2443 0 obj <>/Filter/FlateDecode/ID[<30EF4E5AA22E03459A9EF6E0C2536565><7935FD3A29EF9D43BC143B64EE87FEEF>]/Index[2430 29]/Info 2429 0 R/Length 72/Prev 288071/Root 2431 0 R/Size 2459/Type/XRef/W[1 2 1]>>stream HUMo8W,"Z[$hAX][RmyZ#=({x~6VX,k:JT%CXI qhTpz (12 USC 5514(a)(1)(B)). Inadvertent notation. 6. Sec. 4, 2017). ii. 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. 82 FR 43088, 43100-43102 (Sept. 13, 2017); see also id. One industry commenter requested clarification that use of the 2016 URLA complies with Regulation B. Chip Stapleton is a Series 7 and Series 66 license holder, CFA Level 1 exam holder, and currently holds a Life, Accident, and Health License in Indiana. 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. Fair Lending Fair Lending Laws and Regulations - PDF provides an abbreviated discussion of federal fair lending laws and regulations based on . Once people know the reason for the denial, there is a strong incentive to correct the credit reports and reapply. documents in the last year, 940 1. Will Kenton is an expert on the economy and investing laws and regulations. Each document posted on the site includes a link to the [17] 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). Federal Reserve. 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 CFPB protects the following credit applications and transactions for consumers: Consumer. One alternative would permit collection of applicant demographic information for any loan secured by an applicant's dwelling with no timeframe restriction. An application for temporary financing to construct a dwelling is not subject to 1002.13. Under 1002.12(b)(1)(i), these records include any information required to be obtained concerning characteristics of credit applicants to monitor compliance with ECOA and Regulation B or other similar law. 210.2 Definitions.*. on FederalRegister.gov [202.9(a)(3)(i)(B)] We designed the application to include those disclosures. 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. 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. 5581). 29. on Creditors that fail to comply with Reg B will be held liable for punitive damages up to $10,000 in individual actions. In December 2011, the CFPB restated the Federal Trade Commission's implementing regulation at 12 CFR Part 1006 (76 Fed. daily Federal Register on FederalRegister.gov will remain an unofficial The commenters also argued that such collection is often inaccurate, cannot be relied upon for fair lending analysis, and is contrary to the purposes of ECOA. Sections with amendments are marked with an asterisk (*). Regulation B of the Equal Credit Opportunity Act (ECOA) describes lending acts and practices that are specifically prohibited, permitted, or required. Redlining is an unethical and illegal practice that denies loans or services to people living in majority-minority communities. Regulation B 1002.2(g) defines business credit to mean, with certain exceptions, extensions of credit primarily for business or commercial purposes. Regulations B and C both contain an appendix B that provides model forms for use when collecting applicant demographic information required under the regulations. Consumer Finance Protection Bureau. 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. of the issuing agency. Regulation B 1. Creditors that utilize model forms from appendix B to Regulation B (the Regulation B appendix) for mortgage loans are also affected by the rule. The Bureau received one industry comment supporting alignment of the instructions in 1002.13 with the revised Regulation C appendix. Comment appendix B-1 provides that a previous version of the URLA, dated October 1992, may be used by creditors without violating Regulation B. A large number of industry commenters supported proposed 1002.5(a)(4) and the five-year timeframe for 1002.5(a)(4)(i), (ii), and (iii). 19. 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. Director, Bureau of Consumer Financial Protection. Revision of the Standards for the Classification of Federal Data on Race and Ethnicity, 62 FR 58782, 5878-90 (Oct. 30, 1997). Counts are subject to sampling, reprocessing and revision (up or down) throughout the day. 13. Examination Procedures 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 Both the Bureau's consultations with the prudential regulators and its own experience in fair lending enforcement indicate that these data are used. 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. When a creditor collects ethnicity and race information pursuant to 1002.13(a)(1)(i)(B), the applicant must be offered the option to select more than one ethnicity designation and more than one racial designation. documents in the last year, 474 For example, an applicant who puts down his home as collateral will have additional information collected for monitoring compliance. As further discussed in the Section 1022(b) analysis below, the Bureau believes that the additional burden would have few benefits. 