does reg b cover collection procedures

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. This prototype edition of the Regulation B covers the actions of a creditor before, during, and after a credit transaction. [19] Finally, demographic data retained by Regulation B-only creditors is not reported under Regulation C. Consequently, most oversight and analysis of demographic data retained by Regulation B-only creditors will be done only by regulators, whereas researchers and community groups also conduct analysis of HMDA data reported under Regulation C. The Bureau believes the final rule will not impose any costs on consumers. What Is the Equal Credit Opportunity Act (ECOA)? 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. New principal residence. Chip Stapleton is a Series 7 and Series 66 license holder, CFA Level 1 exam holder, and currently holds a Life, Accident, and Health License in Indiana. A creditor that enters information items from a written application into a computerized or mechanized system and makes the credit decision mechanically, based only on the items of information entered into the system, may comply with 1002.12(b) by retaining the information actually entered. Joint guidance on overdraft protection programs. The current Regulation B appendix includes five model forms, each designated for use in a particular type of consumer credit transaction. 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. The Bureau published a final rule on October 28, 2015, amending Regulation C, with many of the amendments taking effect January 1, 2018. 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. 32. Amend 1002.13 by revising paragraph (a)(1)(i) and paragraph (b) to read as follows: (A) For ethnicity, the aggregate categories Hispanic or Latino and not Hispanic or Latino; and, for race, the aggregate categories American Indian or Alaska Native, Asian, Black or African American, Native Hawaiian or Other Pacific Islander, and White; or. The same commenter also cited a report by health researchers discussing, among other topics, that observer-selected race, often used for death certificates, may not match self-selected race. Industry commenters noted this potential conflict and expressed their support for the proposal. A creditor that accepts an application by telephone or mail must request the monitoring information. Fannie Mae, Form 1003 and Freddie Mac Form 65, Demographic Information Addendum, (Aug. 2016), available at https://www.fanniemae.com/content/guide_form/urla-demographic-addendum.pdf. 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. Investopedia requires writers to use primary sources to support their work. 82 FR 43088, 43093-43096 (Sept. 13, 2017); see also id. 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. 24. 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. 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. An industry service provider asked the Bureau to provide guidance regarding whether the term natural person as used in Regulation B and Regulation C includes living trusts or sole proprietorships. A creditor can satisfy this requirement by recording on paper or by means of computer the information that the applicant provides orally and that the creditor normally considers in a credit decision. 41. Indeed, given that Regulation C requires collection of certain applicant demographic information on the basis of visual observation or surname, adopting either proposal would undermine the purpose of this rulemaking by imposing different requirements in Regulation B and Regulation C.[37] 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. Questions regarding ethnicity, race, sex, marital status, and age may be listed, at the creditor's option, on the application form or on a separate form that refers to the application. The rule makes certain changes to the Regulation B appendix. of the issuing agency. One industry commenter generally supported the proposal, noting the flexibility would reduce compliance burden. Comment appendix B-1 provides that a previous version of the URLA, dated October 1992, may be used by creditors without violating Regulation B. 6. Section 1002.12 provides rules concerning permissible and required record retention. 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. 31. Under Section 1002.5Rules concerning requests for information: b. regulation prescribes rules for taking, evaluating, and acting on applications aswell rules for furnishing and maintaining credit information. The commenters proposed that the requirement to collect applicant demographic information on the basis of visual observation or surname should be eliminated or that the Bureau provide additional instructions to aid creditors to identify an applicant's ethnicity and race based on visual observation or surname. A creditor that receives an application to refinance an existing extension of credit made by that creditor for the purchase of the applicant's dwelling may request the monitoring information again but is not required to do so if it was obtained in the earlier transaction. It is not an official legal edition of the Federal 09/29/2017 at 8:45 am. The commenter noted that differing instructions may lead to uncertainty and that Regulation B-only creditors would benefit from the additional instructions provided in revised Regulation C. No commenters opposed the proposed comment, and so the Bureau is finalizing comment 13(a)-7 as proposed. A refinancing occurs when an existing obligation is satisfied and replaced by a new obligation undertaken by the same borrower. Application-by-application basis. 1375, 2035-39 (2010) (codified at 12 U.S.C. 80 FR 66128, 80 FR 66140, and 66144 (Oct. 28, 2015). The Bureau is issuing this final rule pursuant to its authority under section 703 of ECOA, as amended by section 1085 of the Dodd-Frank Act. Without Regulation B's explanation requirement, many potential borrowers with errors in their credit reports would become discouraged and give up. corresponding official PDF file on govinfo.gov. 8. 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. Securities credit refers to extensions of credit subject to regulation under section 7 of the Securities Exchange Act of 1934 or extensions of credit by a broker or dealer subject to regulation as a broker or dealer under the Securities Exchange Act of 1934. 5. When a creditor collects ethnicity and race information pursuant to 1002.13(a)(1)(i)(A), the applicant must be offered the option to select more than one racial designation. 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. The Bureau has determined that this final rule would not impose any new or revised information collection requirements (recordkeeping, reporting or disclosure requirements) on covered entities or members of the public that would constitute collections of information requiring OMB approval under the PRA. 03/01/2023, 159 1. Having considered the comments received and for the reasons discussed above, the Bureau is finalizing 1002.13(a)(1)(i) as proposed. For example, an applicant who puts down his home as collateral will have additional information collected for monitoring compliance. The FFIEC call report for banks does not report originations for depository institutions that do not report to HMDA. !qZ{r![6|(:9'nG%8}tB\iJ9 DIbsH NB8- 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. [40] When you visit the site, Dotdash Meredith and its partners may store or retrieve information on your browser, mostly in the form of cookies. 9. 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. The commenter asserted the resulting data are never used by regulators, while the collection and retention imposes a substantial burden. The Bureau received no comments on its proposal and so is removing the commentary to the Regulation B appendix in this final rule. Definition, What Is Redlining? The industry service provider commented that this distinction makes data collection more complex and burdensome, and requested that the Bureau clarify the collection requirements for co-applicants under Regulation B. [2] 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. For example, Hispanic or Latino as defined by OMB for the 2010 Census refers to a person of Cuban, Mexican, Puerto Rican, South or Central American, or other Spanish culture or origin. 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. The Regulatory Flexibility Act (RFA), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996, requires each agency to consider the potential impact of its regulations on small entities, including small business, small governmental units, and small nonprofit organizations. Fr 66128, 80 FR 66128, 80 FR 66140, and a. 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