If a borrower refuses to provide this information or if the application is over the phone, should we have the lender later put in the correct information from the interview?

IMHO - NO.

It is not required for a telephone application if the borrower does not wish to provide the information.

Under the current rules, which this application will fall under, you are to request the information if you meet with the borrower anytime during the loan decision process. If you meet with the borrower after the loan decision is made, you are highly encouraged to request the information, but you are not required to do so. Look at page D-12 of the GIR.

Effective 1/1/03, the rule will change to read:

If the applicant declines to answer these questions or fails to provide the information on an application taken by mail or telephone or the Internet, the data need not be provided. In such case, indicate that the application was received by mail, telephone or Internet, if it is not otherwise evident on the face of the application.

203.4 (b) Collection of data on race or national origin, sex, and income. (1) A financial institution shall collect data about the race or national origin and sex of the applicant or borrower as prescribed in appendix B. If the applicant or borrower chooses not to provide the information, the lender shall note the data on the basis of visual observation or surname, to the extent possible.
(2) Race or national origin, sex, and income data may but need not be collected for:
(i) Loans purchased by the financial institution; or
(ii) Applications received or loans originated by a bank, savings association, or credit union with assets on the preceding December 31 of $30 million or less.

Anon, what you quoted does not apply to a telephone application. Even if the lender did meet with the applicants he can not collect the GMI without giving the proper GMI disclosure. That is why the appendix specifies that you request the information; the thought being if you requested the information you gave the proper disclosure.

But under no circumstance or you to report the information without giving the proper GMI disclosure first.

If the borrower refuses to provide information over the phone, you are finished with the requirement. However, keep in mind that consumer advocacy groups really want this information and are pushing to get as much as they can. While this suggestion actually adds a little to compliance burden, I think it would be useful to note that the information was requested and refused. A lot of telephone refusals could help to get rid of this rule --- someday.

Lucy, the Reg. B proposal was due for discussion a month or two ago and was delayed. The "optional" gathering of this data for other loans is still a pending issue in that proposal. Is there any expectations here or should we just shut up and hope it goes away?

I'm sort of in the sit quietly and hope it goes away camp. However, I think the issues of privacy and new BSA rules could be the reason for the delay. My guess is that the ban could be lifted to enable collection of information in Customer identification programs.

If you are OCC regulated you are required to complete the monitoring information based on visual observation or sir name and must note that fact in the monitoring area. I realize this goes against what is said, but thats the government.

Tina: what is your source? I don't think that the OCC has anything that trumps Reg C. The in-person application rules require me to note GMI based on visual observation or surname, but not phone applications.

My experience has been that while the OCC regurgitates regulations under their numbering system, the FRB has ownership. They interpret it.

I believe that is the general finding of the Reg itself, but not the specific requirements.

We were at one time required to complete this information for the HMDA LAR, however, based on the information I just looked up that could change. I have requested comment from by regulators. Thanks David.

In the HMDA staff commentary, it indicates that if an application is begun on the phone, internet or mail, but later completed in person, you would need to complete the information based on surname or observation. The FDIC Compliance manual indicates that they do not require this, however, and the BOL teleconference last week indicated the same thing. It may be that the OCC is taking a more conservative approach than the FDIC. I would encourage you to ask your regulator for clarification if there is any question.

Of course, visual observation only works if you see the customer at some point. Are you saying that the OCC holds you to gathering the data at closing?

I would object strongly to using surname to presume race or ethnicity. Names can be very misleading. For example, the Director of the FRB's Division of Consumer and Community Affairs is Dolores Smith. She is Hispanic so her first name is a better clue than her surname. The OCC method seems to be fraught with errors.

I agree strongly with you, however, the OCC does state this fact. I have emailed the agency to get better clarification on this fact. I cannot seem to find my source as yet, but during an exam (external auditors) and during a HMDA class it was noted as such. I believe BCG did have it noted in their manuals, but it now says something a little different. They based their information on the OCC's Fair Housing Home Loan Data System. It seems that the OCC now apply the rules of Reg C under their Community Bank Consumer Compliance Handbook. I will see when I receive notice from them.

That should be interesting. Perhaps we should track how different agencies and examiners are approaching this. There are a lot of options to pursue and plenty of opportunity for confusion. Using surnames really bothers me on accuracy grounds.

Tina, I'm curious as to what response you'll get. I have seen situations where a banker will misinterpret what an examiner told them, or heard what they wanted to hear. Also, it is possible you maybe talked to an inexperienced examiner who did not did not do their homework. Also, it's possible one field office interprets things differently than another - they are only people too.

While it's hard to imagine, bank examiners do not come out of college automatically knowing everything there is to know about the regulations. There is also the possibility that you misinterpreted what they were trying to say. I wouldn't hang my hat on that without doing further checking and getting something in writing.

Here is the OCC cite re wanting information based on visual observation or surname.

The OCC's FHHLDS serves a similar purpose as HMDA, but is different. And OCC banks doing HMDA need not worry about the FHHLDS. OCC 94-36

I have spent most of my years at OCC institutions and have never been cited for not recording info on basis of surname. The only time I have ever seen the OCC use surname was in "test" fairlending analyses of credit card and other non-mortgage portfolios.

it needs to be on the gmi that it was a phone application