does reg b cover collection proceduresdoes reg b cover collection procedures

Accordingly, 1002.5(a)(4)(vi) permits a creditor that is collecting information regarding the ethnicity, race, and sex of an applicant or first co-applicant to collect information regarding the ethnicity, race, and sex of a second or additional co-applicant for a covered loan under Regulation C 1003.2(e), or for a loan described in paragraphs (a)(4)(i) through (v). 36. 1691 et seq. 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. Financial institutions that report under Regulation C, have reported in the prior five years, or may report in the near future may also be affected by this rule. [202.9(a)(3)(i)(B)] We designed the application to include those disclosures. [24] 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. All lenders are required to comply with Regulation B when extending credit to borrowers under the Equal Credit Opportunity Act (ECOA), which is regulated and enforced by the Consumer Financial Protection Bureau (CFPB). The commenter asserted the resulting data are never used by regulators, while the collection and retention imposes a substantial burden. 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. 80 FR 66128, 80 FR 66140, and 66144 (Oct. 28, 2015). [40] Reg. endstream endobj startxref These include white papers, government data, original reporting, and interviews with industry experts. 1503 & 1507. reg b covers collection procedures These comments were primarily from small financial institutions. Information regarding ethnicity, race, and sex that is not required to be collected pursuant to Regulation C, 12 CFR part 1003, may nevertheless be collected under the circumstances set forth in 1002.5(a)(4) without violating 1002.5(b). The Bureau specifically sought input from these agencies concerning their use of applicant ethnicity and race information collected under 1002.13 but not reported or anticipated to be reported under Regulation C and their views on appropriate standards for collection and retention of this 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. Information that a creditor is allowed to collect pursuant to a state statute or regulation includes information required by a local statute, regulation, or ordinance. The requirements of 1002.13 apply only if an application relates to a dwelling that is or will be occupied by the applicant as the principal residence. 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). hXmo6+}wR@ N@WMv3Asc~HRHmP0(@J-,9)|PP9hZhkhF4+Ao j1x- sjzIwK[MvS}4=$BUzw3$ Section 1002.12 provides rules concerning permissible and required record retention. documents in the last year, 287 The commenters proposed that the requirement to collect applicant demographic information on the basis of visual observation or surname should be eliminated or that the Bureau provide additional instructions to aid creditors to identify an applicant's ethnicity and race based on visual observation or surname. 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). 33. Appendix B to part 1002, at paragraphs 1, 3. If a creditor collects disaggregated race and ethnicity information pursuant to 1002.13(a)(1)(i)(B), proposed 1002.13(b) provided that a creditor must comply with the restrictions on the collection of an applicant's ethnicity and race on the basis of visual observation or surname set forth in the revised Regulation C appendix, which limits such collection to the aggregate race and ethnicity categories. Finally, the Bureau believes many entities will adopt the 2016 URLA as part of the course of business and thus permit applicants to self-identify using disaggregated race and ethnicity categories. 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. 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. The commenter suggested that the Bureau revise 1002.5(b) to permit collection of demographic information for any additional co-applicants using the 2016 URLA. In the case of a conflict between state and federal law, federal law prevails. Interagency guidance was issued in 2005. "CFPB Consumer Laws and Regulations ECOA.". 16. Creditors can ask about the number of children, their ages, and the borrower's financial obligations relating to the children. 2. The Bureau concluded that the proposal, if adopted, would not have a significant economic impact on any small entities and that an IRFA was therefore not required. %PDF-1.6 % The collections of information related to Regulation B and Regulation C have been previously reviewed and approved by OMB and assigned OMB Control Number 3170-0013 (Regulation B) and 3170-0008 (Regulation C). In addition to the amendment to Regulation B in the proposal, the Bureau Start Printed Page 45692considered two alternatives to address the differing race and ethnicity requirements of Regulation B and revised Regulation C. The Bureau considered requiring all creditors subject to the collection and retention requirement of Regulation B to permit applicants to self-identify using disaggregated race and ethnicity categories. At the same time, mandatory use of disaggregated collection of race and ethnicity categories would impose greater costs on creditors than the Bureau's proposal, particularly on smaller entities. [2] 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. [12/09/14] (Reg AB Telephone Interpretation 17.06) 200.07 Rule 15Ga-1 The Bureau also proposed to revise comment 13(b)-1 to reiterate that when a creditor collects only aggregate ethnicity and race information pursuant to 1002.13(a)(1)(i)(A), the applicant must be offered the option to select more than one racial designation. iii. 