The documents posted on this site are XML renditions of published Federal Relevant information about this document from Regulations.gov provides additional context. 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. 2458 0 obj <>stream In 2016, the Enterprises issued a new version of the URLA that complies with the 2015 HMDA Final Rule (2016 URLA). 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. Amend 1002.12 by revising paragraph (b)(1)(i) to read as follows: (i) Any application that it receives, any information required to be obtained concerning characteristics of the applicant to monitor compliance with the Act and this part or other similar law, any information obtained pursuant to 1002.5(a)(4), and any other written or recorded information used in evaluating the application and not returned to the applicant at the applicant's request. One of the exceptions to the reporting requirements under HMDA is for entities that do not have a branch or home office located in an MSA. The applicant(s) shall be asked but not required to supply the requested information. Accordingly, the undersigned certifies that this final rule will not have a significant economic impact on a substantial number of small entities. A general description of the regulation, by section, follows. 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). 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. 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). Public Law 111-203, 124 Stat. ii. If the debt collector does not provide . However, 1002.5(a)(2) does not authorize collection of information beyond what is required by law. The Bureau requested comment on the analysis under the RFA and any relevant data. 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. 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). Answer by David Dickinson: The definition of applicant in Reg B Section 202.2: (e) Applicant means any person who requests or who has received an extension of credit from a creditor, and includes any person who is or may become contractually liable regarding an extension of credit.For purposes of Section 202.7(d), the term includes guarantors, sureties, endorsers, and similar parties. the Federal Register. include documents scheduled for later issues, at the request british citizenship by marriage living abroad. All forms contained in this appendix are models; their use by creditors is optional. The creditor need not orally request the monitoring information if it is requested in writing. developer tools pages. Scope. The Bureau believes that these provisions further the purposes of ECOA by easing overall burden on creditors and improving the quality of the data that is used to promote the availability of credit to all creditworthy applicants. [23] Computerized decisions. The Enterprises also made available a Demographic Information Addendum, which is identical in form to section 7 of the 2016 URLA. Similarly, an industry commenter stated that the collection methods used in Regulation B and Regulation C should match. publication in the future. 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. [17] The commenter noted that differing instructions may lead to uncertainty and that Regulation B-only creditors would benefit from the additional instructions provided in revised Regulation C. No commenters opposed the proposed comment, and so the Bureau is finalizing comment 13(a)-7 as proposed. documents in the last year, 121 82 FR 16307, 16315 (Apr. 1376, 2083-84 (2010). New Documents Section 1061 of the Dodd-Frank Act transferred to the Bureau consumer financial protection functions previously vested in certain other Federal agencies, including the authority to prescribe rules or issue orders or guidelines pursuant to any Federal consumer financial law and perform appropriate functions to promulgate and review such rules, Start Printed Page 45684orders, and guidelines. 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. 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. Section 1002.13 sets forth the scope, required information, and manner for the mandatory collection of certain protected applicant-characteristic information under Regulation B. 1. Thus, the final rule has the added benefit that it will allow Regulation B-only creditors to use the 2016 URLA as an instrument to collect race and ethnicity information. Commenters also requested that the Bureau increase the thresholds for being a HMDA reporter to a higher limit that would exempt more creditors from HMDA. Register (ACFR) issues a regulation granting it official legal status. B covers creditor activities before, during, and after the extension of credit. One commenter argued that the proposed rule would add complexity, however, as creditors would be required to report disaggregated information under revised Regulation C, permitted to collect such information under revised 1002.13, but prohibited from collecting disaggregated information if the applicant does not provide it. This feature is not available for this document. (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. 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. When a creditor receives an application through an unaffiliated loan-shopping service, it does not have to request the monitoring information for purposes of the ECOA or Regulation B. has no substantive legal effect. 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 Bureau proposed an effective date of January 1, 2018, which aligns with the effective date for the bulk of the revisions to Regulation C in the 2015 HMDA Final Rule. 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. [24] This repetition of headings to form internal navigation links One industry commenter generally supported the proposal, noting the flexibility would reduce compliance burden. The Bureau has consulted, or offered to consult with, the prudential regulators (the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency), 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, and the Department of the Treasury, including regarding consistency with any prudential, market or systematic objectives administered by such agencies. 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. 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. The Bureau considered these comments but does not believe that the 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. Fair Lending Fair Lending Laws and Regulations - PDF provides an abbreviated discussion of federal fair lending laws and regulations based on . A person can have only one principal residence at a time. 32. The spouses of rejected married applicants also have the right to this information. 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. The Bureau is finalizing the amendments to 1002.12(b)(1)(i) and comment 12(b)-2 as proposed. 15. (12 USC 5514(a)(1)(B)). 80 FR 66128, 66139, and 66169 (Oct. 28, 2015). Sec. 