From today's press release--

The changes finalized today, initially proposed in March, will provide compliance flexibility for individual mortgage lenders, and also support the broader mortgage industry’s ability to use consistent forms and compliance practices. Mortgage lenders will not be required to maintain different practices depending on their loan volume or other characteristics, allowing more lenders to adopt application forms that include expanded requests for information regarding a consumer’s ethnicity and race, including the revised Uniform Residential Loan Application.

The Bureau also finalized other amendments to Regulation B and its commentary to facilitate compliance with Regulation B’s requirements for the collection and retention of information about the ethnicity, race, and sex of applicants seeking certain types of mortgage loans.

The final rule on ECOA issued today is available at:
http://files.consumerfinance.gov/f/documents/201709_cfpb_final-rule_regulation-b.pdf

The amendments will be effective 1/1/18 (except that the amendment removing the current URLA form is effective 1/1/22

I'm starting to scan through the rule now. In general, it seems to be good and helpful. But this constant tweaking and issuing of proposed and final rules, particularly so close to the effective date, is beginning to drive me nuts.

John, your tagline is very appropriate in this context!

I scanned through the rule and I have one question. We are not subject to HMDA reporting therefore we collect the govt monitoring information under Reg B which states information is to be obtained on primary residences only. I don't think this amendment changed that. Am I correct?

It did not. The new Reg B rule only allows you to use the Demographic Info collection form with subcategories. It didn't change when you collect GMI / DI.

Thank you.

We are not required to report HMDA for open-end, specifically HELOCs. Therefore, nothing has changed in regards to collecting GMI for Reg B. However, our system is being enhanced with the subcategories for HMDA 2018. Shouldn't we only be collecting race, sex, etc. for Reg B since we're not reporting it for HMDA?

Yes.

Can you please forward the citing in Regulation B that requires a non-HMDA bank to collect the GMI? I need to know exactly what information (ethnicity, sex and/or race) needs to be collected, so I can check configuration in my consumer loan origination system.

My two cents.....it seems wrong to collect this information on HELOCs and not do anything with it. Since it only applies to a purchase/refinance of an owner-occupied primary residence, the process for collecting GMI is inconsistent for frontline staff and therefore a nightmare to monitor. I sure it's being collected when it shouldn't be and vice versa.

1002.13—Information for monitoring purposes.

(a) Information to be requested. (1) A creditor that receives an application for credit primarily for the purchase or refinancing of a dwelling occupied or to be occupied by the applicant as a principal residence, where the extension of credit will be secured by the dwelling, shall request as part of the application the following information regarding the applicant(s):

For the revised collection of data - see the amendments:

http://files.consumerfinance.gov/f/documents/201709_cfpb_final-rule_regulation-b.pdf

We are required to report for HMDA on all closed-end transactions, but are exempt for open-end transactions, which are processed by a different business unit using a different LOS.

That said, can we gather the GMI in our LOS used to originate open-end transactions or do we have to have a written application to support it? Trying to be paperless around here. Since it's not being reported, we could confirm procedures are being followed by looking at purchase/refi transactions in the LOS.

Official Interpretation

13(b) Obtaining of information.

2. Written applications. The regulation requires written applications for the types of credit covered by §1002.13. 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.

The LOS vendor we use to originate HELOCs is telling me these Reg B data collection requirements are limited to "closed-end mortgages". Geez.

Commentary to 1002.13 (a)

5.Transactions not covered.
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. Therefore, applications for credit secured by the applicant's principal residence but made primarily for a purpose other than the purchase or refinancing of the principal residence (such as loans for home improvement and debt consolidation) are not subject to the information-collection requirements. An application for an open-end home equity line of credit is not subject to this section unless it is readily apparent to the creditor when the application is taken that the primary purpose of the line is for the purchase or refinancing of a principal dwelling.

Yes, I saw this statement in the commentary and thought maybe we could get out of collecting for a HELOC. However, since our application has a specific field for the purpose, how could I justify the purpose was not "readily apparent to the creditor?"

Are we required to collect government monitoring information for Reg B on a second lien if it has already been collected on the first? We recently moved all our HELOC processing to one department, which includes second lien piggyback loans. So, when the purpose is "purchase of a primary residence", our system is requesting the government monitoring information for Reg B, but it has already been collected for HMDA on the first lien mortgage loan. Ugh!

Trust your system on this.

Reg B §1002.13(a) begins as follows: "A creditor that receives an application for credit primarily for the purchase or refinancing of a dwelling occupied or to be occupied by the applicant as a principal residence, where the extension of credit will be secured by the dwelling, shall request as part of the application the following information regarding the applicant(s):"

I'd suggest that, if the HELOC is covered by the same application as the first-lien loan, you already collected in connection with the application, and you don't need to collect it twice. But if there are two separate applications, I think you need to request the info in both applications.

Reg.B and Reg. C monitoring information goes hand in hand but they are two separate requirements by two separate regulations.

To my knowledge Reg. B's requirement is not based on lien status.

But you will want to populate the fields for the GMI/DI in your HELOC input in either case (one application or two).

These HELOC requests are one application. The first lien is being processed through one LOS for mortgage loans, while the second is processed through another LOS for consumer loans. I can't disable the demographic information in the consumer loan system, because then we would miss standalone HELOCs with a purpose of purchase/refi of a primary residence.

We will continue to gather and report the demographic information for HMDA on the first lien, closed-end through our mortgage LOS, but just gather it in the consumer loan LOS for the second lien.

Thanks Everyone!