We have to report whether Ethnicity, Race, or Sex was collected on the basis of visual observation or surname by entering one of the following: (1) Collected on the basis of visual observation or surname (2) Not collected on the basis of visual observation or surname (3) Not applicable (4) No co-applicant My first thought was we would report 'NA' for all loans that were not taken in person. After further investigation, I believe we would either enter '1' or '2' for all applications, except for loans to a non-natural person (we would enter '3') or loans with no co-applicant we would enter '4'. Do you agree with this logic? I was fine with this logic until I was reading the edits for 2018 HMDA and they have that 'info not provided by applicant in mail, internet, or telephone application' can be reported as either '2' or '3'. I cannot find any guidance on why you would report one over the other. How are you looking at this?

It is my understanding that NA will be used in the same circumstances as it is now. See GIR App A, I.D.
"Use 'not applicable'; only when the applicant or co-applicant is not a natural person or when applicant or co-applicant information is unavailable because the loan has been purchased by your institution."

I agree with Truffle. There's some new twists to collecting Demographic Information (DI).
If the applicant chooses not to provide the information… note this fact on the collection form and then collect the applicant’s ethnicity, race, and sex on the basis of visual observation or surname. You must report whether the applicant’s ethnicity, race, and sex was collected on the basis of visual observation or surname. When you collect an applicant’s ethnicity, race, and sex on the basis of visual observation or surname, you must select from the following aggregate categories . . . [Appendix B to §1003 #10]

If the DI is left blank, but the applicant makes "I do not wish . . .", then you're done. [Appendix B to §1003 #11]
But if they don't mark the "I do not wish . . ." you must make a request for the DI again, IF you see them during the application process:
If the applicant begins an application by mail, internet, or telephone, and does not provide the requested information on the application but does not check or select the “I do not wish to provide this information” box on the application, and the applicant meets in person with you to complete the application, you must request the applicant’s ethnicity, race, and sex. If the applicant does not provide the requested information during the in-person meeting, you must collect the information on the basis of visual observation or surname. [Appendix B to §1003 #12]

If you meet with them at closing and don't have the DI, you don't have to collect DI. I recommend you don't collect it at closing because you collect it on all loans, but you don't collect it on denied, withdrawn, etc.
If the meeting occurs after the application process is complete, for example, at closing or account opening, you are not required to obtain the applicant’s ethnicity, race, and sex. [Appendix B to §1003 #12]

So, it all hinges on (1) how the application was taken, and (2) whether or not the applicant indicated "I do not wish..."

Is that what we're saying?

@Homestar, yes I believe that is correct...first how the application was taken, then go on for further analysis. I typed up this snippet during my studies yesterday. I welcome anyone to weigh in on it. (Sorry - this forum is not letting me copy over the bullets as I have them typed [neatly] in Word).


The only time you would complete for the customer according to Appendix B #10-13 depends on the method of application and how the customer completes (or doesn’t complete) this GMI disclosure:

F2F Application:
o If the customer chooses not to provide the information, note this on the form, and complete the GMI for them based on your visual observation of them and/or their surname. Complete all 3 aggregate categories that the customer has not: Ethnicity, Race, and Sex.
(§1003 Appendix B #10)

Phone/Mail/Internet Application:
o If the customer states orally (phone app) or marks the box (mail/internet app) that they “do not wish to provide this information”…report “information not provided by applicant…” and do not complete any GMI for them.
(§1003 Appendix B #11)
o If the customer states orally (phone app) or marks the box (mail/internet app) that they “do not wish to provide this information”…but they also do complete some or all of the GMI fields, report the fields that were completed by the applicant, but leave the rest blank and report “information not provided by applicant…” as stated above.
(§1003 Appendix B #13)
o If the customer does not state orally (phone app) or mark the box (mail/internet app) that they “do not wish to provide this information” … and you meet with them in person before closing (i.e. during the application process), you must request the GMI completion by the customer at that time. If they decline to provide that information at time of the F2F meeting, then complete all 3 aggregate categories that the customer has not, as shown in the F2F Application instructions above.
(§1003 Appendix B #12)

I do have a follow-up question though as to the COLLECTION METHOD (collected on basis of visual observation or surname).

I had a conversation (phone) with the CFPB recently. They said that this field is really for applications taken in person/face to face, as stated on the expanded GMI addendum form and from Appendix B #10 ("for an application taken in person").
If the customer completes the fields, then we select "NOT collected on basis of...", but if we complete any for them, then we select "collected on basis of...".

However, when I asked the CFPB what we should report for NON-F2F apps (phone, mail, internet), she would only tell me that we need to make our own procedures for this, and her opinion was that we only answer that field for in-person applications. I said I understand that part, but do we select "NOT collected on basis of..." or do we select "NA". She would not say.