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. Indeed, given that Regulation C requires collection of certain applicant demographic information on the basis of visual observation or surname, adopting either proposal would undermine the purpose of this rulemaking by imposing different requirements in Regulation B and Regulation C.[37] The Bureau considered the comments, and adopts a modified final rule as described below in the section-by-section analysis. Specifically, covered institutions must permit applicants to self-identify their ethnicity and race using certain disaggregated ethnic and racial subcategories such as Mexican, Puerto Rican, or Cuban under the aggregate category Hispanic or Latino. [41] Federal Reserve. 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). Accordingly, the undersigned certifies that this final rule will not have a significant economic impact on a substantial number of small entities. In the 2017 ECOA Proposal, the Bureau also considered but did not propose the alternative of including the 2016 URLA as a model form in the Regulation B appendix. 2458 0 obj <>stream A Rule by the Consumer Financial Protection Bureau on 10/02/2017. 80 FR 66128, 66187-88 (Oct. 28, 2015). 37. A creditor that enters information items from a written application into a computerized or mechanized system and makes the credit decision mechanically, based only on the items of information entered into the system, may comply with 1002.12(b) by retaining the information actually entered. However, the Bureau believes it may impose costs on consumers. 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. documents in the last year, 83 The Bureau is not adding the 2016 URLA as a model form in place of the 2004 version. A credit union trade association commenter also argued that the Bureau should remove the requirement, asserting that removing it would reduce the regulatory burden on its members. See U.S. Census Bureau, Overview of Race and Hispanic Origin: 2010, at 2 (Mar. 1375, 2035-39 (2010) (codified at 12 U.S.C. The first sample form is intended for use in open-end, unsecured transactions; the second for closed-end, secured transactions; the third for closed-end transactions, whether unsecured or secured; the fourth in transactions involving community property or occurring in community property States; and the fifth in residential mortgage transactions which contains a model disclosure for use in complying with 1002.13 for certain dwelling-related loans. 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). This feature is not available for this document. endstream endobj 2434 0 obj <>stream One industry commenter generally supported the proposal, noting the flexibility would reduce compliance burden. On October 24, 2012, the CFPB issued a larger participant regulation in the market of consumer debt collection. 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. 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. on The notice must explain why the applicant was rejected or give instructions for how the applicant can request this information. endstream endobj 2431 0 obj <>/Metadata 156 0 R/Outlines 270 0 R/Pages 2420 0 R/StructTreeRoot 365 0 R/Type/Catalog>> endobj 2432 0 obj <>/Font<>>>/Rotate 0/StructParents 0/Type/Page>> endobj 2433 0 obj <>stream 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. 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. This information is not part of the official Federal Register document. The Bureau did not propose these changes in the 2017 ECOA Proposal. A small financial institution commenter advocated for eliminating the Regulation B requirement to collect and retain race and ethnicity information. For complete information about, and access to, our official publications 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. Dodd-Frank Act Section 1022(b) Analysis, B. 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. 5512, 5581; 15 U.S.C. In addition, the Bureau proposed amendments adding 1002.5(a)(4) to permit creditors to collect applicant demographic information when they would not otherwise be required to do so in certain scenarios where creditors may benefit from being able to adopt Regulation C compliance practices before they become required or maintain them when they are no longer required. 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). 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. 1. in Effective January 1, 2018, amend Appendix B to Part 1002 by revising paragraph 1 and adding a Data Collection Model Form to the end of the Appendix to read as follows: 1. 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). 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. documents in the last year. regulatory information on FederalRegister.gov with the objective of Under Regulation B, a lender may not request information about an applicants sex, national origin, color, or other information not related to creditworthiness. Federal Register. For data collected in or after 2018, the 2015 HMDA Final Rule amends the requirement for collection and reporting of applicant demographic information. 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