A mortgage loan application must be documented using the URLA in the mortgage loan file for the loan to be eligible for sale to the Enterprises. HUMo8W,"Z[$hAX][RmyZ#=({x~6VX,k:JT%CXI qhTpz 2. Having considered the comments received and for the reasons discussed above, the Bureau is finalizing 1002.13(a)(1)(i) as proposed. "Federal Fair Lending Regulations and Statutes: Equal Credit Opportunity (Regulation B)," Page 1. 4. The Bureau is issuing this final rule pursuant to its authority under section 703 of ECOA, as amended by section 1085 of the Dodd-Frank Act. The Bureau received no comments on the proposal to remove the 2004 URLA or the timing of the removal and so is finalizing removal of the 2004 URLA as proposed. documents in the last year, 121 1. documents in the last year, by the Environmental Protection Agency For complete information about, and access to, our official publications These can be useful (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. Other permissible collection of information. Although the loan volumes of most of these institutions would be too sparse for statistical analysis, the ability to conduct comparative file reviews using data retained under Regulation B has some benefit. The documents posted on this site are XML renditions of published Federal 210.2 Definitions.*. The Bureau continues to believe that the benefits of this alternative are very low. Z8m'POn0k6j'T]]>o:gzwzBOLLX6XaXDfB{cQftl9GTFS7_^W/nX6[ Finally, demographic data retained by Regulation B-only creditors is not reported under Regulation C. Consequently, most oversight and analysis of demographic data retained by Regulation B-only creditors will be done only by regulators, whereas researchers and community groups also conduct analysis of HMDA data reported under Regulation C. The Bureau believes the final rule will not impose any costs on consumers. 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. 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. Any information unrelated to consumer credit cannot be used when making loan approval decisions. 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. 1. 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. alteration, or termination of credit; collection procedures. In this Issue, Documents New principal residence. 1691 et seq., 12 CFR part 1002. 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). To the extent that the provision benefits firms and consumers, consumers in rural areas will see the largest benefits. If it appears that action is warranted, the Bureau will engage in further rulemaking as appropriate. Such entities likely serve primarily customers in rural areas. The FFIEC call report for banks does not report originations for depository institutions that do not report to HMDA. 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. 1002.4): Discriminating against applicants on a prohibited basis regarding any aspect of a credit transaction. Questions regarding ethnicity, race, sex, marital status, and age may be listed, at the creditor's option, on the application form or on a separate form that refers to the application. The Bureau did not propose these changes to Regulation B. A creditor that receives an application to refinance an existing extension of credit made by that creditor for the purchase of the applicant's dwelling may request the monitoring information again but is not required to do so if it was obtained in the earlier transaction. Amend 1002.5 by adding paragraph (a)(4) to read as follows: (4) Other permissible collection of information. 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. Subpart A--Collection of Checks and Other Items By Federal Reserve Banks. Certain of these categories include several more specific race, heritage, nationality, or country of origin groups. regulation prescribes rules for taking, evaluating, and acting on applications aswell rules for furnishing and maintaining credit information. The federal Fair Credit Reporting Act covers how debt collection is reported in credit reports. Regulation B's prohibition of advertising that would discourage potential applicants from applying for loans is a crucial part of redlining cases. documents in the last year, 37 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. The industry service provider commented that this distinction makes data collection more complex and burdensome, and requested that the Bureau clarify the collection requirements for co-applicants under Regulation B. ECOA section 703 serves as a source of authority to establish rules concerning the taking and evaluation of credit applications, collection and retention of applicant demographic information concerning the applicant or co-applicant, use of designated model forms, and substantive requirements to carry out the purposes of ECOA. The commenter noted that the Bureau Approval Notice applied to all applications taken in 2017 and suggested that the proposed effective date for this rule sends a mixed message. 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 offers that appear in this table are from partnerships from which Investopedia receives compensation. Hu^U[4'~f,t?o{NwYrB-ez,]{-}7/;UsUe5_,Vl]vw~lh}ive8=&fw}\*!tTb(8+0(0-D)3\-|bS ]4#i!N#.tD >X_\pI;$?gacx`BtvAa,q]k"m ? ,H?tYrjfMN 2.q9^w\k.ke5jXcLKjvszyD G Errors in credit reports are fairly common, and many people only find out about them after being denied credit. 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. The RFA defines a small business as a business that meets the size standard developed by the Small Business Administration pursuant to the Small Business Act. Overdraft payment programs and consumer protection. 4. 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. 35. If an applicant applies through an electronic medium without video capability, the creditor treats the application as if it were received by mail. The Fair Debt Collection Practices Act (FDCPA) is a federal law that provides limitations on what debt collectors can do when collecting certain types of debt. One industry commenter generally supported the proposal, noting the flexibility would reduce compliance burden. Complying with both Regulations B and C would require burdensome and duplicative collection of race and ethnicity data at both the aggregated and disaggregated level. Yes. 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). Information regarding ethnicity, race, and sex that is not required to be collected pursuant to Regulation C, 12 CFR part 1003, may nevertheless be collected under the circumstances set forth in 1002.5(a)(4) without violating 1002.5(b). Video and other electronic-application processes. Forms for collecting data. 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. Thus, a small entity that is in compliance with current law need not take any additional action, save those already required by the 2015 HMDA Final Rule. 7. Sec. Regulation B 1. Various consumer advocacy groups also opposed proposed comment 13(a)-8, arguing that the instruction could encourage creditors to develop and maintain haphazard, inaccurate, and inconsistent data collection methods. Federal Register provide legal notice to the public and judicial notice 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. The final rule may have benefits to consumers, to the extent that lending entities voluntarily choose to collect disaggregated race and ethnicity information. 