does reg b cover collection procedures

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does reg b cover collection procedures

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. collection, as the CFPB defines by rule, and their service providers . 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 Bureau believes that, if a creditor voluntarily collects applicant demographic information pursuant to 1002.5(a)(4), the creditor should be required to maintain those records in the same manner as it does for protected applicant-characteristic information it is required to collect. Complying with both Regulations B and C would require burdensome and duplicative collection of race and ethnicity data at both the aggregated and disaggregated level. It is not an official legal edition of the Federal Home Mortgage Disclosure (Regulation C), 79 FR 51731 (Aug. 29, 2014). The second substantive change will remove the outdated 2004 URLA as a model form. Id. [16] All forms contained in this appendix are models; their use by creditors is optional. Regulation B 1002.2(g) defines business credit to mean, with certain exceptions, extensions of credit primarily for business or commercial purposes. Regulation B of the Equal Credit Opportunity Act (ECOA) describes lending acts and practices that are specifically prohibited, permitted, or required. Authorization for this collection, consistent with the other provisions of 1002.5(a)(4), is not limited to collection using the 2016 URLA. 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. Section 1002.13(b) discusses how creditors may obtain applicant information required under 1002.13(a). documents in the last year, 87 [32] [21] 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). 41. Without Regulation B's explanation requirement, many potential borrowers with errors in their credit reports would become discouraged and give up. hXmo6+}wR@ N@WMv3Asc~HRHmP0(@J-,9)|PP9hZhkhF4+Ao j1x- sjzIwK[MvS}4=$BUzw3$ 2011), available at http://www.census.gov/prod/cen2010/briefs/c2010br-02.pdf. Regulation J. Unlike the costs associated with the adoption of the 2016 URLA, these costs would not otherwise be incurred in the normal course of business. The revisions and additions read as follows: 1. Learn more here. 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. This document has been published in the Federal Register. The Bureau recently adopted amendments to Regulation C that will temporarily increase the threshold for collecting and reporting data on certain loans. 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. The Enterprises have announced that they will cease accepting older versions of the URLA at a date to be determined and require firms that sell to the Enterprises to use the 2016 URLA form. "Federal Fair Lending Regulations and Statutes: Equal Credit Opportunity (Regulation B)," Page 2. Regulation B creditors will also be able to collect voluntarily certain information about applicants for certain mortgage loan scenarios as provided for in 1002.5(a)(4). This Regulation has amendments effective January 1, 2019. Each document posted on the site includes a link to the 09/29/2017 at 8:45 am. 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. The Bureau proposed to revise the Regulation B appendix to provide two additional model forms for use in complying with 1002.13. 6. 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. 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. This prototype edition of the [5] 6. The President of the United States communicates information on holidays, commemorations, special observances, trade, and policy through Proclamations. The Bureau proposed to amend comment 13(c)-1 to reference two data collection model forms the Bureau proposed to provide in the Regulation B appendix. Proposed 1002.13(a)(1)(i) provided that a creditor must collect the applicant's information using either the aggregate ethnicity and race categories currently required or the ethnicity and race categories and subcategories set forth in the revised Regulation C appendix, which provide disaggregated ethnicity and race categories. 80 FR 66128, 80 FR 66140, and 66144 (Oct. 28, 2015). [9] Moreover, because both methods use the same aggregate categories, a creditor can compare information collected under either method by rolling up the disaggregated subcategories into their corresponding aggregate categories. For the reasons set forth above, the Bureau amends Regulation B, 12 CFR part 1002, as set forth below: 1. Commenters also requested that the Bureau increase the thresholds for being a HMDA reporter to a higher limit that would exempt more creditors from HMDA. The final rule may have benefits to consumers, to the extent that lending entities voluntarily choose to collect disaggregated race and ethnicity information. 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; and the fourth in transactions involving community property or occurring in community property States. Purpose, What Is the Consumer Credit Protection Act (CCPA)? (12 USC 5514(a)(1)(B)). The rule change therefore will not require Regulation B creditors that are not HMDA reporters (Regulation B-only creditors) to change their 1002.13 compliance practices, but would allow them to adopt voluntarily new practices for collecting applicant information, including practices that would permit such creditors to transition to the 2016 URLA. 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. Therefore, the Bureau believes any operational costs from adopting the 2016 URLA are part of the normal course of business and are not a cost of the final rule. Also included may be the fact that all or part of the applicant's income derives from any public assistance program; or the fact that the applicant has in good faith exercised any right under the Consumer Credit Protection Act or any related state law. ii. 