does reg b cover collection procedures

By making disaggregated collection an option under Regulation B, entities who will report race and ethnicity information under revised Regulation C will also be in compliance with Regulation B with certainty. On October 24, 2012, the CFPB issued a larger participant regulation in the market of consumer debt collection. The first will give persons who collect and retain race and ethnicity information in compliance with Regulation B the option of permitting applicants to self-identify using the disaggregated race and ethnicity categories required by revised Regulation C. In practice, this will allow entities that report race and ethnicity in accordance with revised Regulation C to comply with Regulation B without further action, while entities that do not report under Regulation C but record and retain race and ethnicity data under Regulation B will have the option of recording data either using the existing aggregated categories or the new disaggregated categories. The Bureau received one industry comment supporting alignment of the instructions in 1002.13 with the revised Regulation C appendix. Z 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. Document page views are updated periodically throughout the day and are cumulative counts for this document. [17] As part of the Bureau's outreach to financial institutions, vendors, and other mortgage industry participants to prepare for the implementation of the 2015 HMDA Final Rule, the Bureau received questions about the requirement to permit applicants to self-identify using disaggregated ethnicity and race categories. Register, and does not replace the official print version or the official . 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. With the introduction of the 2016 URLA 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 use more easily standard forms for collection of applicant demographic information without identifying at the time of collection which applicants are the primary and first co-applicant. on with the applicable provisions of Regulation B described below. The Bureau may reevaluate the need for mandatory disaggregated collection under 1002.13 after implementation of the 2015 HMDA Final Rule and transition to the 2016 URLA, when more information is available on creditor collection practices. Principal residence. An applicant's age can be requested if it appears that they cannot legally sign a contract. 2. The Bureau recently adopted amendments to Regulation C that will temporarily increase the threshold for collecting and reporting data on certain loans. The Bureau did not receive any comments on the analysis or data. Copies. The current Regulation B appendix includes five model forms, each designated for use in a particular type of consumer credit transaction. 32. A creditor that accepts an application by telephone or mail must request the monitoring information. Register documents. Errors in credit reports are fairly common, and many people only find out about them after being denied credit. 34. The creditor shall then also note on the form, to the extent possible, the ethnicity, race, and sex of the applicant(s) on the basis of visual observation or surname. Rules for Taking Applications Section 202.5 Regulation B prohibits creditors from requesting and collecting specific personal information about an applicant that has no bearing on the applicant's The Bureau is not adding the 2016 URLA as a model form in place of the 2004 version. documents in the last year, 20 documents in the last year, by the Food and Drug Administration 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. (ii) Section 1002.12(b) relating to record retention. These proposed changes included establishing applicant demographic information collection, reporting, and public disclosure requirements for automobile creditors similar to HMDA, requiring adverse action notices in certain situations involving counteroffers, and adding record-keeping and applicant demographic information collection requirements for brokers and arrangers of credit. This information is discussed below in the section-by-section analysis and subsequent parts of the notice, as applicable. should verify the contents of the documents against a final, official The information provided to applicants about the rejection helps them take constructive steps to build their credit. The proposed model form substantially mirrors section X in the 2004 URLA and the data collection model form contained in the current Regulation C appendix. The Enterprises also made available a Demographic Information Addendum, which is identical in form to section 7 of the 2016 URLA. Appendix B provides data collection model forms for use in complying with 1002.13 and that comply with 1002.13(c). Section 1002.13(c) sets forth disclosures a creditor must provide to an applicant when collecting the information set forth in 1002.13(a). documents in the last year, 1408 210.3 General provisions.*. This prototype edition of the Given that neither of these forms is currently used by the Enterprises, the Bureau proposed to remove in its entirety the commentary to the Regulation B appendix. Unlike prior versions of the URLA, the 2016 URLA permits an applicant to select disaggregated ethnicity and race categories, as required under revised Regulation C. Given the issuance of the Bureau Approval Notice and the modifications to 1002.13, the Bureau proposed several revisions to the Regulation B appendix as discussed below. 