CFPB Proposes Amendments to ECOA to Provide More Flexibility for Lenders
The Consumer Financial Protection Bureau (CFPB) has issued proposed changes to the Equal Credit Opportunity Act in order to provide lenders with additional flexibility when collecting consumer ethnicity and race information. The CFPB aims to prepare mortgage lenders to comply with the HMDA final rule, particularly concerning the collection of race and ethnicity. The proposed change clarifies mortgage lenders that will not be required to collect and report the new information for certain transaction types, based on the institution’s asset size or loan volume, may choose to use consistent forms and collection procedures without violating Regulation B.
The proposed changes include the addition of certain model forms and the removal of others which correspond with the Government Sponsored Enterprises’ adoption of the new version of the Uniform Residential Loan Application (URLA). The proposed rule will also clarify that creditors that voluntarily utilize the updated URLA’s Demographic Information Addendum after January 1, 2017 will also be permitted to collect such information under ECOA, even though Regulation C’s requirements are not effective until January 1, 2018.
Regulation B includes restrictions concerning a mortgage lender’s ability to question consumers about their race, color, religion, national origin or sex, except in certain circumstances. Under to the new proposal mortgage lenders would not be required to utilize different procedures and would be permitted to adopt application forms to suit their loan programs. The proposal also contains other amendments to Regulation B that will help lender comply with for the collection of borrower characteristics for other types of credit.
Comments must be submitted within 30 days of the proposed rule’s publication in the Federal Register