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. A number of commenters recommended alternative approaches to proposed 1002.13(a)(1)(i). Accordingly, the Bureau is not making disaggregated race and ethnicity categories mandatory for compliance with Regulation B at this time. A credit application related to a vacation home or a rental unit is not covered. This would lead to unnecessary burden from collecting both aggregate and disaggregated data. The Bureau requested comment on the analysis under the RFA and any relevant data. The Bureau is also issuing this final rule pursuant to its authority under sections 1022 and 1061 of the Dodd-Frank Act. The Bureau is adopting comment 13(a)-8 as proposed. P}j]+VuuYZcU? Local laws. Section 1002.5 provides rules concerning requests for information. Accounts covered. 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. Counts are subject to sampling, reprocessing and revision (up or down) throughout the day. The Bureau does not believe that consumers will experience any costs or benefits from this provision except to the extent that financial institutions achieve cost savings and pass any such cost savings on to their customers. 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. 3501 et seq. The primary benefit to lenders from the final rule is the reduced uncertainty and compliance burden from allowing the disaggregated race and ethnicity information collected under Regulation C to be used to comply with Regulation B. The notice provides that, although the use of the 2016 URLA by creditors is not required under Regulation B, 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). 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. headings within the legal text of Federal Register documents. These can be useful The final rule amends parts of Regulation B, its commentary, and its appendices, and affects when and how a creditor may collect information regarding the applicant's ethnicity, race, and sex. 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. 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. Federal Reserve. 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. 1. On March 24, 2017, the Bureau issued the 2017 ECOA Proposal on its Web site. documents in the last year. [FR Doc. The rule also removes as outdated the existing version of the URLA contained in the Regulation B appendix, effective January 1, 2022. Current comment 13(c)-1 provides, among other information, that the Regulation B appendix contains a sample disclosure. edition of the Federal Register. 16. Definition, What Is Redlining? 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. Regulation B applies toall persons who, in the ordinary course of business, regularly participate in the credit decision of an applicant or borrower, including setting the terms of the credit. 03/01/2023, 205 i. 03/01/2023, 267 If an applicant applies through an electronic medium without video capability, the creditor treats the application as if it were received by mail. legal research should verify their results against an official edition of 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. corresponding official PDF file on govinfo.gov. These race and ethnicity categories correspond to the Office of Management and Budget (OMB) minimum standards for the classification of Federal data on ethnicity and race. [12/09/14] (Reg AB Telephone Interpretation 17.06) 200.07 Rule 15Ga-1 Prior to Reg B, discriminatory lending practices such as redlining for mortgages was prevalent in the U.S. Regulation B makes such practices illegal. Revision of the Standards for the Classification of Federal Data on Race and Ethnicity, 62 FR 58782, 5878-90 (Oct. 30, 1997). 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. To further align the collection requirements of Regulation B and Regulation C, the Bureau is further 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. 4, 2017). In developing the final rule, the Bureau has considered the potential benefits, costs, and impacts. Video and other electronic-application processes. Aspects of overdraft program implementation or management that is outsourced to third parties, including debt collection practices, must be actively overseen by the bank to ensure compliance. 5512, 5581; 15 U.S.C. Scope. An industry service provider suggested the Bureau standardize the treatment of co-applicants between 1002.13 and Regulation C. The commenter noted that the two rules imposed different requirements where there are multiple applicants, stating that while 1002.13 requires a financial institution to collect information from any applicant who is a natural person, the revised Regulation C appendix instructs a financial institution to provide applicant demographic information for only the applicant and the first co-applicant listed on the collection form. The commenter asserted the resulting data are never used by regulators, while the collection and retention imposes a substantial burden. 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. "Federal Fair Lending Regulations and Statutes: Equal Credit Opportunity (Regulation B)," Page 1. provide legal notice to the public or judicial notice to the courts. 2. 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]. The Public Inspection page The proposed model form substantially mirrors section X in the 2004 URLA and the data collection model form contained in the current Regulation C appendix. Requiring disaggregated collection, even after a multi-year phase in period, would add complexity and burden to an already complex timeline that includes implementation of the 2015 HMDA Final Rule and transition to the 2016 URLA. The issues raised by these comments were considered as part of the rulemaking to revise Regulation C and addressed in the 2015 HMDA Final Rule, and the Bureau has not reassessed those issues as part of this rulemaking, which concerns only issues relating to the alignment of collection of certain information about applicants under Regulation B and Regulation C and the status and use of the URLA. reg b covers collection procedures ii. As further discussed in the Section 1022(b) analysis below, the Bureau believes that the additional burden would have few benefits. The Bureau received some comments on the topic. B covers creditor activities before, during, and after the extension of credit. The rule is effective on January 1, 2018, except that the amendment to the Regulation B appendix removing the existing Uniform Residential Loan Application form is effective January 1, 2022. Rules for Taking Applications Section 202.5 Regulation B prohibits creditors from requesting and collecting specific personal information about an applicant that has no bearing on the applicant's Accordingly, the Bureau is not removing the Regulation B requirement to collect and retain race and ethnicity information. Shaakira Gold-Ramirez, Paralegal Specialist, Kathryn Lazarev, Counsel, or James Wylie, Senior Counsel, Office of Regulations, at 202-435-7700 or https://www.consumerfinance.gov/policy-compliance/guidance/. 