The revisions and additions read as follows: 1. The Bureau solicited comment on its proposal to allow creditors to collect applicant race and ethnicity information using, at the creditor's option, either aggregate or disaggregated categories. The regulation only addresses the procedures for state application for exemption from the provisions of the Act. In addition, the Bureau proposed amendments adding 1002.5(a)(4) to permit creditors to collect applicant demographic information when they would not otherwise be required to do so in certain scenarios where creditors may benefit from being able to adopt Regulation C compliance practices before they become required or maintain them when they are no longer required. See Fannie Mae, Guide Forms, available at https://www.fanniemae.com/singlefamily/selling-servicing-guide-forms (last visited Sept. 6, 2017) (listing all selling and servicing guide forms); Freddie Mac, Forms and Documents, available at http://www.freddiemac.com/singlefamily/guide/ (last visited Sept. 6, 2017) (same). Regulations B and C both contain an appendix B that provides model forms for use when collecting applicant demographic information required under the regulations. 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). documents in the last year, by the International Trade Commission While use of the model forms is optional, if a creditor uses the appropriate model form, or modifies a form in accordance with the instructions provided in the Regulation B appendix, that creditor is deemed to be acting in compliance with 1002.5(b) through (d).[38]. Inadvertent notation. The proposed amendment would align 1002.13 collection of disaggregated information with the collection requirements of Regulation C. While the Bureau acknowledges that this limitation on the collection of applicant demographic information involves some complexity, the Bureau believes that, on balance, aligning 1002.13 collection methods with Regulation C will be less complex than introducing different rules for 1002.13(b) alone. Regulation B implements the Equal Credit Opportunity Act (ECOA)[1] 5. 1691b; Public Law 111-203, 124 Stat. documents in the last year, by the Food Safety and Inspection Service and the Food and Drug Administration 7. 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. Natural person. These proposed changes included establishing applicant demographic information collection, reporting, and public disclosure requirements for automobile creditors similar to HMDA, requiring adverse action notices in certain situations involving counteroffers, and adding record-keeping and applicant demographic information collection requirements for brokers and arrangers of credit. 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. Accordingly, the undersigned certifies that this final rule will not have a significant economic impact on a substantial number of small entities. The current Regulation B appendix includes the 2004 URLA as a model form for use in complying with 1002.13. Currently the disaggregated race and ethnicity categories required by the amendments to Regulation C in the 2015 HMDA Final Rule, effective January 1, 2018, do not match the categories specified in current Regulation B. A general description of the regulation, by section, follows. Collecting information on behalf of creditors. Under Dodd-Frank Act section 1022(b)(1), the Bureau has authority to prescribe rules as may be necessary or appropriate to enable the Bureau to administer and carry out the purposes and objectives of the Federal consumer financial laws and to prevent evasions thereof. In addition, the Bureau proposed several revisions to 1002.13(b) and (c) and its commentary to align further the collection requirements of Regulation B with revised Regulation C. Section 1002.13(a) sets forth certain protected applicant-characteristic information a creditor must collect for applications on certain dwelling-secured loans. 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. documents in the last year, 822 This alternative would reduce burden to firms that do not report under HMDA. Show 80 FR 66128, 80 FR 66140, and 66144 (Oct. 28, 2015). This site displays a prototype of a Web 2.0 version of the daily (B) The categories and subcategories for the collection of ethnicity and race set forth in appendix B to 12 CFR part 1003. Section 1002.12(b)(1) provides that a creditor must retain certain records for 25 months, or 12 months for business credit. One of the exceptions to the reporting requirements under HMDA is for entities that do not have a branch or home office located in an MSA. The offers that appear in this table are from partnerships from which Investopedia receives compensation. A synopsis of some of the more important points of Regulation B follows, and an examination program is provided for a more thorough review. The Bureau requested comment regarding the costs and benefits associated with this provision. One industry commenter also noted that the 2016 URLA includes a form for the collection of applicant demographic information for additional borrowers and does not necessarily limit the collection to the applicant and the first co-applicant, even though Regulation C requires financial institutions to provide the ethnicity, race and sex information only for the applicant and first co-applicant. by the Housing and Urban Development Department 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. Regulation B of the Equal Credit Opportunity Act (ECOA) describes lending acts and practices that are specifically prohibited, permitted, or required. 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. Use the PDF linked in the document sidebar for the official electronic format. [44] Section 1061 of the Dodd-Frank Act transferred to the Bureau consumer financial protection functions previously vested in certain other Federal agencies, including the authority to prescribe rules or issue orders or guidelines pursuant to any Federal consumer financial law and perform appropriate functions to promulgate and review such rules, Start Printed Page 45684orders, and guidelines. Proposed 1002.5(a)(4)(i) and (ii) would permit a creditor that is a financial institution under revised Regulation C 1003.2(g) to collect demographic information of an applicant for 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.[31]. ECOA authorizes the Bureau to issue regulations to carry out the purposes of ECOA. The commenters also argued that such collection is often inaccurate, cannot be relied upon for fair lending analysis, and is contrary to the purposes of ECOA. Regulation B covers the actions of a creditor before, during, and after a credit transaction. ii. The Bureau will finalize as proposed the revisions to 1002.13(b) concerning the collection of an applicant's ethnicity and race information on the basis of visual observation or surname. The federal Fair Credit Reporting Act covers how debt collection is reported in credit reports. Demographic information collected under Regulation B by those institutions with larger loan volumes may be used in statistical analysis that supports fair lending supervision and enforcement. documents in the last year, 983 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. This information is not part of the official Federal Register document. The regulation covers topics such as: Prohibition on kickbacks and unearned fees Mortgage origination and servicing disclosures Affiliated business arrangements Title insurance Escrow accounts List of homeownership counseling organizations Mortgage loan servicing requirements Force-placed insurance %%EOF
43. The Bureau believes that the interim final rule will benefit consumers and covered persons by updating and recodifying Regulation B to reflect the transfer of authority to the Bureau and certain other changes mandated by the Dodd-Frank Act. Unlike prior versions of the URLA, the 2016 URLA permits an applicant to select disaggregated ethnicity and race categories, as required under revised Regulation C. Given the issuance of the Bureau Approval Notice and the modifications to 1002.13, the Bureau proposed several revisions to the Regulation B appendix as discussed below. Definition, Legality, and Effects, Federal Fair Lending Regulations and Statutes: Equal Credit Opportunity (Regulation B). The date Start Printed Page 45690for removal of the 2004 URLA from the Regulation B appendix is discussed further in the Effective Date section below. establishing the XML-based Federal Register as an ACFR-sanctioned Paragraph 13(b)Obtaining of information is revised. Written applications. The prudential regulators confirm that data collected and retained by entities subject to Regulation B but not Regulation C may be used for fair lending supervision and enforcement. 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. hXmo6+}wR@ N@WMv3Asc~HRHmP0(@J-,9)|PP9hZhkhF4+Ao j1x- sjzIwK[MvS}4=$BUzw3$ d. Appendix BModel Application Forms is removed. 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. As discussed above in Part V, the Bureau disagrees with the consumer advocacy group commenter that there would be little burden to Regulation B-only creditors from making the collection of disaggregated race and ethnicity categories mandatory. 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