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National Monitoring Information needs Under the HMDA additionally the ECOA

mayo 30, 2020

National Monitoring Information needs Under the HMDA additionally the ECOA

By Aaron Thompson, Senior Examiner, Federal Reserve Bank of Richmond


National monitoring information (GMI) means the mortgage 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 particular home mortgages. The requirement that is regulatory loan providers to get such information goes back to 1977 as soon as the Federal Reserve Board (Board) amended Regulation B to need creditors to gather monitoring details about age, intercourse, marital status, and battle or nationwide beginning on home-purchase loans and refinancing deals. 1 The Board explained that these records would help federal regulators detect home loan discrimination that is lending. Consumer groups additionally thought that this information could be valuable in detecting mortgage discrimination that is lending. 2

Likewise, in 1989, the finance institutions Reform, healing and Enforcement Act amended the HMDA to need creditors to gather competition, intercourse, and earnings data from candidates for mortgage loans to simply help 3 In 2002, the Board amended Regulation C to conform the assortment of competition and ethnicity information to modifications used by the working office of Management and Budget. 4 Overall, the range associated with the HMDA information collection demands is wider compared to ECOA’s requirement considering that the HMDA relates to all home mortgages, including home-improvement loans.

In line with the regularity of assessment violations, complying with GMI needs could be challenging. Regarding the one hand, Regulation B generally forbids creditors from gathering information on battle, color, faith, nationwide beginning, or intercourse “to discourage discrimination, on the basis of the premise that when creditors cannot ask about or note candidates’ individual characteristics, such as for example nationwide beginning or battle, they truly are more unlikely unlawfully to cons 5 But the legislation also incorporates an exception in 12 C.F.R. §1002.13 that needs creditors to get GMI for home-purchase and refinanced loans secured by the dwelling that is owner-occupied. 6 likewise, Regulation C requires that creditors collect GMI for several forms of home loans. Hence, creditors must be sure they usually have procedures in position to make sure that applicant info is not gathered about competition, color, religion, nationwide origin, or sex, except within the context of GMI for home mortgages, once they must gather compare dollar loan center with other lenders particular information.

Overview of supervisory information from Federal Reserve System conformity exams reveals that GMI requirements regularly show up on record of probably the most often violated laws. These violations include failing woefully to gather GMI whenever needed, gathering it you should definitely needed, and recording the GMI information incorrectly. To facilitate conformity, this short article product reviews the GMI requirements under Regulations B and C, identifies common GMI violations in Federal Reserve System conformity exams, and covers the brand new GMI conditions associated with Dodd-Frank Wall Street Reform and customer Protection Act (Dodd-Frank Act).

ECOA/Regulation B

Under 12 C.F.R. §1002.13(a)(1), a “creditor that receives a credit card applicatoin for credit mainly for the acquisition or refinancing of the dwelling occupied or even be occupied by the applicant as being a major res 7 house equity lines of credit aren’t at the mercy of this area unless it really is easily apparent into the creditor at application that the principal function is always to buy or refinance a major dwelling. 8 The required information can be noted on the application form form or on a form that is separate references the application form. 9 The creditor must give an explanation for good explanation the information and knowledge is required. In the event that applicant doesn’t prov 10 Unlike voluntarily the HMDA, Regulation B will not need creditors to aggregate the details in to a register or report it.

HMDA/Regulation C

The dining dining dining table below compares the information creditors must collect under laws B and C.