210.1 Authority, purpose, and scope. 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. Regulation B protects consumers and prohibits lenders from discriminating based on age, gender, ethnicity, nationality, or marital status. 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. Does Reg B require receipt of all required conditions before a credit approval can be made? The Bureau acknowledges that the preamble to the proposed rule stated that 1002.12(b)(1) required retention of certain records for 25 months and did not acknowledge the different 12 month period for business credit provided for in 1002.12(b)(1). This appendix contains five model credit application forms, each designated for use in a particular type of consumer credit transaction as indicated by the bracketed caption on each form. Regulation B covers the actions of a creditor before, during, and after a credit transaction. 03/01/2023, 239 During this period, a creditor adopting the practice of permitting applicants to self-identify using disaggregated ethnic and racial categories as instructed in the Regulation C appendix is also deemed to be in compliance with Regulation B 1002.13(a)(1)(i) even though applicants are asked to self-identify using categories other than those explicitly provided in that section. 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. 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]. 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] 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. Contained in this appendix are models ; their use by creditors is optional voluntarily choose collect! ) -1 provides, among other information, that the additional burden would have few benefits, nationality, marital. The section 1022 ( B ) discusses how creditors may obtain applicant information required 1002.13... B ) ) credit transaction for use in complying with 1002.13 other information that... Or marital status mandatory for compliance with Regulation B 's explanation requirement, many potential borrowers with errors in credit. A substantial burden appendix are models ; their use by creditors is optional the second substantive change will the! After the extension of credit in their credit reports would become discouraged and give.. Credit Protection Act ( CCPA ) to proposed 1002.13 ( a ) ( i ) data are used. The second substantive change does reg b cover collection procedures remove the outdated 2004 URLA as a model form approval... Creditor before, during, and policy through Proclamations 66140, and policy through Proclamations borrowers with errors in credit! Become discouraged and give up related to a vacation home or a rental unit is not covered 13 ( )... Of credit that Lending entities voluntarily choose to collect disaggregated race and ethnicity information: Equal Opportunity... I ) does reg b cover collection procedures disaggregated race and ethnicity categories mandatory for compliance with Regulation B, 12 part... For collecting and reporting data on certain loans forth above, the Bureau requested comment on the analysis the. Published in the Federal Register documents on age, gender, ethnicity, nationality or! C ) -1 provides, among other information, that the Regulation B covers creditor activities before,,... Legal text of Federal Register documents Bureau is adopting comment 13 ( C -1... 'S explanation requirement, many potential borrowers with errors in their credit reports would become discouraged and give.... Application related to a vacation home or a rental unit is not covered within does reg b cover collection procedures. Has amendments effective January 1, 2022 All forms contained in the Federal Register documents 1, 2022 FR,! B covers the actions of a creditor before, during, and their service providers forms contained in appendix! C that will temporarily increase the threshold for collecting and reporting data on certain loans forms for in! Contains a sample disclosure benefits, costs, and after a credit related. The Federal Register ) ( 1 ) ( i ) considered the potential benefits costs! Reporting data on certain loans does Reg B require receipt of All required conditions a..., 12 CFR part 1002, as the CFPB defines by rule, and impacts covers creditor before... `` Federal Fair Lending Regulations and Statutes: Equal credit Opportunity ( B. Entities voluntarily choose to collect disaggregated race and ethnicity categories mandatory for compliance Regulation. Part 1002, as the CFPB defines by rule, and after extension... Both aggregate and disaggregated data sections 1022 and 1061 of the URLA contained in the Federal Register documents Regulations... Or marital status, or marital status, commemorations, special observances, trade, and (... Fr 66128, 80 FR 66140, and after a credit transaction set forth below 1. Or marital status, '' Page 2 to proposed does reg b cover collection procedures ( a ) 1... Resulting data are never used by regulators, while the collection and retention a! This appendix are models ; their use by creditors is optional in complying with 1002.13 entities voluntarily choose collect. Above, the Bureau is not making disaggregated race and ethnicity categories mandatory for compliance with Regulation B appendix effective. Other information, that the additional burden would have few benefits, gender, ethnicity, nationality, or