Home Mortgage Disclosure (Regulation C), 80 FR 66128 (Oct. 28, 2015). In addition, there are state laws that provide protections. Creditors can ask about the number of children, their ages, and the borrower's financial obligations relating to the children. These included, for example, a comment supporting the collection of loan officers' demographic information, a request to collect information on whether the applicant is divorced, a request for guidance on when previously gathered applicant demographic information can be used for new applications, and a request that the Bureau provide a safe harbor for information collected in 2017. 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. The second substantive change will remove the outdated 2004 URLA as a model form. As such, lenders cannot discriminate based on any of the above factors. Fannie Mae, Selling Guide: Single Family Seller Servicer, at B1-1-01 (Dec. 16, 2014), available at https://www.fanniemae.com/content/guide/selling/b1/1/01.html;; Freddie Mac, Single-Family Seller/Servicer Guide (Sep. 21, 2016), 3401.7, available at http://www.freddiemac.com/singlefamily/guide/bulletins/snapshot.html. Industry commenters proposed two additional, narrowly tailored exceptions that the Bureau is substantially adopting. The CFPB protects the following credit applications and transactions for consumers: Credit applications and information requirements, Standards of creditworthiness and investigation procedures. Regulation J. 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. Public Law 111-203, 124 Stat. The Regulatory Flexibility Act (RFA), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996, requires each agency to consider the potential impact of its regulations on small entities, including small business, small governmental units, and small nonprofit organizations. For the reasons provided below, the Bureau is adopting 1002.13(a) and comments 13(a)-7 and 13(a)-8 as proposed. Refinancings. Register documents. The Bureau solicited comment on permitting the collection of applicant demographic information in the circumstances described in proposed 1002.5(a)(4), and, in particular, regarding the proposed five-year time frame, and whether there are other specific, narrowly tailored circumstances not described in 1002.5(a)(2) or proposed 1002.5(a)(4) under which a creditor would benefit from being able to collect applicant demographic information for mortgage loan applicants. [30] The information-collection requirements of this section apply to applications for credit primarily for the purchase or refinancing of a dwelling that is or will become the applicant's principal residence. iii. 80 FR 66128, 80 FR 66140, and 66144 (Oct. 28, 2015). Paragraph 13(b)Obtaining of information is revised. 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; [33] 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). Creditors that fail to comply with Reg B will be held liable for punitive damages up to $10,000 in individual actions. Reg B also helps anyone who is denied credit by requiring lenders to give them an explanation. 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. 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. It also provides that the information must be retained pursuant to the requirements of 1002.12. However, the commenter did not address the Bureau's conclusion, mentioned in the proposal and again above, that the benefits of mandatory disaggregated collection are quite limited. Register (ACFR) issues a regulation granting it official legal status. 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. 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 Enterprises have not yet provided a date when lenders may begin using the 2016 URLA or the date lenders are required to use the 2016 URLA (the cutover date), but have stated their intention to collaborate with industry stakeholders to help shape the implementation timeline for the 2016 URLA, with a goal to provide lenders with more precise information in 2017 regarding the cutover date.[20]. A place where you can easily find solutions and ask questions Procedures for providing disclosures. Start Printed Page 45687Thus, the Bureau concludes that retaining 1002.13 serves the purposes of ECOA to promote the availability of credit to all creditworthy applicants without regard to protected characteristics. To the extent that the provision benefits firms and consumers, consumers in rural areas will see the largest benefits. Securities credit refers to extensions of credit subject to regulation under section 7 of the Securities Exchange Act of 1934 or extensions of credit by a broker or dealer subject to regulation as a broker or dealer under the Securities Exchange Act of 1934. 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. Written applications. 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. 1376, 2083-84 (2010). 210.1 Authority, purpose, and scope. headings within the legal text of Federal Register documents. The Enterprises also made available a Demographic Information Addendum, which is identical in form to section 7 of the 2016 URLA. A purpose of ECOA is to promote the availability of credit to all creditworthy applicants without regard to race, color, religion, national origin, sex, marital status, or age (provided the applicant has the capacity to contract) or other protected characteristics. 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. Section 1002.5(a)(4)(v) permits a creditor that is a financial institution under revised Regulation C 1003.2(g) or that submitted HMDA data for any of the preceding five calendar years but is not currently a financial institution under revised Regulation C 1003.2(g) to collect information regarding the ethnicity, race, and sex of an applicant for a loan that would otherwise be a covered loan under revised Regulation C 1003.2(e) if not excluded by revised Regulation C 1003.3(c)(10). 6. Fair Lending Fair Lending Laws and Regulations - PDF provides an abbreviated discussion of federal fair lending laws and regulations based on . 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. 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. On March 24, 2017, the Bureau issued the 2017 ECOA Proposal on its Web site. 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. Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. The notice must explain why the applicant was rejected or give instructions for how the applicant can request this information. The Bureau requested comments on both the costs and benefits associated with this alternative approach. The Bureau acknowledges that the preamble to the proposed rule stated that 1002.12(b)(1) required retention of certain records for 25 months and did not acknowledge the different 12 month period for business credit provided for in 1002.12(b)(1). Accounts covered. The Enterprises, not the Bureau, mandate the adoption of the 2016 URLA. Definition, What Is Redlining? For class actions, the creditor could face a penalty of $500,000 or 1% of the creditors net worth, whichever is lower. The current Regulation B appendix includes five model forms, each designated for use in a particular type of consumer credit transaction. Regulation B 1. @*EtJ '_whyb.v'Yc:E| t%]C@bkBZSAqqu`2B6G\#; Thus, even if the Bureau were reconsidering its approach to visual observation or surname collection, which it is not, the Bureau does not believe the evidence submitted by the commenters demonstrate that collection based on visual observation or surname do not serve the purposes of ECOA. In light of these inquiries, the Bureau determined that it would be beneficial to establish through rulemaking appropriate standards in Regulation B concerning the collection of an applicant's ethnicity and race information similar to those in revised Regulation C. Because many of the financial institutions most affected by this proposed rule are supervised by the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), the Federal Reserve Board (Board), and the National Credit Union Administration (NCUA), the Bureau conducted outreach to these agencies. To further align the collection requirements of Regulation B and Regulation C, the Bureau is further 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. 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. Credit by requiring lenders to give them an explanation 2017, the Bureau issued the 2017 Proposal. 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