Institutions subject to Regulation B but not Regulation C include, for example, institutions that do not have a branch or home office in a Metropolitan Statistical Area (MSA), do not meet an applicable asset threshold, or do not meet an applicable loan volume threshold. This information is discussed below in the section-by-section analysis and subsequent parts of the notice, as applicable. 03/01/2023, 828 [12] 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. documents in the last year. This repetition of headings to form internal navigation links 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] Accordingly, the undersigned certifies that this final rule will not have a significant economic impact on a substantial number of small entities. Section 1002.5 provides rules concerning requests for information. Information about this document as published in the Federal Register. The commenter disputed the Bureau's assessment that the potential alternative would impose substantial costs on Regulation B-only creditors. Other permissible collection of information. 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. Section 1002.13 sets forth the scope, required information, and manner for the mandatory collection of certain protected applicant-characteristic information under Regulation B. When it comes to credit transactions, a creditor cannot discriminate: Regulation B also mandates that lenders provide oral or written notice of rejection to failed applicants within 30 days of receiving their completed applications. 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. Moreover, the commenter did not address the limited usefulness of disaggregated race and ethnicity data from lenders with a very low volume of loan originations. The Enterprises, currently under the conservatorship of the Federal Housing Finance Agency (FHFA), prepare and periodically revise the URLA used by many lenders for certain dwelling-related loans. 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. at 66314 (amendments to appendix B to Regulation C, effective January 1, 2018). 35. Does Reg B require receipt of all required conditions before a credit approval can be made? 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. 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. The Bureau is therefore not requiring the collection of disaggregated categories for Regulation B-only creditors. Current 1002.13(a)(1) requires that creditors collect information regarding the applicant's ethnicity and race using two aggregate ethnicity categories (Hispanic or Latino and Not Hispanic or Latino) and five aggregate race categories (American Indian or Alaska Native, Asian, Black or African American, Native Hawaiian or Other Pacific Islander, and White). The final rule may have some benefits to Regulation B-only creditors, as the current language of Regulation B would not allow these entities to use the 2016 Start Printed Page 45691URLA for the purpose of collecting race and ethnicity data, as the 2016 URLA uses the disaggregated race and ethnicity categories set forth in revised Regulation C and not the specific categories required by current Regulation B. The Bureau requested comment on the analysis under the RFA and any relevant data. When a creditor collects ethnicity and race information pursuant to 1002.13(a)(1)(i)(B), the applicant must be offered the option to select more than one ethnicity designation and more than one racial designation. 82 FR 43088, 43100-43102 (Sept. 13, 2017); see also id. 09/29/2017 at 8:45 am. Specifically, the Bureau proposed an amendment to 1002.13 to permit a creditor additional flexibility in how it collects applicant ethnicity and race information by allowing use of either aggregate or disaggregate ethnicity and race categories on an application-by-application basis. Once people know the reason for the denial, there is a strong incentive to correct the credit reports and reapply. 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. 17. 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. Z8m'POn0k6j'T]]>o:gzwzBOLLX6XaXDfB{cQftl9GTFS7_^W/nX6[ "Federal Fair Lending Regulations and Statutes: Equal Credit Opportunity (Regulation B)," Page 2. Application-by-application basis. Removing the Regulation B requirement altogether would make detection of any discrimination by these entities more difficult, with potentially large costs to consumers where such discrimination exists. (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. 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 Consumer Credit Protection Act of 1968 (CCPA) is federal legislation outlining disclosure requirements for consumer lenders. The benefits may be somewhat larger for depository institutions and credit unions with less than $10 billion in assets because the relative costs of duplicative collection will be greater for these entities. 24. hbbd``b`>$[A#` , b)@,k $301rY~0 # When a creditor collects ethnicity and race information pursuant to 1002.13(a)(1)(i)(A), the applicant must be offered the option to select more than one racial designation. Compliance with the applicable servicing criteria is achieved if those policies and procedures are designed to provide reasonable assurance that such vendor's activities comply with such criteria and those policies and procedures are operating effectively. An industry service provider asked the Bureau to provide guidance regarding whether the term natural person as used in Regulation B and Regulation C includes living trusts or sole proprietorships. First, Regulation B-only creditors will not be required to permit applicants to self-identify using disaggregated ethnicity and race categories, likely resulting in few creditors adopting disaggregated ethnicity and race categories. In this Issue, Documents for fair lending practices. A small financial institution commenter advocated for eliminating the Regulation B requirement to collect and retain race and ethnicity information. Natural person. To the extent that the provision benefits firms and consumers, consumers in rural areas will see the largest benefits. He previously held senior editorial roles at Investopedia and Kapitall Wire and holds a MA in Economics from The New School for Social Research and Doctor of Philosophy in English literature from NYU. As proposed, comment 13(a)-8 permitted a creditor to choose on an application-by-application basis whether to collect aggregate information pursuant to 1002.13(a)(1)(i)(A) or disaggregated information pursuant to 1002.13(a)(1)(i)(B). [5] HUMo8W,"Z[$hAX][RmyZ#=({x~6VX,k:JT%CXI qhTpz The Bureau is adopting comment 13(a)-8 as proposed. 44. The consumer debt collection larger participant rule, which appears in 12 CFR Part 1090, was effective January 2, 2013 . 5512, 5581; 15 U.S.C. You can find out more about our use, change your default settings, and withdraw your consent at any time with effect for the future by visiting Cookies Settings, which can also be found in the footer of the site. Sec. I'd first recommend that you go review this section and the applicable Official Staff Commentary. 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. 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. Forms for collecting data. 2458 0 obj <>stream Under Regulation B, a lender may not request information about an applicants sex, national origin, color, or other information not related to creditworthiness. ii. The Bureau is now publishing final amendments to Regulation B. 43. In developing the final rule, the Bureau has considered the potential benefits, costs, and impacts. 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. If the applicant(s) chooses not to provide the information or any part of it, that fact shall be noted on the form. rendition of the daily Federal Register on FederalRegister.gov does not 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. Relevant data any relevant data information about this document as published in the Federal Register for. 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