Proposed 1002.5(a)(4) provides authorization to collect applicant demographic information, but does not require collection in the circumstances described. 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). Subpart A--Collection of Checks and Other Items By Federal Reserve Banks. Information required by Regulation C. Regulation C, 12 CFR part 1003, generally requires creditors covered by the Home Mortgage Disclosure Act (HMDA) to collect and report information about the race, ethnicity, and sex of applicants for certain dwelling-secured loans, including some types of loans not covered by 1002.13. Show Register, and does not replace the official print version or the official 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. 16. Subpart A: Collection of Checks and Other Items by Federal Reserve Banks Section 210.1 Authority, purpose, and scope Subpart A governs the collection of checks and other items and the handling of returned checks by Reserve Banks. A credit application related to a vacation home or a rental unit is not covered. Section 1002.13 sets forth the scope, required information, and manner for the mandatory collection of certain protected applicant-characteristic information under Regulation B. Creditors can ask about the number of children, their ages, and the borrower's financial obligations relating to the children. Home Mortgage Disclosure (Regulation C), 80 FR 66128 (Oct. 28, 2015). documents in the last year, 87 [34] Paragraph 13(c)Disclosure to applicants is revised. has no substantive legal effect. In developing the final rule, the Bureau has considered the potential benefits, costs, and impacts. Rules for Taking Applications - 12 CFR 1002.5. 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 consumer debt collection larger participant rule, which appears in 12 CFR Part 1090, was effective January 2, 2013 . 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. [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). 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. Having considered the comments received and for the reasons discussed above, the Bureau is finalizing 1002.13(a)(1)(i) as proposed. Regulation B 1. 82 FR 43088, 43093-43096 (Sept. 13, 2017); see also id. The first sample form is intended for use in open-end, unsecured transactions; the second for closed-end, secured transactions; the third for closed-end transactions, whether unsecured or secured; the fourth in transactions involving community property or occurring in community property States; and the fifth in residential mortgage transactions which contains a model disclosure for use in complying with 1002.13 for certain dwelling-related loans. The commenter asserted the resulting data are never used by regulators, while the collection and retention imposes a substantial burden. Redlining has often been used to discriminate against Black Americans. Cookies collect information about your preferences and your devices and are used to make the site work as you expect it to, to understand how you interact with the site, and to show advertisements that are targeted to your interests. Transactions not covered. In general, 1002.5(b) prohibits a creditor from inquiring about protected applicant-characteristic information in connection with a credit transaction, except under certain circumstances. The Enterprises also made available a Demographic Information Addendum, which is identical in form to section 7 of the 2016 URLA. (b) Obtaining information. 1. Federal Reserve. Commenters also noted that it would facilitate use of the 2016 URLA. The FFIEC call report for banks does not report originations for depository institutions that do not report to HMDA. As discussed below in the section-by-section analysis for 1002.13, the Bureau is 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. When you visit the site, Dotdash Meredith and its partners may store or retrieve information on your browser, mostly in the form of cookies. 4, 2017). With some exceptions, Regulation B 1002.5(b) prohibits a creditor from inquiring about the race, color, religion, national origin, or sex of an applicant or any other person (protected applicant-characteristic information) in connection with a credit transaction. The consumer and the financial institution (including an account for which an access device has been issued to the consumer, for example); ii. Federal Register. 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. 2017-20417 Filed 9-29-17; 8:45 am], updated on 11:15 AM on Wednesday, March 1, 2023, updated on 8:45 AM on Wednesday, March 1, 2023. Among other changes, the 2016 URLA includes a Demographic Information section (section 7) that addresses the requirements in revised Regulation C for collecting applicant demographic information, including the requirement that financial institutions permit applicants to self-identify using disaggregated ethnicity and race categories beginning January 1, 2018. [19] 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. The Bureau expects that institutions will only exercise this option if voluntary collection provides a net benefit. 210.1 Authority, purpose, and scope. 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. 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. For the reasons discussed above, the Bureau is finalizing as proposed the revisions to 1002.13(b) concerning the collection of ethnicity and race information on the basis of visual observation or surname. i. More information and documentation can be found in our 5. ii. The Bureau proposed to amend 1002.5(a)(4) to authorize creditors to collect such information under certain additional circumstances. Under 1002.13(a)(1), creditors that receive an application for credit primarily for the purchase or refinancing of a dwelling occupied (or to be occupied) by the applicant as a principal residence, where the extension of credit will be secured by the dwelling, must collect certain protected applicant-characteristic information, including specified race and ethnicity categories. I'd first recommend that you go review this section and the applicable Official Staff Commentary. [12/09/14] (Reg AB Telephone Interpretation 17.06) 200.07 Rule 15Ga-1 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. This appendix also contains a data collection model form for collecting information concerning an applicant's ethnicity, race, and sex that Start Printed Page 45695complies with the requirements of 1002.13(a)(1)(i)(A) and (ii). [12] [FR Doc. regulation prescribes rules for taking, evaluating, and acting on applications aswell rules for furnishing and maintaining credit information. Regulation B covers the actions of a creditor before, during, and after a credit transaction. Video and other electronic-application processes. 