CFPB Harmonizes Regs B and C

The Consumer Financial Protection Bureau today modified the Equal Credit Opportunity Act (Regulation B) to provide flexibility for lenders around the collection of applicants’ demographic data under the Home Mortgage Disclosure Act (Regulation C). Reg B previously prohibited creditors from collecting information on consumers’ race or ethnicity, except to the extent required to monitor compliance with ECOA or comply with HMDA. The permissible inquiries under Reg B included only aggregate racial and ethnic categories. However, under the new HMDA rules, banks must permit applicants and borrowers to self-identify using disaggregated ethnic and racial categories.

Today’s changes permit creditors to self-identify using disaggregated categories beginning on Jan. 1, 2017, enabling institutions to use Fannie Mae and Freddie Mac’s new Uniform Residential Loan Application prior to January 2018. The rule includes other optional model forms to assure compliance with Regulation B requirements.   It also allows institutions not subject to HMDA reporting requirements to choose on an “application-by-application basis” between two approaches to collecting personal demographic data: either the more limited, aggregate race and ethnicity category required by Reg B, or the disaggregated and more expansive categories required for HMDA reporting institutions under Reg C effective in 2018.

The rule does not add the 2016 URLA to the Regulation B appendix; according to the bureau, that form is subject to a separate Federal Register notice that will be issued by the CFPB. For more information, contact ABA’s Rob Rowe or Rod Alba.