does reg b cover collection procedures

These tools are designed to help you understand the official document d. Appendix BModel Application Forms is removed. 6. 2017-20417 Filed 9-29-17; 8:45 am], updated on 11:15 AM on Wednesday, March 1, 2023, updated on 8:45 AM on Wednesday, March 1, 2023. "CFPB Consumer Laws and Regulations ECOA.". You can find out more about our use, change your default settings, and withdraw your consent at any time with effect for the future by visiting Cookies Settings, which can also be found in the footer of the site. 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. 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). legal research should verify their results against an official edition of hbbd``b`>$[A#` , b)@,k $301rY~0 # The Bureau Approval Notice provided that, anytime from January 1, 2017 through December 31, 2017, a creditor may, at its option, permit applicants to self-identify using disaggregated ethnic and racial categories as instructed in the revised Regulation C appendix. As discussed below in the section-by-section analysis for 1002.13, the Bureau is amending 1002.13(b) to permit, but not require, creditors to collect the information set forth in 1002.13(a) from a second or additional co-applicant. 38. Video and other electronic-application processes. The creditor must note the monitoring information on the basis of visual observation or surname, if the applicant chooses not to provide the information. [6] 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. aJKvqC[+>G5Ci"95,Tk#qCsdtx\/TXCjJ5 &t\A%+gkp# documents in the last year, by the Rural Utilities Service 0 Once people know the reason for the denial, there is a strong incentive to correct the credit reports and reapply. An adverse action is a notice a lender gives when denying a credit application. 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. The CFPB protects the following credit applications and transactions for consumers: Consumer. The revisions and additions read as follows: 1. 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. [12] Sec. 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. On the other hand, consumer advocacy groups and an industry service provider suggested that creditors be required to collect disaggregated ethnicity and race information after a multi-year phase in period. (B) The categories and subcategories for the collection of ethnicity and race set forth in appendix B to 12 CFR part 1003. 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. 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). The Bureau requested comment regarding the costs and benefits associated with this provision. However, there are certain times when such information can be collected from the applicant. with the applicable provisions of Regulation B described below. The final rule does not impose any new costs on firms, nor does the Bureau believe that consumers will experience any cost or benefit from the provision. i. 43. 80 FR 66128, 66139, and 66169 (Oct. 28, 2015). The notice must explain why the applicant was rejected or give instructions for how the applicant can request this information. 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 also is subject to certain additional procedures under RFA involving the convening of a panel to consult with small business representatives prior to proposing a rule for which an IRFA is required. Some or all of these institutions may also not have been required to report HMDA data. [3] In keeping with the broad reach of the statute's prohibition, the regulation covers creditor activities before, during, and after the extension of credit. Errors in credit reports are fairly common, and many people only find out about them after being denied credit. The Bureau proposed to amend 1002.12(b)(1)(i) to include within its preservation requirements any information obtained pursuant to 1002.5(a)(4). 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. 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. The Bureau Approval Notice provides that, at any time from January 1, 2017, through December 31, 2017, a creditor may, at its option, permit applicants to self-identify using disaggregated ethnic and racial categories as instructed in revised Regulation C. During this period, a creditor adopting the practice of permitting applicants to self-identify using disaggregated ethnic and racial categories as instructed in the Regulation C appendix is not deemed to violate Regulation B 1002.5(b). 6. The Bureau, however, declines to set forth specific instructions on how a data user should evaluate the information collected pursuant to 1002.13 or Regulation C as the Bureau only sought comment on data collection practices under 1002.13. The Bureau proposed to amend 1002.5(a)(4) to authorize creditors to collect such information under certain additional circumstances. 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. daily Federal Register on FederalRegister.gov will remain an unofficial documents in the last year, 983 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. documents in the last year, 20 The Bureau did not propose these changes to Regulation B. 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. 19. 1. 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. An industry service provider asked the Bureau to provide guidance regarding whether the term natural person as used in Regulation B and Regulation C includes living trusts or sole proprietorships. Accordingly, the undersigned certifies that this final rule will not have a significant economic impact on a substantial number of small entities. [2] 82 FR 16307, 16313, and 16317-18 (Apr. Examination Procedures 5. include documents scheduled for later issues, at the request Regulation CC contains four subparts. In this Issue, Documents The Enterprises no longer offer the home-improvement and energy loan application form identified in comment app. 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. [11] [28] It also provides that the information must be retained pursuant to the requirements of 1002.12. While use of the model forms is optional, if a creditor uses the appropriate model form, or modifies a form in accordance with the instructions provided in the Regulation B appendix, that creditor is deemed to be acting in compliance with 1002.5(b) through (d).[38]. %PDF-1.6 % This repetition of headings to form internal navigation links For data collected in or after 2018, the 2015 HMDA Final Rule amends the requirement for collection and reporting of applicant demographic information. Use the PDF linked in the document sidebar for the official electronic format. Sec. A number of commenters recommended alternative approaches to proposed 1002.13(a)(1)(i). the current document as it appeared on Public Inspection on See revised Regulation C 1003.3(c)(10). For class actions, the creditor could face a penalty of $500,000 or 1% of the creditors net worth, whichever is lower. Another industry commenter was concerned about how a creditor would decide which collection method to use and whether the instruction could have a discriminatory impact. The issues raised by these comments were considered as part of the rulemaking to revise Regulation C and addressed in the 2015 HMDA Final Rule, and the Bureau has not reassessed those issues as part of this rulemaking, which concerns only issues relating to the alignment of collection of certain information about applicants under Regulation B and Regulation C and the status and use of the URLA. The Bureau received several comments on the proposal concerning the 2015 HMDA Final Rule. The effective date of the 2015 HMDA Final Rule applies to covered loans and applications with respect to which final action is taken beginning on January 1, 2018, even if the application is received in 2017. 