. The Bureau considered these comments but does not believe that the 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. 03/01/2023, 267 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 is not adding the 2016 URLA as a model form in place of the 2004 version. Other circumstances permitting voluntary collection of applicant demographic information finalized in this rule do not correspond to provisions in Regulation C addressing optional reporting. edition of the Federal Register. The current Regulation B appendix includes the 2004 URLA as a model form. As discussed above in the section-by-section analysis for 1002.5(a)(4), the Bureau is also adopting new 1002.5(a)(4)(vi) to permit collection of applicant demographic information for second or additional co-applicants in certain circumstances, thereby providing additional optionality for creditors to maintain consistent collection practices under Regulation B and Regulation C.Start Printed Page 45689. Consumer Finance Protection Bureau. 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. 41. Because the Enterprises have not announced a cutover date for the mandatory use of the 2016 URLA, the Bureau is finalizing January 1, 2022, as the effective date for the removal of the 2004 URLA from the Regulation B appendix. of the issuing agency. This repetition of headings to form internal navigation links [15] Requiring disaggregated collection, even after a multi-year phase in period, would add complexity and burden to an already complex timeline that includes implementation of the 2015 HMDA Final Rule and transition to the 2016 URLA. Predatory Lending Laws: What You Need to Know, Discrimination in Insurance Underwriting Guidelines. [21] 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]. Principal residence. Creditors can ask about the number of children, their ages, and the borrower's financial obligations relating to the children. Comments related to the data collection model forms are addressed in the section-by-section analysis of the Regulation B appendix. Errors in credit reports are fairly common, and many people only find out about them after being denied credit. The regulation covers topics such as: Prohibition on kickbacks and unearned fees Mortgage origination and servicing disclosures Affiliated business arrangements Title insurance Escrow accounts List of homeownership counseling organizations Mortgage loan servicing requirements Force-placed insurance Section 1002.13 sets forth the scope, required information, and manner for the mandatory collection of certain protected applicant-characteristic information under Regulation B. 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. 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. Federal Reserve. 8. I'd first recommend that you go review this section and the applicable Official Staff Commentary. Answer: Reg B defines both an "application" and a "completed application" in section 202.2 (f). In developing the final rule, the Bureau has considered the potential benefits, costs, and impacts. [35] Section IV. [4], The HMDA requirement to collect and report applicant information was recently updated through a final rule amending Regulation C, published in October of 2015 (2015 HMDA Final Rule). 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. The Bureau requested comment regarding the costs and benefits associated with this provision. The Bureau acknowledges that the collection and retention requirement of Regulation B imposes some burden on financial institutions. 2430 0 obj <> endobj The creditor must note the monitoring information on the basis of visual observation or surname, if the applicant chooses not to provide the information. Accounts covered. The Bureau proposed that the 2004 URLA be removed on the cutover date the Enterprises designate for use of the 2016 URLA or January 1, 2022, whichever comes first. 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). Ax$({MeQR.5V>+FrJLv_Y-+1aeJ|omxoVEEw]=QM*?^y[IrOz$;l:&=EMXz${xpIg To facilitate compliance with Regulation B and further align the collection requirements of Regulations B and Regulation C, the Bureau is also amending 1002.13(b) to permit, but not require, creditors to collect the information set forth in 1002.13(a) from a second or additional co-applicant. But an application for both a temporary loan to finance construction of a dwelling and a permanent mortgage loan to take effect upon the completion of construction is subject to 1002.13. For the reasons provided below, the Bureau is adopting 1002.13(a) and comments 13(a)-7 and 13(a)-8 as proposed. The Bureau did not propose these changes to Regulation B. on The consumer advocacy groups stated that mandatory disaggregated collection would ensure uniform data collection practices and facilitate fair lending analysis, including identifying potential discrimination against racial and ethnic subgroups. Accordingly, the Bureau is not making disaggregated race and ethnicity categories mandatory for compliance with Regulation B at this time. Many HMDA reporters are also subject to the collection requirements of 1002.13. The Bureau proposed to amend 1002.5(a)(4) to authorize creditors to collect such information under certain additional circumstances. The applicant(s) shall be asked but not required to supply the requested information. Regulation CC contains four subparts. Data collection under Regulation C. For applications subject to 1002.13(a)(1), a creditor that collects information about the ethnicity, race, and sex of an applicant in compliance with the requirements of appendix B to 12 CFR part 1003 is acting in compliance with 1002.13 concerning the collection of an applicant's ethnicity, race, and sex information. hbbd``b`>$[A#` , b)@,k $301rY~0 # The Bureau also proposed comment 5(a)(4)-1 to provide guidance on proposed 1002.5(a)(4) and to highlight the voluntary nature of the rule. 