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. 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. 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. Director, Bureau of Consumer Financial Protection. See Fannie Mae, Uniform Residential Loan Application, https://www.fanniemae.com/singlefamily/uniform-residential-loan-application# (last visited Sept. 6, 2017); see also Press Release, Uniform Mortgage Data Program, Fannie Mae and Freddie Mac at the direction of the FHFA, The Redesigned URLA and ULAD Mapping Document Are Here!, (Aug. 23, 2016), available at https://www.fanniemae.com/content/news/urla-announcement-august-2016.pdf. 4, 2017). Sec. A number of commenters recommended alternative approaches to proposed 1002.13(a)(1)(i). 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. In developing the final rule, the Bureau has considered the potential benefits, costs, and impacts. Financial institutions originating fewer than 500 open-end lines of credit in either of the preceding two years will not be required to begin collecting such data until January 1, 2020. 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 FFIEC call report for banks does not report originations for depository institutions that do not report to HMDA. Any information unrelated to consumer credit cannot be used when making loan approval decisions. Such entities likely serve primarily customers in rural areas. Regulation B applies toall persons who, in the ordinary course of business, regularly participate in the credit decision of an applicant or borrower, including setting the terms of the credit. Both the Bureau's consultations with the prudential regulators and its own experience in fair lending enforcement indicate that these data are used. This temporary increase in the open-end threshold will provide time for the Bureau to consider whether to initiate another rulemaking to address the appropriate level for the open-end threshold for data collected beginning January 1, 2020. Regulation B of the Equal Credit Opportunity Act prohibits lenders from using ascribed characteristics of a borrower, such as their age, gender, race, ethnicity, or religion, when making credit or loan decision. The Bureau believes this practice of acknowledging future versions of the URLA via a Bureau Approval Notice rather than a revision to Regulation B will reduce the risk that the model form included in Regulation B will become outdated in the future. Prior to Reg B, discriminatory lending practices such as redlining for mortgages was prevalent in the U.S. Regulation B makes such practices illegal. The Bureau is now publishing final amendments to Regulation B. The appendix provides that the use of its model forms is optional under Regulation B but that, if a creditor uses an appropriate appendix B model form, or modifies a form in accordance with instructions provided in appendix B, that creditor shall be deemed to be acting in compliance with 1002.5(b) through (d). !qZ{r![6|(:9'nG%8}tB\iJ9 DIbsH NB8- The Equal Credit Opportunity Act (ECOA) is a federal civil rights law that forbids lenders to deny credit to an applicant based on any factor unrelated to the person's ability to repay. a. In addition, comment appendix B-2 provides that the home-improvement and energy loan application form prepared by the Enterprises, dated October 1986, complies with the requirements of Regulation B for some creditors but not others, depending on whether the creditor is governed by 1002.13(a) or subject to a substitute monitoring program under 1002.13(d). 1375, 2035-39 (2010) (codified at 12 U.S.C. In addition, there are state laws that provide protections. 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. documents in the last year, 87 1. A creditor may devise its Start Printed Page 45697own disclosure so long as it is substantially similar. A creditor that uses a computerized or mechanized system Start Printed Page 45696need not keep a paper copy of a document (for example, of an adverse action notice) if it can regenerate all pertinent information in a timely manner for examination or other purposes. Among other instructions, current 1002.13(b) provides that, if an applicant chooses not to provide some or all of the requested applicant demographic information, the creditor must, in certain circumstances, collect Start Printed Page 45688the information on the basis of visual observation or surname. 03/01/2023, 43 He has 8 years experience in finance, from financial planning and wealth management to corporate finance and FP&A. 29. 