This topic has been discussed for years and years. From a 2010 FDIC teleseminar on fair lending:https://www.fdic.gov/news/conferences/fl/2010-11-16-qa.html
"10. I am an independent compliance consultant that works with various banks helping them with Fair Lending reviews and risk assessments. Do you see any problem with me using information from borrowers’ drivers licenses that are stored in the bank’s Customer Information System to obtain demographic information for fair lending analysis such as age, sex, and possibly race? As you know, the government monitoring information is only available for HMDA-covered loans. If I am trying to conduct fair lending analyses on other types of loans, such as consumer loans or vehicle-secured loans, there isn’t much to go on other than making assumptions about race via surnames and gender via first names. If I could use information from the drivers license that is imaged and in the bank’s system, I could get demographic information without having to make assumptions.
Do you see any problem with doing that? I am independent from the bank and this is done after the loan decision has been made (these are existing loans). To go one step further, would this be OK for a bank’s compliance officer to do too, if that person is independent from the lending function and it’s done after the loan decision has been made?
Regulation B does not prohibit the practice of photo copying or digitally storing photo identification, but it does prohibit the collection of certain demographic information. Given that photo identification usually contains this prohibited information, it is a best practice not to retain a copy of the photo identification. However, if a bank chooses to retain a copy of photo identification, it is best if it is segregated from loan files. Furthermore, the photo identification should only be requested to comply with the USA Patriot Act and not be used as part of the underwriting process.
Keeping the above in mind, photo identification that is available in a customer information system could be used to obtain demographic information to assist in a fair lending analysis. As stated in the question, it would be a more accurate way to conduct the analysis than making assumptions based on factors such as surnames."