So in SUMMARY ...
If we have a phone, mail, or internet application, what do we select in COLLECTION METHOD? (*) "Not collected...", or (*) "NA"?

Thank you!

Check out the CFPB guide on reporting not applicable. It can only be reported in that category for purchased loans and loans or application when the applicant or co-applicant is not a natural person. So in your scenario you would report "Not collected on the basis of visual observation or surname."

Thank you @ComplianceRegs

Are the questions below on the Addendum only completed for a Face-to-Face application? If so, when would you ever answer "no", since you are supposed to be collecting DI based on visual observation or surname if the borrower choses not to provide.

- Was the ethnicity of the borrower collected on the basis of visual observation or surname? N or Y
- Was the sex of the borrower collected on the basis of visual observation or surname? N or Y
- Was the race of the borrower collected on the basis of visual observation or surname? N or Y

You would answer 'no' if the applicant provided the information.

Only complete these questions if the applicant was taken in-person, correct? Do we just leave these questions blank if the application was taken by phone/mail/internet?

I believe you report 'no', or 2, if the application was not taken in person. There is no option to leave the field blank, and the guide to reporting NA indicates you would only use NA for purchased loans or loans where the applicant isn't a natural person.

Since the answer can only be YES for an in-person application, I'm going to default my LOS to complete the NO bullets for an application taken by telephone/fax or mail/email or internet. MLOs shouldn't be able to mess it up.

Mel - you might want to check Appendix B #11 & #12. If the applicant doesn't mark or indicate they don't wish to provide the demographic information in a non-face-to-face application and the LO meets with the applicant prior to closing, they must ask for the demographic information then. If the applicant doesn't provide it, then the LO must complete based on visual observation.

See David's post above for more details...

(obviously I cannot figure out how to format these replies; sorry this is not in pretty format)

Here is what I have currently in our Field Completion Guide that I created for our Bank to use:

Collected on the Basis of Visual Observation or Surname
Only use if the application was taken face-to-face, and the customer did not complete the Ethnicity themselves (the RM/LO/Frontline completed it for them).

Not Collected on the Basis of Visual Obs. or Surname
Only use on F2F applications if the customer completed the Ethnicity themselves.
Use on all phone/mail/internet applications in which the applicant is an individual person.

Not Applicable
Only use if the applicant is an entity, and not an individual person.

We are also selecting "Not Collected on the Basis of Visual Obs or Surname" for all applications received via telephone/fax or mail/email or internet. Based on the last sentence in Appendix B, #12 (see below), we feel the "application process is complete", because the applicant has been given the opportunity to complete or choose not to provide the demographic information and the file has moved on to processing/underwriting.

Appendix B to Part 1003--Form and Instructions for Data Collection on Ethnicity, Race, and Sex

12. If the applicant begins an application by mail, internet, or telephone, and does not provide the requested information on the application but does not check or select the “I do not wish to provide this information” box on the application, and the applicant meets in person with you to complete the application, you must request the applicant's ethnicity, race, and sex. If the applicant does not provide the requested information during the in-person meeting, you must collect the information on the basis of visual observation or surname. If the meeting occurs after the application process is complete, for example, at closing or account opening, you are not required to obtain the applicant's ethnicity, race, and sex.

Based on the last sentence in Appendix B, #12 (see below), we feel the "application process is complete",

If underwriting has not made a decision, or if they need additional information then how is your application process complete simply because the applicant submitted the application by telephone, mail, fax or Internet?

While the definition of "application process" is not defined, I would suggest you interpret it as "anytime before closing". If you go with that interpretation, you can't go wrong or have to defend your position with an examiner that has a different understanding.

IOW, if you see them before closing, you should attempt to collect the demographic information.

If the customer selects "Mexican" for ethnicity, but does not select "Hispanic". We only report "Mexican" under ethnicity.

Is that a question Dodge? If so, I agree.

It appears that our LOS is only completing the "based on visual/not based on visual" fields if the application is face to face. If not, these fields are being left blank, is this correct?

Per the instructions:

"To Be Completed by Financial Institution (for application taken in person):"

In other words you would leave the field blank?

I believe so. I thought I had read something else that gave better clarification, but am not finding it now. Maybe someone else will chime in if there is further guidance.

We are reporting "not collected...".
Have been advised we cannot leave this field blank, and confirmed this by testing on our LAR software.
Also the FIG shows that "NA" is only for entities (a couple other reasons too, which don't apply to us).

The validity errors we get are V629-1, V632-1, V636-1, V639-1, V643-1, V644-2.

Basically they all says we cannot leave the collection method missing.
(On my test transaction, I put that the app was made via phone and via internet for each of the applicants).