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. Regulation B's prohibition of advertising that would discourage potential applicants from applying for loans is a crucial part of redlining cases. No commenters provided such data. for fair lending practices. The Bureau did not propose changes to Regulation C in this rulemaking. The Bureau did not intend to extend the record retention period under Regulation B for business credit transactions through the proposal and this final rule does not do so. 6. Any information unrelated to consumer credit cannot be used when making loan approval decisions. the official SGML-based PDF version on govinfo.gov, those relying on it for 2. The Enterprises have announced that they will cease accepting older versions of the URLA at a date to be determined and require firms that sell to the Enterprises to use the 2016 URLA form. The Bureau believes that such a broad exception could Start Printed Page 45685significantly alter the limitations and would not be appropriate without further rulemaking and consideration. The final rule may have benefits to some Regulation B-only creditors. The rule also removes as outdated the existing version of the URLA contained in the Regulation B appendix, effective January 1, 2022. 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. by the Housing and Urban Development Department Will Kenton is an expert on the economy and investing laws and regulations. c. Under Section 1002.13Information for monitoring purposes: i. Paragraph 13(a)Information to be requested is revised. 210.1 Authority, purpose, and scope. The proposal was published in the Federal Register on April 4, 2017.[22]. Under Section 1002.12Record retention, Paragraph 12(b) is revised. Investopedia requires writers to use primary sources to support their work. 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. the Federal Register. The CFPB protects the following credit applications and transactions for consumers: Credit applications and information requirements, Standards of creditworthiness and investigation procedures. 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. documents in the last year, by the Food Safety and Inspection Service and the Food and Drug Administration He previously held senior editorial roles at Investopedia and Kapitall Wire and holds a MA in Economics from The New School for Social Research and Doctor of Philosophy in English literature from NYU. the material on FederalRegister.gov is accurately displayed, consistent with New Documents 4, 2017). FDIC Consumer Compliance Examination Manual provides information and examination procedures to assist institutions with understanding and complying with fair lending-related requirements. The Bureau received no comments specifically addressing the revisions to proposed comment 13(b)-1, and so is finalizing it as proposed. A creditor that accepts an application by telephone or mail must request the monitoring information. The final rule may have benefits to consumers, to the extent that lending entities voluntarily choose to collect disaggregated race and ethnicity information. Definition, What Is Redlining? 3 The Bureau expects that institutions will only exercise this option if voluntary collection provides a net benefit. The Enterprises, not the Bureau, mandate the adoption of the 2016 URLA. Authorization for this collection, consistent with the other provisions of 1002.5(a)(4), is not limited to collection using the 2016 URLA. 1. Certain of these categories include several more specific race, heritage, nationality, or country of origin groups. Application-by-application basis. on In December 2011, the CFPB restated the Federal Trade Commission's implementing regulation at 12 CFR Part 1006 (76 Fed. 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. See revised Regulation C 1003.3(c)(10). 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. Reg B is part of the Equal Credit Opportunity Act (ECOA), which is regulated and enforced by the Consumer Financial Protection Bureau (CFPB). Under this section, procedural requirements of the regulation do not apply to certain types of credit. This appendix contains four model credit application forms, each designated for use in a particular type of consumer credit transaction as indicated by the bracketed caption on each form. All lenders are required to comply with Regulation B, which protects applicants from discrimination. 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