This appendix also contains a data collection model form for collecting information concerning an applicant's ethnicity, race, and sex that complies with the requirements of 1002.13(a)(1)(i)(A) and (ii). The Bureau believes that allowing voluntary collection will reduce the burden of compliance with Regulation C on some entities and provide certainty regarding Regulation B compliance over time. Revision of the Standards for the Classification of Federal Data on Race and Ethnicity, 62 FR 58782, 5878-90 (Oct. 30, 1997). 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. a. 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. Appendix B to 12 CFR part 1003 provides a data collection model form for collecting information concerning an applicant's ethnicity, race, and sex that complies with the requirements of 1002.13(a)(1)(i)(B) and (ii). Video and other electronic-application processes. 82 FR 16307, 16313, and 16317-18 (Apr. 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URLA in the Bureau Approval Notice, the Bureau proposed to remove the 2004 URLA as a model form in Regulation B. When originally enacted, ECOA gave the Federal Reserve Board responsibility for prescribing the implementing regulation. 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. (B) The categories and subcategories for the collection of ethnicity and race set forth in appendix B to 12 CFR part 1003. *. See Fannie Mae, Guide Forms, available at https://www.fanniemae.com/singlefamily/selling-servicing-guide-forms (last visited Sept. 6, 2017) (listing all selling and servicing guide forms); Freddie Mac, Forms and Documents, available at http://www.freddiemac.com/singlefamily/guide/ (last visited Sept. 6, 2017) (same). Financial institutions that report under Regulation C, have reported in the prior five years, or may report in the near future may also be affected by this rule. On March 24, 2017, the Bureau issued the 2017 ECOA Proposal on its Web site. 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. The RFA generally requires an agency to conduct an initial regulatory flexibility analysis (IRFA) and a final regulatory flexibility analysis (FRFA) of any rule subject to notice-and-comment rulemaking requirements, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. include documents scheduled for later issues, at the request Sections with amendments are marked with an asterisk (*). Two industry commenters, while supportive of the flexibility provided in the 2017 ECOA Proposal, sought clarification on how aggregate and disaggregated data will be evaluated against one another, including how aggregate information collected under Regulation B would be compared to disaggregated information collected under revised Regulation C. The commenters expressed concern that the optionality could result in dissimilar demographic reporting and potentially greater compliance burden for creditors who choose to continue to collect aggregate information. Sec. The Bureau also received questions as to how that requirement intersected with compliance obligations under Regulation B. Appendix B provides data collection model forms for use in complying with 1002.13 and that comply with 1002.13(c). 1691b. Local laws. 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. hXmo6+}wR@ N@WMv3Asc~HRHmP0(@J-,9)|PP9hZhkhF4+Ao j1x- sjzIwK[MvS}4=$BUzw3$ B prohibited practices (12 C.F.R. Information about this document as published in the Federal Register. When you visit the site, Dotdash Meredith and its partners may store or retrieve information on your browser, mostly in the form of cookies. 44. A consumer advocacy group commenter argued that the Bureau should adopt the alternative of requiring all persons subject to the collection and retention requirement of Regulation B to permit applicants to self-identify using disaggregated race and ethnicity categories. 4. If there is more than one co-applicant, a creditor is permitted, but is not required, to collect the information set forth in paragraph (a) of this section from a second or additional co-applicant. Some Regulation B-only creditors sell mortgages to the Enterprises, and would benefit from being able to use the 2016 URLA. Your institution is required to establish procedures to ensure that it complies with the requirements of Regulation CC and to provide a copy of these procedures to all employees who perform duties affected by the regulation. 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. 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. 82 FR 43088, 43100-43102 (Sept. 13, 2017); see also id. [42] and, in part, prohibits a creditor from inquiring about the race, color, religion, national origin, or sex of a credit applicant except under certain circumstances. 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. You can learn more about the standards we follow in producing accurate, unbiased content in our. 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. Notwithstanding paragraph (b) of this section, a creditor may collect information under the following circumstances provided that the creditor collects the information in compliance with appendix B to 12 CFR part 1003: (i) A creditor that is a financial institution under 12 CFR 1003.2(g) may collect information regarding the ethnicity, race, and sex of an applicant for a closed-end mortgage loan that is an excluded transaction under 12 CFR 1003.3(c)(11) if it submits HMDA data concerning such closed-end mortgage loans and applications or if it submitted HMDA data concerning closed-end mortgage loans for any of the preceding five calendar years; (ii) A creditor that is a financial institution under 12 CFR 1003.2(g) may collect information regarding the ethnicity, race, and sex of an applicant for an open-end line of credit that is an excluded transaction