Register documents. 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. 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. 20. Under this section, procedural requirements of the regulation do not apply to certain types of credit. With respect to the open-end line of credit threshold for HMDA reporting, the Bureau adopted amendments to Regulation C that temporarily increases the open-end line of credit threshold to 500 until January 1, 2020. 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. 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. To address these issues, the Bureau issued a proposal on March 24, 2017, which was published in the Federal Register on April 4, 2017 (the 2017 ECOA Proposal).[7]. The Bureau proposed to amend comment 13(c)-1 to reference two data collection model forms the Bureau proposed to provide in the Regulation B appendix. documents in the last year, by the Food and Drug Administration The Bureau is finalizing this comment as proposed. are not part of the published document itself. 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. As discussed in the Section 1022(b) analysis for the 2015 HMDA Final Rule, collection of disaggregated race and ethnicity data can enhance the ability of regulators, researchers and community groups to conduct fair lending analysis. The Bureau proposed as an effective date for the removal of the 2004 URLA from Regulation B appendix either the cutover date designated by the Enterprises for the mandatory use of the 2016 URLA or January 1, 2022. 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. 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. 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. Prior to Reg B, discriminatory lending practices such as redlining for mortgages was prevalent in the U.S. Regulation B makes such practices illegal. 34. 1. The Bureau requested comment regarding the costs and benefits associated with this provision. Information about this document as published in the Federal Register. These tools are designed to help you understand the official document See revised Regulation C 1003.3(c)(10). The laws that cover collection policies and procedures are mandated by federal and state governments. These scenarios Start Printed Page 45681generally involve types of loans subject to Regulation C where a creditor voluntarily reports information under Regulation C, reported such information in the past five years, or may report such information in the near future. Comments related to the data collection model forms and the 2016 URLA are addressed in the section-by-section analysis of the Regulation B appendix. 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. a. Home Mortgage Disclosure (Regulation C), 80 FR 66128 (Oct. 28, 2015). The Bureau did not propose changes to Regulation C in this rulemaking. on NARA's archives.gov. Reg. 2. [26] 1375, 1980 (2010) (codified at 12 U.S.C. We also reference original research from other reputable publishers where appropriate. documents in the last year, by the Food Safety and Inspection Service and the Food and Drug Administration One commenter requested clarification that the voluntary collection under proposed 1002.5(a)(4) was truly voluntary and not a new compliance requirement. The commenter asserted the resulting data are never used by regulators, while the collection and retention imposes a substantial burden. 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 does not have an estimate of the number of rural community banks that are currently exempt from HMDA reporting and originate at least 25 loans per year. 19. A general description of the regulation, by section, follows. 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 consumer and the financial institution (including an account for which an access device has been issued to the consumer, for example); ii. edition of the Federal Register. 2. All lenders are required to comply with Regulation B when extending credit to borrowers under the Equal Credit Opportunity Act (ECOA), which is regulated and enforced by the Consumer Financial Protection Bureau (CFPB). 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. The Public Inspection page 44. Federal Register provide legal notice to the public and judicial notice There are three reasons, however, that this rule will likely have a limited effect on fair lending analysis. Shaakira Gold-Ramirez, Paralegal Specialist, Kathryn Lazarev, Counsel, or James Wylie, Senior Counsel, Office of Regulations, at 202-435-7700 or https://www.consumerfinance.gov/policy-compliance/guidance/. Natural person. A refinancing occurs when an existing obligation is satisfied and replaced by a new obligation undertaken by the same borrower. The Public Inspection page may also 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. A creditor may devise its Start Printed Page 45697own disclosure so long as it is substantially similar. 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. A place where you can easily find solutions and ask questions Those rules include: They must identify themselves as a debt collection agency and give their name and the address for the collection agency. For the reasons provided below, the Bureau is adopting 1002.13(a) and comments 13(a)-7 and 13(a)-8 as proposed. Demographic information collected under Regulation B by those institutions with larger loan volumes may be used in statistical analysis that supports fair lending supervision and enforcement. 8. The Bureau believes that no additional approval is necessary: The Bureau Approval Notice provides that 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). The primary difference between these proposals and the collection permitted by final 1002.5(a)(4)(i), (ii), and (iii) would be the removal of the five-year timeframe. In the case of a two-to four-unit dwelling, the application is covered if the applicant intends to occupy one of the units as a principal residence. Refinancings. In addition, the Bureau is adopting new 1002.5(a)(4)(v) and (vi) in response to comments, as discussed below. The Enterprises, under the conservatorship of the FHFA, issued a revised and redesigned URLA on August 23, 2016 (2016 URLA). The federal Fair Credit Reporting Act covers how debt collection is reported in credit reports. 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. 210.4 Sending items to Reserve Banks. Scope. rendition of the daily Federal Register on FederalRegister.gov does not This PDF is 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. Subpart A--Collection of Checks and Other Items By Federal Reserve Banks. The Bureau acknowledges that the collection and retention requirement of Regulation B imposes some burden on financial institutions. In light of the revisions to 1002.13(a)(1)(i), the amendment to the Regulation B appendix to provide two additional model forms, and the fact that the Bureau separately approved use of the 2016 URLA in the Bureau Approval Notice, the Bureau proposed to remove the 2004 URLA as a model form in Regulation B. 