44. The Public Inspection page may also Video and other electronic-application processes. documents in the last year, 474 For the reasons discussed above, the Bureau is finalizing as proposed the revisions to 1002.13(b) concerning the collection of ethnicity and race information on the basis of visual observation or surname. The Bureau is now publishing final amendments to Regulation B. hbbd``b`>$[A#` , b)@,k $301rY~0 # That is, the CFPB interprets FDCPA section 808 (1) to permit collection of an amount only if: (1) the agreement creating the debt expressly permits the charge and some law does not prohibit it; or (2) some law expressly permits the charge, even if the agreement creating the debt is silent. reg b covers collection procedures The Bureau acknowledges that the collection and retention requirement of Regulation B imposes some burden on financial institutions. the Federal Register. 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. Regulation CC contains four subparts. 20. Accordingly, the Bureau has authority to issue regulations to administer ECOA. The notice must explain why the applicant was rejected or give instructions for how the applicant can request this information. See also comment 5(a)(2)-2. Temporary financing. Similarly, an industry commenter stated that the collection methods used in Regulation B and Regulation C should match. It is not an official legal edition of the Federal Is There a Gender Gap in Home Equity Loans? 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. The changes to Regulation B in this rule are summarized briefly in this section and discussed in detail below. The commenter argued that the availability of the 2016 URLA would reduce the cost of collecting disaggregated race and ethnicity information, and advocated for a two-year implementation period for mandatory disaggregated collection to further reduce the costs. Regulation B of the Equal Credit Opportunity Act (ECOA) describes lending acts and practices that are specifically prohibited, permitted, or required. 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. Refinancings. Federal Register provide legal notice to the public and judicial notice [24] endstream endobj 2434 0 obj <>stream 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. 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. Institutions subject to Regulation B but not Regulation C include, for example, institutions that do not have a branch or home office in a Metropolitan Statistical Area (MSA), do not meet an applicable asset threshold, or do not meet an applicable loan volume threshold. A general description of the regulation, by section, follows. [39] The Enterprises have advised that the Demographic Information Addendum may be used by lenders at any time on or after January 1, 2017, as a replacement for section X (Information for Government Monitoring Purposes) in the current URLA, dated July 2005 (revised June 2009). The criteria for being a financial institution and reporting transactions under HMDA are different in some ways from the criteria for reporting under the NMLS Mortgage Call Report and reporting transactions under it. Definition. Moreover, the cited studies conclude only that some applicants may self-identify as different races over time and that visual observation of race is not always accurate. 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. 1. For the reasons provided below, the Bureau is adopting 1002.13(a) and comments 13(a)-7 and 13(a)-8 as proposed. documents in the last year, 662 documents in the last year, 37 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. 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. 2. A place where you can easily find solutions and ask questions 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. 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. Accounts covered. 03/01/2023, 267 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. 33. The commenter disputed the Bureau's assessment that the potential alternative would impose substantial costs on Regulation B-only creditors. On the other hand, the Bureau believes that requiring disaggregated collection for Regulation B-only creditors would impose additional burden on creditors without significant benefits. 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. 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. Such entities likely serve primarily customers in rural areas. 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; and the fourth in transactions involving community property or occurring in community property States. 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. However, 1002.5(a)(2) does not authorize collection of information beyond what is required by law. 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. The final rule amends parts of Regulation B, its commentary, and its appendices, and affects when and how a creditor may collect information regarding the applicant's ethnicity, race, and sex. For data collected in or after 2018, the 2015 HMDA Final Rule amends the requirement for collection and reporting of applicant demographic information. Revision of the Standards for the Classification of Federal Data on Race and Ethnicity, 62 FR 58782, 5878-90 (Oct. 30, 1997). 