On the federal level, the Federal Trade Commission regulates what is called the Fair Debt Collection Practices Act (FDCPA). headings within the legal text of Federal Register documents. A creditor may devise its Start Printed Page 45697own disclosure so long as it is substantially similar. HUMo8W,"Z[$hAX][RmyZ#=({x~6VX,k:JT%CXI qhTpz Another industry commenter was concerned about how a creditor would decide which collection method to use and whether the instruction could have a discriminatory impact. Any information unrelated to consumer credit cannot be used when making loan approval decisions. The Bureau did not propose changes to Regulation C in this rulemaking. Similarly, because the substance and form of section 7 of the 2016 URLA is substantially similar to the form the Bureau provides as a model form in Regulation C, the 2016 URLA may be used in complying with 1002.13. One commenter noted that Regulation B 1002.12(b)(1) provides a 25-month record retention period for most transactions, but a 12-month period for business credit transactions, and that the Bureau's proposal would create a longer retention period for business credit for which a creditor voluntarily collected applicant demographic information under proposed 1002.5(a)(4). The information-collection requirements of this section apply to applications for credit primarily for the purchase or refinancing of a dwelling that is or will become the applicant's principal residence. The Bureau is not adopting any of the alternatives suggested by commenters. Hu^U[4'~f,t?o{NwYrB-ez,]{-}7/;UsUe5_,Vl]vw~lh}ive8=&fw}\*!tTb(8+0(0-D)3\-|bS ]4#i!N#.tD >X_\pI;$?gacx`BtvAa,q]k"m ? ,H?tYrjfMN 2.q9^w\k.ke5jXcLKjvszyD G 03/01/2023, 205 Adverse action is also a negative action that impacts employment. Amend 1002.12 by revising paragraph (b)(1)(i) to read as follows: (i) Any application that it receives, any information required to be obtained concerning characteristics of the applicant to monitor compliance with the Act and this part or other similar law, any information obtained pursuant to 1002.5(a)(4), and any other written or recorded information used in evaluating the application and not returned to the applicant at the applicant's request. Creditors subject to the Home Mortgage Disclosure Act should be aware, however, that data collection may be called for under Regulation C (12 CFR part 1003), which generally requires creditors to report, among other things, the sex and race of an applicant on brokered applications or applications received through a correspondent. documents in the last year, 522 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. The consumer and the financial institution (including an account for which an access device has been issued to the consumer, for example); ii. This compensation may impact how and where listings appear. Paragraph 13(c)Disclosure to applicants is revised. 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. Fair Lending Fair Lending Laws and Regulations - PDF provides an abbreviated discussion of federal fair lending laws and regulations based on . On October 24, 2012, the CFPB issued a larger participant regulation in the market of consumer debt collection. 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. Section IV. The Bureau believes that, absent this change, entities that currently report race and ethnicity data under Regulation C could conclude that they have different obligations under Regulation B and Regulation C once the 2015 HMDA Final Rule goes into effect on January 1, 2018. Transactions not covered. As the Bureau noted in the 2017 ECOA Proposal, without a time limit such voluntary collection would permit a creditor to collect protected applicant-characteristic information for a period of time that is too attenuated from any past Regulation C legal requirement and associated compliance process. 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. Examination Procedures Reg. 2017-20417 Filed 9-29-17; 8:45 am], updated on 11:15 AM on Wednesday, March 1, 2023, updated on 8:45 AM on Wednesday, March 1, 2023. Because Regulation B and Regulation C do not provide inconsistent instructions on the scope of the term natural person, the Bureau declines to provide additional guidance on this issue within this final rule, which, as related to 1002.13, is limited to modifications that harmonize the collection requirements of Regulation B and Regulation C. The Bureau proposed revised comment 13(a)-7 to provide that, for applications subject to 1002.13(a)(1), a creditor that collects information about the ethnicity, race, and sex of an applicant in compliance with the requirements of the revised Regulation C appendix will be acting in compliance 1002.13 concerning the collection of an applicant's ethnicity, race, and sex information. This information is not part of the official Federal Register document. One commenter argued that the proposed rule would add complexity, however, as creditors would be required to report disaggregated information under revised Regulation C, permitted to collect such information under revised 1002.13, but prohibited from collecting disaggregated information if the applicant does not provide it. Accounts covered. 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. The Bureau did not propose these changes to Regulation B. 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. procedures. Even for institutions with very small volumes of originations that may not be subject to HMDA reporting because they do not meet an applicable loan volume threshold, the retained information may be useful for comparative file reviews. Regulation J. 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. The Bureau is finalizing the amendments to 1002.12(b)(1)(i) and comment 12(b)-2 as proposed. The Bureau Approval Notice provides that, at any time from January 1, 2017, through December 31, 2017, a creditor may, at its option, permit applicants to self-identify using disaggregated ethnic and racial categories as instructed in revised Regulation C. 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 not deemed to violate Regulation B 1002.5(b). Through this proposed change, creditors taking applications for loans subject to 1002.13(a)(1) but not required to submit HMDA data under Regulation C would have the option of either maintaining their current collection practices or transitioning to the revised Regulation C collection practices and the 2016 URLA. A creditor that accepts an application by mail need not make a special request for the monitoring information if the applicant has failed to provide it on the application form returned to the creditor. 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. 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. If a creditor takes an application through an electronic medium that allows the creditor to see the applicant, the creditor must treat the application as taken in person. 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. 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. Appendix B to 12 CFR part 1003 provides 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)(B) and (ii). 4. Application-by-application basis. To determine whether the credit union discriminated against members of one or more protected classes in any aspect of its credit operations. 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