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. Natural person. [39] The current and revised Regulation C appendix include instructions and a data collection model form for collecting applicant demographic information. Reg. Accordingly, the Bureau is not making disaggregated race and ethnicity categories mandatory for compliance with Regulation B at this time. For complete information about, and access to, our official publications Video and other electronic-application processes. Proposed 1002.5(a)(4)(iii) would permit a creditor that falls below both of the revised Regulation C loan-volume thresholds to continue to collect applicant demographic information for five calendar years after first becoming exempt from HMDA reporting. About the Federal Register The Enterprises no longer offer the home-improvement and energy loan application form identified in comment app. 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. New principal residence. 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. The Bureau proposed to amend 1002.13(a)(1)(i) to provide a creditor flexibility to collect applicant ethnicity and race information using either aggregate or disaggregated categories, thereby furthering the purposes of ECOA, reducing compliance burden, and facilitating use of the 2016 URLA. The Bureau believes that rural areas might benefit from the provision to allow collection of disaggregated race and ethnicity information more than urban areas. 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. 2. 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. Proposed 1002.13(a)(1)(i) provided that a creditor must collect the applicant's information using either the aggregate ethnicity and race categories currently required or the ethnicity and race categories and subcategories set forth in the revised Regulation C appendix, which provide disaggregated ethnicity and race categories. Cookies collect information about your preferences and your devices and are used to make the site work as you expect it to, to understand how you interact with the site, and to show advertisements that are targeted to your interests. The Bureau received one industry comment supporting alignment of the instructions in 1002.13 with the revised Regulation C appendix. Under Regulation B, a lender may not request information about an applicants sex, national origin, color, or other information not related to creditworthiness. As the Bureau noted in the 2017 ECOA Proposal, without a time limit such voluntary collection would permit a creditor to collect protected applicant-characteristic information for a period of time that is too attenuated from any past Regulation C legal requirement and associated compliance process. Appendix B provides data collection model forms for use in complying with 1002.13 and that comply with 1002.13(c). 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. The permitted collection may also alleviate concerns about violating 1002.5(b) if a financial institution collects applicant demographic information for a particular dwelling-secured loan made primarily for a business or commercial purpose, based on the financial institution's belief that it is a home purchase loan, a refinancing, or a home improvement loan, but the financial institution later discovers that this belief was mistaken, and therefore collection of applicant demographic information was not required under Regulation C. The Bureau is adopting 1002.5(a)(4)(v) to address the commenter's suggestion. 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. Credit denial is the rejection of a credit application by a prospective lender, usually due to its assessment that the applicant is not creditworthy. This PDF is on 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. headings within the legal text of Federal Register documents. 03/01/2023, 828 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). This information is discussed below in the section-by-section analysis and subsequent parts of the notice, as applicable. Investopedia does not include all offers available in the marketplace. Section 1002.13 applies only to applications from natural persons. Regulation J. The Bureau does not have an estimate of the number of rural community banks that are currently exempt from HMDA reporting and originate at least 25 loans per year. 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. 5. Applications through loan-shopping services. 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. 11. The Bureau also believes that permitting creditors to collect certain protected applicant-characteristic information in these circumstances provides a narrow exception to the general limitations in 1002.5(b) through (d) respects the purposes of those prohibitions. 2430 0 obj <> endobj Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 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]. Regulation B covers the actions of a creditor before, during, and after a credit transaction. 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 changes to Regulation B in this rule are summarized briefly in this section and discussed in detail below. On the federal level, the Federal Trade Commission regulates what is called the Fair Debt Collection Practices Act (FDCPA). 210.3 General provisions.*. 44. Even for institutions with very small volumes of originations that may not be subject to HMDA reporting because they do not meet an applicable loan volume threshold, the retained information may be useful for comparative file reviews. The Bureau proposed to add 1002.5(a)(4) to authorize a creditor to obtain information in certain additional specified circumstances other than as described in 1002.5(a)(2). Many HMDA reporters are also subject to the collection requirements of 1002.13. [42] The Bureau acknowledges that the requirement to collect or provide applicant demographic information from co-applicants differs between 1002.13 and revised Regulation C. The Bureau concludes that these differences may create additional burden and complexity for creditors, who may need to modify their practices concerning co-applicant collection depending on whether collection is required under both Regulation B and revised Regulation C or only under revised Regulation C. The Bureau is therefore revising 1002.13(b) to clarify that a creditor is permitted, but is not required, to collect the information set forth in 1002.13(a) from a second or additional co-applicant. Accordingly, the Bureau has authority to issue regulations to administer ECOA. Ax$({MeQR.5V>+FrJLv_Y-+1aeJ|omxoVEEw]=QM*?^y[IrOz$;l:&=EMXz${xpIg The Bureau continues to believe that the benefits of this alternative are very low. In the same notice, the Bureau also determined that the relevant language in the 2016 URLA is in compliance with the regulatory provisions of Regulation B 1002.5(b) through (d), regarding requests for protected applicant-characteristic information and certain other information. hbbd``b`>$[A#` , b)@,k $301rY~0 # 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. Investopedia requires writers to use primary sources to support their work. The information must be retained pursuant to the requirements of 1002.12. 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. 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. Even accepting the commenter's premise, however, the Bureau notes again that it believes the additional benefits of this alternative to be quite limited because, among other reasons, many Regulation B-only creditors are likely to eventually collect disaggregated race and ethnicity data through adoption of the 2016 URLA. on reg b covers collection procedures Appendix B to part 1002, at paragraphs 1, 3. 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