under 12 CFR 1003.3(c)(12) if it submits HMDA data concerning such open-end lines of credit and applications or if it submitted HMDA data concerning open-end lines of credit for any of the preceding five calendar years; (iii) A creditor that submitted HMDA data for any of the preceding five calendar years but is not currently a financial institution under 12 CFR 1003.2(g) may collect information regarding the ethnicity, race, and sex of an applicant for a loan that would otherwise be a covered loan under 12 CFR 1003.2(e) if not excluded by 12 CFR 1003.3(c)(11) or (12); (iv) A creditor that exceeded an applicable loan volume threshold in the first year of the two-year threshold period provided in 12 CFR 1003.2(g), 1003.3(c)(11), or 1003.3(c)(12) may, in the second year, collect information regarding the ethnicity, race, and sex of an applicant for a loan that would otherwise be a covered loan under 12 CFR 1003.2(e) if the loan were not excluded by 12 CFR 1003.3(c)(11) or (12); (v) A creditor that is a financial institution under 12 CFR 1003.2(g), or that submitted HMDA data for any of the preceding five calendar years but is not currently a financial institution under 12 CFR 1003.2(g), may collect information regarding the ethnicity, race, and sex of an applicant for a loan that would otherwise be a covered loan under 12 CFR 1003.2(e) if the loan were not excluded by 12 CFR 1003.3(c)(10). Many HMDA reporters are also subject to the collection requirements of 1002.13. The Bureau also believes that permitting creditors to collect certain protected applicant-characteristic information in these circumstances provides a narrow exception to the general limitations in 1002.5(b) through (d) respects the purposes of those prohibitions. The current Regulation B appendix includes five model forms, each designated for use in a particular type of consumer credit transaction. 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. 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. 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. This document has been published in the Federal Register. 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. 4, 2017). It is not required to store the complete written application, nor is it required to enter the remaining items of information into the system. [19] [11] documents in the last year, 1479 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. Redlining has often been used to discriminate against Black Americans. See Fannie Mae, Guide Forms, available at https://www.fanniemae.com/singlefamily/selling-servicing-guide-forms (last visited Sept. 6, 2017) (listing all current selling and servicing guide forms); see also Freddie Mac, Forms and Documents, available at http://www.freddiemac.com/singlefamily/guide/ (last visited Sept. 6, 2017) (same). Although it may be true in the particular case of the community bank commenter, the Bureau believes it is not the case that Start Printed Page 45693these data are never used by regulators. The appendix provides that the use of its model forms is optional under Regulation B but that, if a creditor uses an appropriate appendix B model form, or modifies a form in accordance with instructions provided in appendix B, that creditor shall be deemed to be acting in compliance with 1002.5(b) through (d). 03/01/2023, 43 1375, 1980 (2010) (codified at 12 U.S.C. The Bureau did not propose these changes in the 2017 ECOA Proposal. The Bureau also proposed to amend comment 12(b)-2 to require retention of applicant demographic information obtained pursuant to 1002.5(a)(4). Although the information collected under 1002.13 and Regulation C overlap, in part, as discussed in the 2017 ECOA Proposal, regulators will rely on applicant demographic information collected under 1002.13 to supervise and enforce fair lending laws, including for a substantial number of creditors that will not be required to report under revised Regulation C.36 Regulations B and C both contain an appendix B that provides model forms for use when collecting applicant demographic information required under the regulations. The rule does not add the 2016 URLA to the Regulation B appendix; that form is subject to a separate Federal Register notice issued by the Bureau acknowledging its compliance with certain provisions of Regulation B.[8]. 80 FR 66128, 66139, and 66169 (Oct. 28, 2015). documents in the last year, 662 8. Comments related to the data collection model forms are addressed in the section-by-section analysis of the Regulation B appendix. All lenders are required to comply with Regulation B, which protects applicants from discrimination. A place where you can easily find solutions and ask questions Regulation B applies toall persons who, in the ordinary course of business, regularly participate in the credit decision of an applicant or borrower, including setting the terms of the credit. As discussed below, though, a creditor must comply with the record retention requirements of 1002.12 if it chooses to take advantage of the authorization in 1002.5(a)(4). Sc~|~??lW@l 1. Both ECOA and title X of the Dodd-Frank Act are consumer financial laws. A person can have only one principal residence at a time. Document Drafting Handbook 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. Inadvertent notation. Creditors that fail to comply with Regulation B are subject to punitive damages. In the 2017 ECOA Proposal, the Bureau set forth a preliminary analysis of these effects, and the Bureau requested comment and submissions of additional data that could inform the Bureau's analysis of the benefits, costs, and impacts of the proposal. [17] 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. 18. documents in the last year, by the International Trade Commission
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