to their customers. 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. [15] 5. HUMo8W,"Z[$hAX][RmyZ#=({x~6VX,k:JT%CXI qhTpz [40] The FFIEC call report for banks does not report originations for depository institutions that do not report to HMDA. I'd first recommend that you go review this section and the applicable Official Staff Commentary. 24. The commenter disputed the Bureau's assessment that the potential alternative would impose substantial costs on Regulation B-only creditors. Reg B mandates that lenders provide explanations to rejected applicants within 30 days of receiving their completed applications. "CFPB Consumer Laws and Regulations ECOA.". 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. The requirements of the regulation apply only to an account for which an agreement for EFT services to or from the account has been entered into between: i. 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. Temporary financing. documents in the last year, 36 %PDF-1.6 % 6. The laws that cover collection policies and procedures are mandated by federal and state governments. 44. Creditors can ask about the number of children, their ages, and the borrower's financial obligations relating to the children. 6. documents in the last year, 1408 One of these commenters stated that the collection of applicant demographic information is duplicative of Regulation C and that removing this requirement in Regulation B would reduce burden. If an applicant applies through an electronic medium without video capability, the creditor treats the application as if it were received by mail. 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