By Aaron Thompson, Senior Examiner, Federal Reserve Bank of Richmond
Government monitoring information (GMI) is the loan applicant demographic data creditors must gather under Regulation B, which implements the Equal Credit chance Act (ECOA), and Regulation C, which implements the house Mortgage Disclosure Act (HMDA), whenever customers submit an application for specific home loans. The requirement that is regulatory loan providers to gather such information goes back to 1977 once the Federal Reserve Board (Board) amended Regulation B to need creditors to gather monitoring information about age, intercourse, marital status, and competition or nationwide beginning on home-purchase loans and refinancing transactions. 1 The Board explained that these records would assist federal regulators detect home loan lending discrimination. Customer groups additionally believed that this information could be valuable in detecting home loan lending discrimination. 2
Likewise, in 1989, the banking institutions Reform, healing and Enforcement Act amended the HMDA to need creditors to gather competition, intercourse, and earnings information from applicants for mortgage loans to simply help 3 In 2002, the Board amended Regulation C to conform the number of battle and ethnicity information to modifications used by the working office of Management and Budget. 4 Overall, the range associated with HMDA information collection needs is wider compared to the ECOA’s requirement since tennessee online installment loans the HMDA pertains to all home loans, including home-improvement loans.
In line with the frequency of assessment violations, complying with GMI needs could be challenging. Regarding the one hand, Regulation B generally prohibits creditors from gathering information regarding race, color, faith, nationwide origin, or intercourse “to discourage discrimination, in line with the premise that when creditors cannot ask about or note candidates’ individual characteristics, such as for instance nationwide beginning or battle, they’ve been more unlikely unlawfully to cons 5 But the legislation also includes an exclusion in 12 C.F.R. §1002.13 that needs creditors to gather GMI for home-purchase and refinanced loans secured by an dwelling that is owner-occupied. 6 likewise, Regulation C requires that creditors gather GMI for many kinds of home loans. Hence, creditors need to ensure they usually have procedures in position to make sure that applicant info is maybe perhaps not collected about competition, color, faith, nationwide beginning, or intercourse, except into the context of GMI for home loans, once they must gather information that is certain.
Overview of supervisory information from Federal Reserve System conformity exams reveals that GMI requirements regularly show up on record of the many usually violated laws. These violations include failing woefully to gather GMI whenever needed, gathering it when not needed, and recording the GMI information wrongly. To facilitate conformity, this short article ratings the GMI requirements under Regulations B and C, identifies typical GMI violations in Federal Reserve System conformity examinations, and covers the brand new GMI conditions regarding the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).
Under 12 C.F.R. §1002.13(a)(1), a “creditor that gets a credit card applicatoin for credit mainly for the acquisition or refinancing of a dwelling occupied or even to be occupied by the applicant as a major res 7 house equity personal lines of credit aren’t susceptible to this part unless it really is easily obvious to your creditor at application that the principal function is always to buy or refinance a dwelling that is principal. 8 The required information could be noted on the applying form or on a form that is separate references the applying. 9 The creditor must give an explanation for good explanation the knowledge is requested. In the event that applicant will not voluntarily prov 10 Unlike the HMDA, Regulation B will not need creditors to aggregate the data as a register or report it.
The dining table below compares the information creditors must collect under laws B and C.