Industry commenters proposed two additional, narrowly tailored exceptions that the Bureau is substantially adopting. 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. 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. All lenders are required to comply with Regulation B, which protects applicants from discrimination. hXmo6+}wR@ N@WMv3Asc~HRHmP0(@J-,9)|PP9hZhkhF4+Ao j1x- sjzIwK[MvS}4=$BUzw3$ 1002.4): Discriminating against applicants on a prohibited basis regarding any aspect of a credit transaction. A creditor that accepts an application by mail need not make a special request for the monitoring information if the applicant has failed to provide it on the application form returned to the creditor. The creditor need not orally request the monitoring information if it is requested in writing. 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. Regulation CC contains four subparts. 6. Section 1002.13 sets forth the scope, required information, and manner for the mandatory collection of certain protected applicant-characteristic information under Regulation B. documents in the last year, 121 on Home Mortgage Disclosure (Regulation C), 79 FR 51731 (Aug. 29, 2014). 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). 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. [26] P}j]+VuuYZcU? "Federal Fair Lending Regulations and Statutes: Equal Credit Opportunity (Regulation B)," Page 3. These costs include greater operational costs and one-time database upgrades. The President of the United States manages the operations of the Executive branch of Government through Executive orders. Investopedia does not include all offers available in the marketplace. 1. 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. 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. A credit application related to a vacation home or a rental unit is not covered. [32] 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. The Bureau is also issuing this final rule pursuant to its authority under sections 1022 and 1061 of the Dodd-Frank Act. 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). Similarly, an industry commenter stated that the collection methods used in Regulation B and Regulation C should match. 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. 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. The Bureau believes the final rule will provide modest benefits to such institutions, by saving on one-time adjustment costs required to shift in and out of collection. The incremental benefits of this alternative are also likely to be low because many creditors will collect disaggregated categories under Regulation B in any case, either because they are required to do so under revised Regulation C or as part of the transition to the 2016 URLA. collection, as the CFPB defines by rule, and their service providers . (12 USC 5514(a)(1)(B)). The regulation requires written applications for the types of credit covered by 1002.13. Prohibited basis under Regulation B refers to a borrower's race, color, religion, national origin, sex, marital status, or age. 28. [17] 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 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). Paragraph 13(c)Disclosure to applicants is revised. An industry service provider also supported a uniform standard based on the requirements in revised Regulation C in order to reduce the costs of supporting dual collection methods. informational resource until the Administrative Committee of the Federal 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 Public Inspection page may also Under Regulation B, a creditor may request any information. 2. c. Under Section 1002.13Information for monitoring purposes: i. Paragraph 13(a)Information to be requested is revised. See also comment 5(a)(2)-2. The Enterprises, not the Bureau, mandate the adoption of the 2016 URLA. Section 1002.13 applies only to applications from natural persons. 1503 & 1507. Definition. Appendix B provides data collection model forms for use in complying with 1002.13 and that comply with 1002.13(c). 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). If the transaction is subject to 1002.13 or the creditor is collecting information pursuant to 1002.5(a)(4), however, the creditor is required to enter and retain the data on personal characteristics in order to comply with the requirements of that section. The final rule will provide creditors flexibility in complying with Regulation B in order to facilitate compliance with Regulation C and transition to the 2016 URLA. Moreover, the cited studies conclude only that some applicants may self-identify as different races over time and that visual observation of race is not always accurate. Section IV. Regulation B and Ethnicity and Race Information Collection, Comments Related to Other Changes to Regulation B, Section 1002.5Rules Concerning Requests for Information, 5(a)(4) Other Permissible Collection of Information, Section 1002.13Information for Monitoring Purposes, Appendix B to Part 1002Model Application Forms, Model Forms for Complying With Section 1002.13(a)(1)(i), Removal of the Official Commentary to Appendix B, VII. Under Section 1002.12Record retention, Paragraph 12(b) is revised. Regulation B protects consumers and prohibits lenders from discriminating based on age, gender, ethnicity, nationality, or marital status. british citizenship by marriage living abroad. For example, an applicant who puts down his home as collateral will have additional information collected for monitoring compliance. 