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Question & Answer
Question: For the same loan, a refinancing with no new money advanced, should we collect monitoring data?
Answer: HMDA and Regulation B have slightly different rules on when to collect monitoring data. Regulation B, as the broad regulation prohibiting discrimination in credit, is the starting point for this analysis.
Regulation B requires creditors to collect monitoring data on all applications "for the purchase or refinancing of a dwelling occupied or to be occupied by the applicant as a principal residence" when the loan will be secured by the residence. Thus, Regulation B requires collection of monitoring data on mortgage loan applications from consumers to purchase or refinance their homes. Regulation B prohibits collecting monitoring data on any other loan applications unless another regulation or "substitute monitoring program" requires it. See 202.13(d).
Regulation C is a substitute monitoring program. Regulation C requires collection of data on the race or national origin and sex of the applicant or borrower for HMDA-reportable loans. This includes loans for purchase or to make home improvements, including the refinancing of such loans.
HMDA monitoring data is broader than Regulation B in two ways. First, it includes home improvement loans. Second, it is not restricted to collecting monitoring date to loans on the borrower's principal residence. Thus, under HMDA, you should be collecting monitoring data on an application for a loan to purchase or rehab an investment property.
If your bank is covered by both regulations,follow the HMDA rule. If you are not a HMDA reporter, stick with Regulation B. And when the Federal Reserve Board asks for suggestions on ways to improve Regulation B, consider making the suggestion that the Regulation B rule on monitoring data should be the same as HMDA.
Copyright © 1997 Compliance Action. Originally appeared in Compliance Action, Vol. 2, No. 9, 8/97
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