does reg b cover collection procedures

(vi) A creditor that is collecting information regarding the ethnicity, race, and sex of an applicant or first co-applicant may collect information regarding the ethnicity, race, and sex of a second or additional co-applicant for a covered loan under 12 CFR 1003.2(e) or for a second or additional co-applicant for a loan described in paragraphs (a)(4)(i) through (v) of this section. aJKvqC[+>G5Ci"95,Tk#qCsdtx\/TXCjJ5 &t\A%+gkp# The Bureau also proposed comments 13(a)-7 and 13(a)-8 to provide that a creditor that collects applicant information in compliance with the revised Regulation C appendix will be acting in compliance with 1002.13 concerning the collection of an applicant's ethnicity, race, and sex information and to clarify that a creditor may choose on an application-by-application basis whether to collect aggregate or disaggregated information. [35] 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. Many HMDA reporters are also subject to the collection requirements of 1002.13. 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. at 43132, 43145 (1003.2(g)(1)(v)(B), (g)(2)(ii)(B), and 1003.3(c)(12)). "Federal Fair Lending Regulations and Statutes: Equal Credit Opportunity (Regulation B)," Page 1. The Bureau also proposed to remove the outdated 2004 URLA from the Regulation B appendix, add generic model forms for compliance with 1002.13, and maintain approval of the 2016 URLA through a freestanding approval notice. The requirements of 1002.13 apply only if an application relates to a dwelling that is or will be occupied by the applicant as the principal residence. 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. documents in the last year. Any information unrelated to consumer credit cannot be used when making loan approval decisions. The documents posted on this site are XML renditions of published Federal The rule makes certain changes to the Regulation B appendix. The Bureau has consulted, or offered to consult with, the prudential regulators (the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency), the Securities and Exchange Commission, the Department of Justice, the Department of Housing and Urban Development, the Federal Housing Finance Agency, the Federal Trade Commission, the Department of Veterans Affairs, the Department of Agriculture, and the Department of the Treasury, including regarding consistency with any prudential, market or systematic objectives administered by such agencies. 23. 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). Paragraph 13(c)Disclosure to applicants is revised. 7. 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. The consumer advocacy groups further expressed the view that mandatory disaggregated collection would prepare lenders to submit HMDA data in the future should they cross a reporting threshold and that the burden of mandatory disaggregated collection would not be significant because the 2016 URLA makes it easy to record these categories. Under Section 1002.5Rules concerning requests for information: b. B-2. 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. When originally enacted, ECOA gave the Federal Reserve Board responsibility for prescribing the implementing regulation. on NARA's archives.gov. The rule amends the Regulation B appendix to provide two options: A model form for collecting aggregate applicant race and ethnicity information and a cross-reference to the Regulation C appendix model form for collecting disaggregated applicant race and ethnicity information. Comments related to the data collection model forms are addressed in the section-by-section analysis of the Regulation B appendix. The applicant(s) shall be asked but not required to supply the requested information. The current Regulation B appendix includes the 2004 URLA as a model form for use in complying with 1002.13. Appendix B provides data collection model forms for use in complying with 1002.13 and that comply with 1002.13(c). 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. 5. Two commenters supported the proposal regarding record retention, noting that it would facilitate Start Printed Page 45686monitoring of fair lending laws and serve ECOA's purposes and that it seemed appropriate given the proposed amendments to 1002.5(a)(4). 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, which, as related to 1002.13, is limited to modifications that harmonize the collection requirements of Regulation B and Regulation C. For the reasons discussed above, the Bureau is adopting 1002.13(a)(1)(i) and comments 13(a)-7 and 13(a)-8 as proposed. Ax$({MeQR.5V>+FrJLv_Y-+1aeJ|omxoVEEw]=QM*?^y[IrOz$;l:&=EMXz${xpIg 3. i. To the extent that the provision benefits firms and consumers, consumers in rural areas will see the largest benefits. Sec. Given that neither of these forms is currently used by the Enterprises, the Bureau proposed to remove in its entirety the commentary to the Regulation B appendix. 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. daily Federal Register on FederalRegister.gov will remain an unofficial fbS`}R7E_ |.rgxp,gh bWFdd~N2 ]_r'xj`-]JRZPT/]kM;U::. The Bureau did not propose these changes to Regulation B. They must tell you the name of the creditor (company or person you owe), the amount you owe and how you can dispute the debt or seek verification of the debt. The requirements of the regulation apply only to an account for which an agreement for EFT services to or from the account has been entered into between: i. Press Release, Uniform Mortgage Data Program, Fannie Mae and Freddie Mac at the direction of the FHFA, URLA Implementation Guidance and Update, (Nov. 1, 2016), available at https://www.fanniemae.com/content/news/urla-announcement-november-2016.pdf;; Uniform Mortgage Data Program, Fannie Mae and Freddie Mac at the direction of the FHFA, Uniform Residential Loan Application (URLA)/Uniform Loan Application Dataset (ULAD) FAQs, at 6 (Nov. 1, 2016), available at https://www.fanniemae.com/content/faq/urla-ulad-faqs.pdf. Creditors subject to the Home Mortgage Disclosure Act should be aware, however, that data collection may be called for under Regulation C (12 CFR part 1003), which generally requires creditors to report, among other things, the sex and race of an applicant on brokered applications or applications received through a correspondent. by the Housing and Urban Development Department The FFIEC call report for banks does not report originations for depository institutions that do not report to HMDA. Instead, the Bureau is providing for two alternative data collection model forms for the purpose of collecting ethnicity and race information. The RFA defines a small business as a business that meets the size standard developed by the Small Business Administration pursuant to the Small Business Act. publication in the future. The Bureau concluded that the proposal, if adopted, would not have a significant economic impact on