2011), available at http://www.census.gov/prod/cen2010/briefs/c2010br-02.pdf. 8. Regulation B also includes certain optional model forms for use in complying with certain Regulation B requirements, including a model form for complying with 1002.13 that is a 2004 version of the Uniform Residential Loan Application (URLA) issued by the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) (collectively, the Enterprises). This repetition of headings to form internal navigation links Comments on the benefits and costs of the rule are also discussed above in the section-by-section analysis of the preamble. (ii) Section 1002.12(b) relating to record retention. Instead, the Bureau is providing for two alternative data collection model forms for the purpose of collecting ethnicity and race information. He has 8 years experience in finance, from financial planning and wealth management to corporate finance and FP&A. The Bureau believes that such guidance would add complexity and compliance burden on creditors without furthering the purposes of ECOA, and so declines to do so as part of this rulemaking. One commenter argued that the proposed rule would add complexity, however, as creditors would be required to report disaggregated information under revised Regulation C, permitted to collect such information under revised 1002.13, but prohibited from collecting disaggregated information if the applicant does not provide it. 5512(b)(1)). For the reasons provided below, the Bureau is adopting the revisions to 1002.13(b) concerning the collection of ethnicity and race information on the basis of visual observation or surname as proposed. that agencies use to create their documents. If it is not evident on the face of an application that it was received by mail, telephone, or via an electronic medium, the creditor should indicate on the form or other application record how the application was received. In the 2017 ECOA Proposal, the Bureau also considered but did not propose the alternative of including the 2016 URLA as a model form in the Regulation B appendix. The Bureau proposed to amend 1002.13(a)(1)(i) to provide a creditor flexibility to collect applicant ethnicity and race information using either aggregate or disaggregated categories, thereby furthering the purposes of ECOA, reducing compliance burden, and facilitating use of the 2016 URLA. 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. The second substantive change will remove the outdated 2004 URLA as a model form. The consumer and the financial institution (including an account for which an access device has been issued to the consumer, for example); ii. As proposed, comment 13(a)-8 permitted a creditor to choose on an application-by-application basis whether to collect aggregate information pursuant to 1002.13(a)(1)(i)(A) or disaggregated information pursuant to 1002.13(a)(1)(i)(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. 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. During this period, a creditor adopting the practice of permitting applicants to self-identify using disaggregated ethnic and racial categories as instructed in the revised Regulation C appendix shall be deemed to be in compliance with Regulation B 1002.13(a)(i). Two commenters opposed the collection of applicant demographic information on the basis of visual observation or surname under any circumstances. Although some entities subject to Regulation B but not Regulation C may choose to voluntarily Start Printed Page 45694begin collecting disaggregated race and ethnicity information, the Bureau believes the most likely reason for this to occur is through adoption of the 2016 URLA, which is not part of the final rule. regulation prescribes rules for taking, evaluating, and acting on applications aswell rules for furnishing and maintaining credit information. An applicant's age can be requested if it appears that they cannot legally sign a contract. Reg B also helps anyone who is denied credit by requiring lenders to give them an explanation. One industry commenter proposed permitting collection for dwelling-secured loans made primarily for a business or commercial purpose that might be covered loans, regardless of whether or not they are for the purpose of home purchase, refinancing, or home improvement and therefore reportable under revised Regulation C. Under revised Regulation C, dwelling-secured loans made primarily for a business or commercial purpose are only required to be reported if they meet the definition of a home purchase, refinancing, or home improvement loan. on This temporary increase in the open-end threshold will provide time for the Bureau to consider whether to initiate another rulemaking to address the appropriate level for the open-end threshold for data collected beginning January 1, 2020. The current Regulation B appendix includes the 2004 URLA as a model form. "Federal Fair Lending Regulations and Statutes: Equal Credit Opportunity (Regulation B)," Page 2. The final rule may have benefits to some Regulation B-only creditors. It also provides that the information must be retained pursuant to the requirements of 1002.12. 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