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CFPB Amends ECOA Rules on the Collection of Consumer Data

Tue 24 Oct, 2017  /  by McIntyre & Lemon  /   Legislative Updates

10/24/17 – In September, the Consumer Financial Protection Bureau (CFPB) modified its regulations to the Equal Credit Opportunity Act (ECOA), which will provide mortgage lenders flexibility in the collection of consumer data.

The final rule amends parts of Regulation B (the rules which implement the ECOA), its commentary, and its appendices, and affects when and how a creditor may collect information regarding the applicant’s ethnicity, race, and sex. The creditors affected by this rule are primarily those that make mortgage loans dealing with purchase and refinance transactions involving an applicant’s primary residence. Additionally, financial institutions that report under Regulation C (rules the implement the Home Mortgage Disclosure Act), have reported in the prior five years, or may soon report may also be affected by this rule. Creditors that utilize model forms from the Regulation B appendix for mortgage loans are affected by the rule, as well.

Under the new rule, mortgage lenders will not be required to maintain different practices depending on their loan volume or other characteristics, allowing more lenders to adopt application forms that include expanded requests for information regarding a consumer’s ethnicity and race, including the revised Uniform Residential Loan Application (URLA).

Some changes to Regulation B are listed below:

  • Changes to Applicant Information Collection for Regulation B Creditors
    • 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 outlined in
      appendix B to Regulation C as amended by the 2015 HMDA Final Rule.
  • Changes to Applicant Information Collection for HMDA Reporters
    • Provides clarity that compliance with applicant information collection under Regulation C generally satisfies similar requirements under Regulation B.
  • Changes to Regulation B Model Forms
    • 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.
  • The rule also removes as outdated the existing version of the URLA contained in the Regulation B appendix, effective January 1, 2022.

CFPB Press ReleaseFinal Rule Reg. B.