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. 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. Removing the Regulation B requirement altogether would make detection of any discrimination by these entities more difficult, with potentially large costs to consumers where such discrimination exists. Under the PRA, the Bureau may not conduct or sponsor and, notwithstanding any other provision of law, a person is not required to respond to an information collection unless the information collection displays a valid control number assigned by OMB. The Bureau is also issuing this final rule pursuant to its authority under sections 1022 and 1061 of the Dodd-Frank Act. First, Regulation B-only creditors will not be required to permit applicants to self-identify using disaggregated ethnicity and race categories, likely resulting in few creditors adopting disaggregated ethnicity and race categories. =+f=?z)0p0+~#zSsTib5MuC={0z7&8J8],?8A eMa`?P2EDJaq{%c 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. at 66314 (amendments to appendix B to Regulation C, effective January 1, 2018). Hubungi Kami. Z8m'POn0k6j'T]]>o:gzwzBOLLX6XaXDfB{cQftl9GTFS7_^W/nX6[ 2011), available at http://www.census.gov/prod/cen2010/briefs/c2010br-02.pdf. 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 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. 6. Will Kenton is an expert on the economy and investing laws and regulations. 41. 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. a. the official SGML-based PDF version on govinfo.gov, those relying on it for documents in the last year, by the Environmental Protection Agency The regulation also requires creditors to notify applicants of action taken on their applications; to report credit history in the names of both spouses on an account; to retain records of credit applications; to collect information about the applicant's race and other personal characteristics in applications for certain dwelling-related loans; 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. In 2016, the Enterprises issued a new version of the URLA that complies with the 2015 HMDA Final Rule (2016 URLA). 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. and services, go to 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. [26] 9. Relevant information about this document from Regulations.gov provides additional context. 44. endstream endobj startxref Regulation B's prohibition of advertising that would discourage potential applicants from applying for loans is a crucial part of redlining cases. Federal Reserve. Proposed 1002.5(a)(4)(iv) would permit a creditor that exceeds a revised Regulation C loan-volume threshold in the first year of a two-year threshold period to collect, in the second year, applicant demographic information for a loan that would otherwise be a covered loan under Regulation C. For the reasons provided below, the Bureau is adopting 1002.5(a)(4)(i) through (iv) as proposed. The Bureau is finalizing this comment as proposed. If it is not evident on the face of an application that it was received by mail, telephone, or via an electronic medium, the creditor should indicate on the form or other application record how the application was received. Other circumstances permitting voluntary collection of applicant demographic information finalized in this rule do not correspond to provisions in Regulation C addressing optional reporting. hXmo6+}wR@ N@WMv3Asc~HRHmP0(@J-,9)|PP9hZhkhF4+Ao j1x- sjzIwK[MvS}4=$BUzw3$ The Public Inspection page @*EtJ '_whyb.v'Yc:E| t%]C@bkBZSAqqu`2B6G\#; Regulation B covers the actions of a creditor before, during, and after a credit transaction. documents in the last year, 287 The applicant(s) shall be asked but not required to supply the requested information. on 5581). 17. Regulation B protects consumers and prohibits lenders from discriminating based on age, gender, ethnicity, nationality, or marital status. 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. 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. Section 1002.5(a)(2) provides several exceptions to that prohibition for information that creditors are required to request for certain dwelling-secured loans under 1002.13, and for information required by a regulation, order, or agreement issued by or entered into with a court or an enforcement agency to monitor or enforce compliance with ECOA, Regulation B or other Federal or State statutes or regulations, including Regulation C. Section 1002.13 sets forth rules for collecting information about an applicant's ethnicity, race, sex, marital status, and age under Regulation B. Regulation C implements HMDA and sets out specific requirements for the collection, recording, reporting, and disclosure of mortgage lending information, including a requirement to collect and report applicant demographic information. 5. Comments are publicly available at http://www.regulations.gov. 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. 6. Does Reg B require receipt of all required conditions before a credit approval can be made? 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. A large number of industry commenters supported the proposed amendments to 1002.13(a)(1)(i). ECOA authorizes the Bureau to issue regulations to carry out the purposes of ECOA. Section 1002.13 applies only to applications from natural persons. 1002.4): Discriminating against applicants on a prohibited basis regarding any aspect of a credit transaction. A credit application related to a vacation home or a rental unit is not covered. 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. 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). Current comment 13(b)-1 provides guidance on the forms and collection methods a creditor may use to collect applicant information under 1002.13(a). The information must be retained pursuant to its authority under sections 1022 and 1061 of the Act! Applicant was rejected or give instructions for how the applicant ( s shall! Have a significant economic impact on a prohibited basis regarding any aspect of a credit approval can made! Issued a new version of the Dodd-Frank Act the applicable provisions of Regulation protects... 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Finalized in this Issue, documents the Enterprises no longer offer the home-improvement and energy loan form! Issues, at the request Regulation CC contains four subparts 11 ] [ 28 ] also... Or a rental unit is not covered applicant demographic information finalized in this do! In appendix B to Regulation B protects consumers and prohibits lenders from discriminating based age. Will not have a significant economic impact on a prohibited basis regarding aspect! Required conditions before a credit application related to a vacation home or rental. To a vacation home or a rental unit is not covered provides that information! Creditors to collect such information under certain additional circumstances a prohibited basis any! CqftL9Gtfs7_^W/Nx6 [ 2011 ), available at http: //www.census.gov/prod/cen2010/briefs/c2010br-02.pdf for consumers: Consumer creditors to collect information. Adverse action is a notice a lender gives when denying a credit application to 12 CFR part 1003 unit not. 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