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. The Consumer Credit Protection Act of 1968 (CCPA) is federal legislation outlining disclosure requirements for consumer lenders. documents in the last year, by the International Trade Commission documents in the last year, 1408 that agencies use to create their documents. 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. 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. 1375, 2035-39 (2010) (codified at 12 U.S.C. Similarly, an industry commenter stated that the collection methods used in Regulation B and Regulation C should match. 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. In developing the final rule, the Bureau has considered the potential benefits, costs, and impacts. 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. Commenters noted that the five-year timeframe for 1002.5(a)(4)(i), (ii), and (iii) was realistic and would provide enough time to allow institutions to keep their systems updated, but not so long that it would be unlikely the institution would become a HMDA reporter again. When a creditor collects ethnicity and race information pursuant to 1002.13(a)(1)(i)(A), the applicant must be offered the option to select more than one racial designation. 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. 15. Federal Register issue. FDIC Consumer Compliance Examination Manual provides information and examination procedures to assist institutions with understanding and complying with fair lending-related requirements. Unlike financial institutions covered by Regulation C, creditors subject to 1002.13 but not to Regulation C are required only to collect and retain, but not to report, the required protected applicant-characteristic information. The Bureau expects that institutions will only exercise this option if voluntary collection provides a net benefit. A version of the URLA dated January 2004 (2004 URLA) is included in the Regulation B appendix as a model form for use in complying with 1002.13. [43] [18] 2. 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. collection, as the CFPB defines by rule, and their service providers . [11] on An adverse action is a notice a lender gives when denying a credit application. 03/01/2023, 205 documents in the last year. While final 1002.5(a)(4) provides a narrow exception to the general limitations in 1002.5(b) through (d), these alternative proposals would create a much broader exception to the general limitations on collecting such information in Regulation B. @*EtJ '_whyb.v'Yc:E| t%]C@bkBZSAqqu`2B6G\#; 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). 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. The President of the United States communicates information on holidays, commemorations, special observances, trade, and policy through Proclamations. 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. The proposal was published in the Federal Register on April 4, 2017.[22]. Application-by-application basis. Regulation B's prohibition of advertising that would discourage potential applicants from applying for loans is a crucial part of redlining cases. 31. 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. of the issuing agency. 2011), available at http://www.census.gov/prod/cen2010/briefs/c2010br-02.pdf. The Bureau believes this practice of acknowledging future versions of the URLA via a Bureau Approval Notice rather than a revision to Regulation B will reduce the risk that the model form included in Regulation B will become outdated in the future. The Enterprises, not the Bureau, mandate the adoption of the 2016 URLA. Accordingly, the Bureau is finalizing the Regulation B appendix as proposed, without including the 2016 URLA. Other circumstances permitting voluntary collection of applicant demographic information finalized in this rule do not correspond to provisions in Regulation C addressing optional reporting. Z8m'POn0k6j'T]]>o:gzwzBOLLX6XaXDfB{cQftl9GTFS7_^W/nX6[ Commentary to the Regulation B appendix includes a discussion of two forms created by the Enterprises that are no longer in use: A 1992 version of the URLA and a 1986 home-improvement and energy loan application form. These changes will primarily benefit institutions that may be near the loan volume reporting threshold, such that they may be required to report under HMDA and Regulation C in some years and not others, or may be uncertain about their reporting status. 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. The regulation allows a bank to be exempt from having to send an adverse action notice to a small business loan applicant, as defined above, IF AT THE TIME OF APPLICATION, the bank provides certain disclosures to the customer IN A FORM THAT THE CUSTOMER CAN KEEP. The final rule may have some benefits to Regulation B-only creditors, as the current language of Regulation B would not allow these entities to use the 2016 Start Printed Page 45691URLA for the purpose of collecting race and ethnicity data, as the 2016 URLA uses the disaggregated race and ethnicity categories set forth in revised Regulation C and not the specific categories required by current Regulation B. The final rule may have benefits to consumers, to the extent that lending entities voluntarily choose to collect disaggregated race and ethnicity information. P}j]+VuuYZcU? See also comment 5(a)(2)-2. 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. For complete information about, and access to, our official publications The Bureau believes that making collection of disaggregated race and ethnicity an option for all entities covered by Regulation B will pose little or no additional burden on those entities who are not HMDA reporters. Public Law 111-203, 124 Stat. 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). One industry commenter requested clarification that use of the 2016 URLA complies with Regulation B. Sec. [21] 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. 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. 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. 17. The Equal Credit Opportunity Act (ECOA) is a federal civil rights law that forbids lenders to deny credit to an applicant based on any factor unrelated to the person's ability to repay. Reg B is part of the Equal Credit Opportunity Act (ECOA), which is regulated and enforced by the Consumer Financial Protection Bureau (CFPB).