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. publication in the future. 36. These tools are designed to help you understand the official document If the Bureau were to require creditors to adopt a consistent collection method across applications, the Bureau would also need to issue additional guidance in the official commentary concerning how often and under what circumstances a creditor may change its collection method, among other implementation issues. 13. electronic version on GPOs govinfo.gov. Note that the language that follows is taken directly from the regulation, which appears in the References portion of this section. 210.2 Definitions.*. 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). Once people know the reason for the denial, there is a strong incentive to correct the credit reports and reapply. It also provides that the information must be retained pursuant to the requirements of 1002.12. 29. Fair Lending Fair Lending Laws and Regulations - PDF provides an abbreviated discussion of federal fair lending laws and regulations based on . 210.1 Authority, purpose, and scope. The creditor need not orally request the monitoring information if it is requested in writing. (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. Revised Regulation C 1003.2(g)(1)(v) and 1003.2(g)(2)(ii) also introduces an exclusion from the definition of financial institution, from which the duty to report HMDA data flows, for entities that, among other criteria, originated fewer than 25 closed-end mortgage loans or fewer than 100 open-end lines of credit in either of the two preceding calendar years. 2. 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. 03/01/2023, 828 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. c. Under Section 1002.13Information for monitoring purposes: i. Paragraph 13(a)Information to be requested is revised. 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. The Bureau did not propose these changes in the 2017 ECOA Proposal. 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. This document has been published in the Federal Register. Rules for Taking Applications - 12 CFR 1002.5. [45] 82 FR 16307, 16313, and 16317-18 (Apr. Computerized decisions. The Bureau believes that, if a creditor voluntarily collects applicant demographic information pursuant to 1002.5(a)(4), the creditor should be required to maintain those records in the same manner as it does for protected applicant-characteristic information it is required to collect. B prohibited practices (12 C.F.R. Because Regulation B and Regulation C do not provide inconsistent instructions on the scope of the term natural person, the Bureau declines to provide additional guidance on this issue within this final rule, which, as related to 1002.13, is limited to modifications that harmonize the collection requirements of Regulation B and Regulation C. The Bureau proposed revised comment 13(a)-7 to provide that, for applications subject to 1002.13(a)(1), a creditor that collects information about the ethnicity, race, and sex of an applicant in compliance with the requirements of the revised Regulation C appendix will be acting in compliance 1002.13 concerning the collection of an applicant's ethnicity, race, and sex information. The disclosure to an applicant regarding the monitoring information may be provided in writing. 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; Copies of the original record include carbon copies, photocopies, microfilm or microfiche copies, or copies produced by any other accurate retrieval system, such as documents stored and reproduced by computer. The Bureau recently amended Regulation C to explicitly permit optional reporting of closed-end mortgage loans and open-end lines of credit even if a financial institution does not meet the applicable loan volume threshold. The Equal Credit Opportunity Act (ECOA), 15 U.S.C. documents in the last year, 11 Changes to Applicant Information Collection for Regulation B Creditors, C. Changes to Applicant Information Collection for HMDA Reporters, A. The creditor must note the monitoring information on the basis of visual observation or surname, if the applicant chooses not to provide the information. Before the January 1, 2018, effective date of most provisions of the 2015 HMDA Final Rule, inquiries to collect applicant demographic information using disaggregated ethnic and racial categories are not required by current Regulation C and would not have been allowed under Regulation B 1002.5(a)(2), and therefore creditors would have been prohibited by Regulation B 1002.5(b) from requesting applicants to self-identify using disaggregated ethnic and racial categories before January 1, 2018. Threshold for collecting and reporting data on certain loans or give instructions for how the applicant request. The last year, 1408 210.3 General provisions. * for collecting reporting! An applicant 's age can be requested if it is requested in.. 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Revised Regulation C that will temporarily increase the threshold for collecting and reporting data on loans. Need not orally request the monitoring information if it is requested in writing in this and.

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