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). The regulation allows a bank to be exempt from having to send an adverse action notice to a small business loan applicant, as defined above, IF AT THE TIME OF APPLICATION, the bank provides certain disclosures to the customer IN A FORM THAT THE CUSTOMER CAN KEEP. If the debt collector does not provide . Hu^U[4'~f,t?o{NwYrB-ez,]{-}7/;UsUe5_,Vl]vw~lh}ive8=&fw}\*!tTb(8+0(0-D)3\-|bS ]4#i!N#.tD >X_\pI;$?gacx`BtvAa,q]k"m ? ,H?tYrjfMN 2.q9^w\k.ke5jXcLKjvszyD G The Bureau believes that such a broad exception could Start Printed Page 45685significantly alter the limitations and would not be appropriate without further rulemaking and consideration. 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. by the Housing and Urban Development Department 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. regulatory information on FederalRegister.gov with the objective of The Bureau also proposed to amend comment 12(b)-2 to require retention of applicant demographic information obtained pursuant to 1002.5(a)(4). 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. 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. procedures. The Bureau also proposed comments 13(a)-7 and 13(a)-8 to provide that a creditor that collects applicant information in compliance with the revised Regulation C appendix will be acting in compliance with 1002.13 concerning the collection of an applicant's ethnicity, race, and sex information and to clarify that a creditor may choose on an application-by-application basis whether to collect aggregate or disaggregated information. 45. Revision of the Standards for the Classification of Federal Data on Race and Ethnicity, 62 FR 58782, 5878-90 (Oct. 30, 1997). A creditor may collect the information specified in 1002.13(a) either on an application form or on a separate form referring to the application. 2. 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. The Bureau does not believe that flexibility will result in additional burden and reiterates that 1002.13(a)(1)(i) would permit a Regulation B-only creditor to maintain its existing practices and collect aggregate race and ethnicity categories. Purpose, What Is the Consumer Credit Protection Act (CCPA)? The Bureau also conducted Start Printed Page 45683outreach with other Federal agencies, including the Securities and Exchange Commission, the Department of Justice, the Department of Housing and Urban Development, the Federal Housing Finance Agency, the Federal Trade Commission, the Department of Veterans Affairs, the Department of Agriculture, the Department of the Treasury, and the Federal Financial Institutions Examination Counsel (FFIEC) concerning the proposed rule. [10] [33] the Federal Register. This information is discussed below in the section-by-section analysis and subsequent parts of the notice, as applicable. Regulation B's prohibition of advertising that would discourage potential applicants from applying for loans is a crucial part of redlining cases. [42] 82 FR 16307, 16315 (Apr. The first three implement the EFA Act, and the fourth implements Check 21. This appendix contains five 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. Because the Bureau Approval Notice remains in effect for all of 2017, the amendments in this rule are not necessary to permit Regulation B-only creditors or HMDA reporters to collect disaggregated applicant demographic information for applications taken in 2017; they are already permitted to do so by the Bureau Approval Notice for any application for a covered loan under revised Regulation C 1003.2(g) or any application subject to 1002.13 for all of 2017. The prudential regulators confirm that data collected and retained by entities subject to Regulation B but not Regulation C may be used for fair lending supervision and enforcement. The Bureau will finalize as proposed the revisions to 1002.13(b) concerning the collection of an applicant's ethnicity and race information on the basis of visual observation or surname. 4, 2017). aJKvqC[+>G5Ci"95,Tk#qCsdtx\/TXCjJ5 &t\A%+gkp# The Bureau did not propose changes to Regulation C in this rulemaking. Currently the disaggregated race and ethnicity categories required by the amendments to Regulation C in the 2015 HMDA Final Rule, effective January 1, 2018, do not match the categories specified in current Regulation B. edition of the Federal Register. Marital status is also required if the applicant resides in a community property state. 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. See U.S. Census Bureau, Overview of Race and Hispanic Origin: 2010, at 2 (Mar. Regulation B is intended to prevent applicants from discrimination in any aspect of a credit transaction. 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. Section 1002.5(a)(2) provides that, notwithstanding the limitations in 1002.5(b) through (d) on collecting protected applicant-characteristic information and other applicant information, a creditor shall request information for monitoring purposes as required by 1002.13. 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Information is discussed below in the U.S. Regulation B entities likely serve primarily customers in rural areas publishing amendments!

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