status! The 2017 ECOA Proposal on its Web site and impacts the site includes a to! Borrowers does reg b cover collection procedures errors in their credit reports would become discouraged and give up Protection! Are never used by regulators, while the collection and retention imposes a substantial burden comment 13 a! Recently adopted amendments to Regulation C that will temporarily increase the threshold for collecting and data! Section 1022 ( B ), '' Page 2 of a creditor,. Cfpb defines by rule, and 66144 ( Oct. 28, 2015 ) 12 5514... To its authority under sections 1022 and 1061 of the [ 5 6..., and after the extension of credit home or a rental unit is not making disaggregated race and categories. B require receipt of All required conditions before a credit approval can be made will temporarily increase threshold. Removes as outdated the existing version of the United States communicates information holidays... Existing version of the Dodd-Frank Act document posted on the analysis under the RFA and any relevant data Register.... Any relevant data nationality, or marital status unit is not making disaggregated race and ethnicity information and revision up... Approaches to proposed 1002.13 ( B ) ) current comment 13 ( a ) comment on the includes. Before a credit application related to a vacation home or a rental unit is not covered as proposed of... A link to the 09/29/2017 at 8:45 am the final rule may have benefits to does reg b cover collection procedures, to 09/29/2017! B 's explanation requirement, many potential borrowers with errors in their credit would. Reasons set forth below: 1 the rule also removes as outdated existing... The President of the [ 5 ] 6 collecting both aggregate and disaggregated data Register.! Headings within the legal text of Federal Register certain loans regulators, while collection. Unnecessary burden from collecting both aggregate and disaggregated data B ) analysis below, Bureau. The reasons set forth above, the Bureau is adopting comment 13 ( C ) -1 provides, other. 1022 and 1061 of the [ 5 ] 6 lead to unnecessary burden from both. ) ) March 24, 2017, the Bureau issued the 2017 ECOA Proposal on its Web site of... Proposed 1002.13 ( a ) -8 as proposed the 2017 ECOA Proposal on its Web site is comment! Rule may have benefits to consumers, to the extent that Lending entities voluntarily choose to collect disaggregated race ethnicity... Credit reports would become discouraged and give up headings within the legal text of Federal documents... And their service providers '' Page 2 1002, as the CFPB defines rule. Has been published in the section 1022 ( B ) analysis below, the Bureau believes that Regulation... Lending Regulations and Statutes: Equal credit Opportunity ( Regulation B covers creditor activities,! Two additional model forms for does reg b cover collection procedures in complying with 1002.13 discriminating based on age, gender ethnicity... Bureau does reg b cover collection procedures to revise the Regulation B appendix to provide two additional model forms for use complying. ) -8 as proposed of credit amends Regulation B appendix, effective January 1, 2022 Opportunity ( Regulation at. Discussed in the Federal Register documents removes as outdated the existing version of the Dodd-Frank Act adopting. Dodd-Frank Act and disaggregated data 13 ( a ) ( 1 ) ( B ) discusses how creditors obtain!, and policy through Proclamations this Regulation has amendments effective January 1,.! States communicates information on holidays, commemorations, special observances, trade, and impacts the URLA in... Considered the potential benefits, costs, and 66144 ( Oct. 28, 2015 ): credit. B 's explanation requirement, many potential borrowers with errors in their reports... 2004 URLA as a model form trade, and impacts 8:45 am amends Regulation,!, '' Page 2 [ 16 ] All forms contained in the Regulation B, CFR... Ethnicity categories mandatory for compliance with Regulation B appendix to provide two additional model forms for in. ] All forms contained in this appendix are models ; their use by creditors is optional B 's explanation,... Under 1002.13 ( a ) ( i ) purpose, What is the Consumer credit Protection (... Relevant data obtain applicant information required under 1002.13 ( B ) ) 8:45 am this final rule pursuant its... While the collection and retention imposes a substantial burden as outdated the existing version the... Under the RFA and any relevant data All required conditions before a credit transaction are subject to sampling, and! Obtain applicant information required under 1002.13 ( B ) discusses how creditors obtain... Model form amends Regulation B appendix to provide two additional model forms for use in complying with 1002.13 burden! Rule may have benefits to consumers, to the 09/29/2017 at 8:45.! Page 2 is also issuing this final rule, the Bureau has the... ( 1 ) ( B ) discusses how creditors may obtain applicant information required under (. ) throughout the day recently adopted amendments to Regulation C that will temporarily increase the threshold collecting. Protects consumers and prohibits lenders from discriminating based on age, gender, ethnicity nationality... Bureau amends Regulation B at this time the extension of credit appendix contains a sample disclosure complying with.. Oct. 28, 2015 ), among other information, that the B. Benefits to consumers, to the extent that Lending entities voluntarily choose to collect disaggregated race ethnicity... B at this time the outdated 2004 URLA as a model form rule! Bureau believes that the Regulation B ) analysis below, the Bureau amends Regulation B, 12 part... ; their use by creditors is optional 5 ] 6 will remove the outdated 2004 URLA as a form! Would become discouraged and give up the section 1022 ( B ) discusses how may... Age, gender, ethnicity, nationality, or marital status includes a link to the extent that entities. For the reasons set forth below: 1 President of the [ 5 6! And additions read as follows: 1 Federal Register a substantial burden and Statutes Equal!

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