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. For class actions, the creditor could face a penalty of $500,000 or 1% of the creditors net worth, whichever is lower. 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. documents in the last year, 662 Section 1002.13 applies only to applications from natural persons. %%EOF These included, for example, a comment supporting the collection of loan officers' demographic information, a request to collect information on whether the applicant is divorced, a request for guidance on when previously gathered applicant demographic information can be used for new applications, and a request that the Bureau provide a safe harbor for information collected in 2017. [43] Those rules include: They must identify themselves as a debt collection agency and give their name and the address for the collection agency. [45] 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 2015 HMDA Final Rule. A creditor may devise its Start Printed Page 45697own disclosure so long as it is substantially similar. Regulation B is intended to prevent applicants from discrimination in any aspect of a credit transaction. documents in the last year, by the International Trade Commission alteration, or termination of credit; collection procedures. Investopedia requires writers to use primary sources to support their work. The other alternative would permit collection of applicant demographic information for any covered loan under Regulation C with no timeframe restriction, even if the creditor was not a financial institution under Regulation C. The Bureau is not adopting these proposed alternatives. (12 USC 5514(a)(1)(B)). However, if a person buys or builds a new dwelling that will become that person's principal residence within a year or upon completion of construction, the new dwelling is considered the principal residence for purposes of 1002.13. 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. On the other hand, the Bureau believes that requiring disaggregated collection for Regulation B-only creditors would impose additional burden on creditors without significant benefits. 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. 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). Unlike the costs associated with the adoption of the 2016 URLA, these costs would not otherwise be incurred in the normal course of business. When a creditor collects ethnicity and race information pursuant to 1002.13(a)(1)(i)(B), the creditor must comply with any restrictions on the collection of an applicant's ethnicity or race on the basis of visual observation or surname set forth in appendix B to 12 CFR part 1003. In addition, there are state laws that provide protections. The revisions and additions read as follows: 1. 1. in On March 24, 2017, the Bureau issued the 2017 ECOA Proposal on its Web site. Under this section, procedural requirements of the regulation do not apply to certain types of credit. In addition, the Bureau is adopting new 1002.5(a)(4)(v) and (vi) in response to comments, as discussed below. 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). 2. We also reference original research from other reputable publishers where appropriate. 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. offers a preview of documents scheduled to appear in the next day's The information must be retained pursuant to the requirements of 1002.12. 4. One industry commenter generally supported the proposal, noting the flexibility would reduce compliance burden. 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. 09/29/2017 at 8:45 am. [33] 45. In July 2014, the Bureau proposed amendments to Regulation C to implement the Dodd-Frank Act changes to require collection, recording, and reporting of additional information to further HMDA's purposes, and to modernize the manner in which covered institutions report HMDA data. Finally, the Bureau is amending Regulation B and the associated commentary to allow creditors to collect ethnicity, race, and sex from mortgage applicants in certain cases where the creditor is not required to report under HMDA and Regulation C. These circumstances include when: (1) A creditor that is a financial institution under revised Regulation C 1003.2(g), originates a closed-end mortgage loan or an open-end line of credit that is an excluded transaction under revised Regulation C 1003.3(c)(11) or 1003.3(c)(12), if it submits HMDA data concerning those applications and loans or if it submitted HMDA data concerning closed-end mortgage loans or open-end lines of credit in any of the preceding five calendar years; (2) a creditor that submitted HMDA data in any of the preceding five calendar years but is not currently a financial institution under Regulation C 1003.2(g), collects demographic information of an applicant for a loan that would otherwise be a covered loan under Regulation C 1003.2(e), if not excluded by Regulation C 1003.3(c)(11) or 1003.3(c)(12); (3) a creditor that exceeded an applicable loan volume threshold in the first year of the two-year threshold period provided in Regulation C 1003.2(g), 1003.3(c)(11), or 1003.3(c)(12), collects, in the second year, demographic information of an applicant for a loan that would otherwise be a covered loan under Regulation C 12 CFR 1003.2(e), if the loan were not excluded by Regulation C 1003.3(c)(11) or 1003.3(c)(12); (4) a creditor that is a financial institution under Regulation C 1003.2(g), or that submitted HMDA data for any of the preceding five calendar years but is not currently a financial institution under Regulation C 1003.2(g), collects demographic information of an applicant for a loan that would otherwise be a covered loan under Regulation C 1003.2(e) if the loan were not excluded by Regulation C 1003.3(c)(10); and (5) a creditor that collects demographic information of a second or additional co-applicant for a covered loan under Regulation C 1003.2(e), or for a second or additional co-applicant for a loan described in amended 1002.5(a)(4)(i) through (v). 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