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. Implemented by Regulation B. . on documents in the last year, 36 The Bureau believes that, absent this change, entities that currently report race and ethnicity data under Regulation C could conclude that they have different obligations under Regulation B and Regulation C once the 2015 HMDA Final Rule goes into effect on January 1, 2018. Investopedia does not include all offers available in the marketplace. 1691b; Public Law 111-203, 124 Stat. 80 FR 66128, 66139, and 66169 (Oct. 28, 2015). Natural person. 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. 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 considered the comments, and adopts a modified final rule as described below in the section-by-section analysis. 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. 1. i. 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. In addition, the Bureau proposed several revisions to 1002.13(b) and (c) and its commentary to align further the collection requirements of Regulation B with revised Regulation C. Section 1002.13(a) sets forth certain protected applicant-characteristic information a creditor must collect for applications on certain dwelling-secured loans. Comment appendix B-1 provides that a previous version of the URLA, dated October 1992, may be used by creditors without violating Regulation B. P}j]+VuuYZcU? 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 Applications through loan-shopping services. Accounts covered. By providing flexibility and reducing burden, the Bureau believes this modification will further the purposes of ECOA by facilitating practices that promote the availability of credit to all creditworthy applicants. 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. documents in the last year, 983 Sec. [18] Section 1002.13 sets forth the scope, required information, and manner for the mandatory collection of certain protected applicant-characteristic information under Regulation B. Effective January 1, 2022, amend Appendix B to Part 1002 by revising paragraph 1 and under paragraph 3 removing the form Uniform Residential Loan Application. 80 FR 66128, 66187-88 (Oct. 28, 2015). 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. The Bureau published a final rule on October 28, 2015, amending Regulation C, with many of the amendments taking effect January 1, 2018. Open for Comment, Economic Sanctions & Foreign Assets Control, Electric Program Coverage Ratios Clarification and Modifications, Determination of Regulatory Review Period for Purposes of Patent Extension; VYZULTA, General Principles and Food Standards Modernization, Further Advancing Racial Equity and Support for Underserved Communities Through the Federal Government, B. 2011), available at http://www.census.gov/prod/cen2010/briefs/c2010br-02.pdf. Because of the differences between the categories, some creditors required to collect and report race and ethnicity using the disaggregated categories set forth in revised Regulation C may be uncertain whether additional collection using aggregated categories would also be required to satisfy current Regulation B. The rule makes certain changes to the Regulation B appendix. documents in the last year, 822 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. Creditors that utilize model forms from appendix B to Regulation B (the Regulation B appendix) for mortgage loans are also affected by the rule. These race and ethnicity categories correspond to the Office of Management and Budget (OMB) minimum standards for the classification of Federal data on ethnicity and race. All classes of transactions remain subject to 1002.4 (a), the general rule barring discrimination on a prohibited basis, and to any other provision not specifically excepted. Specifically, section 1022(b)(2)(A) of the Dodd-Frank Act calls for the Bureau to consider the potential costs of a regulation to consumers and covered persons, including the potential reduction of access by consumers to consumer financial products or services; the impact on depository institutions and credit unions with $10 billion or less in total assets as described in section 1026 of the Dodd-Frank Act; and the impact on consumers in rural areas. Regulation B implements the Equal Credit Opportunity Act (ECOA)[1] 5581). When you visit the site, Dotdash Meredith and its partners may store or retrieve information on your browser, mostly in the form of cookies. 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. offers a preview of documents scheduled to appear in the next day's If a creditor takes an application through an electronic medium that allows the creditor to see the applicant, the creditor must treat the application as taken in person. Industry commenters proposed two additional, narrowly tailored exceptions that the Bureau is substantially adopting. 16. The Bureau expects that institutions will only exercise this option if voluntary collection provides a net benefit. 82 FR 16307, 16313, and 16317-18 (Apr. endstream endobj 2434 0 obj <>stream A large number of industry commenters supported the proposed amendments to 1002.13(a)(1)(i). 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. On March 24, 2017, the Bureau issued the 2017 ECOA Proposal on its Web site. As further discussed in the Section 1022(b) analysis below, the Bureau believes that the additional burden would have few benefits. This will allow the information to be available for monitoring and enforcing compliance with ECOA, Regulation B, and other Federal or State statutes or regulations. The Bureau does not believe that there will be an adverse impact on access to credit resulting from any of the provisions of the final rule. For example, an applicant who puts down his home as collateral will have additional information collected for monitoring compliance. One commenter indicated that the Bureau's proposed effective date for this rule creates concerns that it does not indicate that the collection of disaggregated applicant demographic information is permitted for applications received in 2017 for which final action is taken in 2018. Second, many Regulation B-only creditors will be exempt from reporting under revised Regulation C because they originate fewer than 25 closed-end mortgage loans in each of the two preceding calendar years, which means both that few consumers would be affected and any disaggregated data would likely be too sparse for statistical analysis. Similarly, an industry commenter stated that the collection methods used in Regulation B and Regulation C should match. [16] Under Section 1002.12Record retention, Paragraph 12(b) is revised. A small financial institution commenter advocated for eliminating the Regulation B requirement to collect and retain race and ethnicity information. 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