any small entities and that an IRFA was therefore not required. Home Mortgage Disclosure (Regulation C), 80 FR 66128 (Oct. 28, 2015). Prohibited basis under Regulation B refers to a borrower's race, color, religion, national origin, sex, marital status, or age. 1002.4): Discriminating against applicants on a prohibited basis regarding any aspect of a credit transaction. The Bureau acknowledges that the requirement to collect or provide applicant demographic information from co-applicants differs between 1002.13 and revised Regulation C. The Bureau concludes that these differences may create additional burden and complexity for creditors, who may need to modify their practices concerning co-applicant collection depending on whether collection is required under both Regulation B and revised Regulation C or only under revised Regulation C. The Bureau is therefore revising 1002.13(b) to clarify that a creditor is permitted, but is not required, to collect the information set forth in 1002.13(a) from a second or additional co-applicant. The Bureau further received questions related to the Bureau Approval Notice about whether the approval for collecting disaggregated ethnicity and race categories under Regulation B in 2017 would be extended to 2018. reg b covers collection procedures An application for an open-end home equity line of credit is not subject to this section unless it is readily apparent to the creditor when the application is taken that the primary purpose of the line is for the purchase or refinancing of a principal dwelling. on that agencies use to create their documents. See revised Regulation C 1003.2(e). 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. The President of the United States manages the operations of the Executive branch of Government through Executive orders. Creditors that fail to comply with Regulation B are subject to punitive damages. See U.S. Census Bureau, Overview of Race and Hispanic Origin: 2010, at 2 (Mar. on A purpose of ECOA, as implemented by Regulation B, is to promote the availability of credit to all creditworthy applicants without regard to protected characteristics. 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. 6. [5] The Bureau of Consumer Financial Protection (Bureau) is issuing a final rule that amends Regulation B to permit creditors additional flexibility in complying with Regulation B in order to facilitate compliance with Regulation C, adds certain model forms and removes others from Regulation B, and makes various other amendments to Regulation B and its commentary to facilitate the collection and retention of information about the ethnicity, sex, and race of certain mortgage applicants. A creditor that uses a computerized or mechanized system Start Printed Page 45696need not keep a paper copy of a document (for example, of an adverse action notice) if it can regenerate all pertinent information in a timely manner for examination or other purposes. 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 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. In addition, there are state laws that provide protections. For class actions, the creditor could face a penalty of $500,000 or 1% of the creditors net worth, whichever is lower. (ii) Section 1002.12(b) relating to record retention. [30] Does Reg B require receipt of all required conditions before a credit approval can be made? @*EtJ '_whyb.v'Yc:E| t%]C@bkBZSAqqu`2B6G\#; Once people know the reason for the denial, there is a strong incentive to correct the credit reports and reapply. To determine whether the credit union is in compliance with those requirements of ECOA that are set forth in Regulation B. Local laws. Register (ACFR) issues a regulation granting it official legal status. 1. 11. 1. in with the applicable provisions of Regulation B described below. 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. , which is implemented by Regulation B (12 CFR Part 1002 ), applies to all creditors, including credit unions. 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. A Rule by the Consumer Financial Protection Bureau on 10/02/2017. A person can have only one principal residence at a time. Sections with amendments are marked with an asterisk (*). The Bureau also conducted Start Printed Page 45683outreach with other Federal agencies, including the Securities and Exchange Commission, the Department of Justice, the Department of Housing and Urban Development, the Federal Housing Finance Agency, the Federal Trade Commission, the Department of Veterans Affairs, the Department of Agriculture, the Department of the Treasury, and the Federal Financial Institutions Examination Counsel (FFIEC) concerning the proposed rule. The Bureau requested comment regarding the costs and benefits associated with this provision. Under Regulation B, a lender may not request information about an applicants sex, national origin, color, or other information not related to creditworthiness. on Two of these circumstances are a requirement for creditors to collect and retain certain information about applicants for certain dwelling-secured loans under Regulation B 1002.13 and the similar applicant information that financial institutions are required to collect and report under Regulation C, 12 CFR part 1003, which implements the Home Mortgage Disclosure Act (HMDA). The creditor must note the monitoring information on the basis of visual observation or surname, if the applicant chooses not to provide the information. [32] 1. In the same notice, the Bureau also determined that the relevant language in the 2016 URLA is in compliance with the regulatory provisions of Regulation B 1002.5(b) through (d), regarding requests for protected applicant-characteristic information and certain other information. "Federal Fair Lending Regulations and Statutes: Equal Credit Opportunity (Regulation B)," Page 2. Section 1002.13 sets forth the scope, required information, and manner for the mandatory collection of certain protected applicant-characteristic information under Regulation B. 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). 3. The regulation requires written applications for the types of credit covered by 1002.13. 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]. Whether the credit union is in compliance with those requirements of 1002.13 punitive. Applicable provisions of Regulation B with this provision in rural areas will see the benefits... With amendments are marked with an asterisk ( * ) the requested information the of... At a time approval decisions ii ) Section 1002.12 ( B ), '' Page 1 can be made a... Hmda reporters are also subject to the collection requirements of 1002.13 ), applies all. Of a credit approval can be made when originally enacted, ECOA gave the Federal Board. Any information unrelated to consumer credit can not be used when making loan approval decisions, there are state that! 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