3 (a) Public-utilities credit. Section 1002.12 provides rules concerning permissible and required record retention. The first sample form is intended for use in open-end, unsecured transactions; the second for closed-end, secured transactions; the third for closed-end transactions, whether unsecured or secured; and the fourth in transactions involving community property or occurring in community property States. Both the Bureau's consultations with the prudential regulators and its own experience in fair lending enforcement indicate that these data are used. A synopsis of some of the more important points of Regulation B follows, and an examination program is provided for a more thorough review. If a creditor collects disaggregated race and ethnicity information pursuant to 1002.13(a)(1)(i)(B), proposed 1002.13(b) provided that a creditor must comply with the restrictions on the collection of an applicant's ethnicity and race on the basis of visual observation or surname set forth in the revised Regulation C appendix, which limits such collection to the aggregate race and ethnicity categories. Similarly, because the substance and form of section 7 of the 2016 URLA is substantially similar to the form the Bureau provides as a model form in Regulation C, the 2016 URLA may be used in complying with 1002.13. documents in the last year, by the Food Safety and Inspection Service and the Food and Drug Administration Joint guidance on overdraft protection programs. Second, for creditors collecting aggregate applicant demographic information pursuant to 1002.13(a)(1)(i)(A) and (ii), the Bureau proposed to amend the Regulation B appendix to add a model form. Because Regulation B and Regulation C do not provide inconsistent instructions on the scope of the term natural person, the Bureau declines to provide additional guidance on this issue within this final rule, which, as related to 1002.13, is limited to modifications that harmonize the collection requirements of Regulation B and Regulation C. The Bureau proposed revised comment 13(a)-7 to provide that, for applications subject to 1002.13(a)(1), a creditor that collects information about the ethnicity, race, and sex of an applicant in compliance with the requirements of the revised Regulation C appendix will be acting in compliance 1002.13 concerning the collection of an applicant's ethnicity, race, and sex information. 1. Demographic information collected under Regulation B by those institutions with larger loan volumes may be used in statistical analysis that supports fair lending supervision and enforcement. The permitted collection may also alleviate concerns about violating 1002.5(b) if a financial institution collects applicant demographic information for a particular dwelling-secured loan made primarily for a business or commercial purpose, based on the financial institution's belief that it is a home purchase loan, a refinancing, or a home improvement loan, but the financial institution later discovers that this belief was mistaken, and therefore collection of applicant demographic information was not required under Regulation C. The Bureau is adopting 1002.5(a)(4)(v) to address the commenter's suggestion. i. [202.9(a)(3)(i)(B)] We designed the application to include those disclosures. Data collection under Regulation C. For applications subject to 1002.13(a)(1), a creditor that collects information about the ethnicity, race, and sex of an applicant in compliance with the requirements of appendix B to 12 CFR part 1003 is acting in compliance with 1002.13 concerning the collection of an applicant's ethnicity, race, and sex information. If there is more than one co-applicant, a creditor is permitted, but is not required, to collect the information set forth in paragraph (a) of this section from a second or additional co-applicant. The benefits may be somewhat larger for depository institutions and credit unions with less than $10 billion in assets because the relative costs of duplicative collection will be greater for these entities. Sec. 3. 12 U.S.C. To the extent that the provision benefits firms and consumers, consumers in rural areas will see the largest benefits. The appendix provides that the use of its model forms is optional under Regulation B but that, if a creditor uses an appropriate appendix B model form, or modifies a form in accordance with instructions provided in appendix B, that creditor shall be deemed to be acting in compliance with 1002.5(b) through (d). Subpart A--Collection of Checks and Other Items By Federal Reserve Banks. Other commenters did not directly address this alternative, but several industry commenters supported the flexibility of the proposal with respect to collection of disaggregated race and ethnicity information, implicitly opposing making this collection mandatory. By making disaggregated collection an option under Regulation B, entities who will report race and ethnicity information under revised Regulation C will also be in compliance with Regulation B with certainty. 2. In addition to the amendment to Regulation B in the proposal, the Bureau Start Printed Page 45692considered two alternatives to address the differing race and ethnicity requirements of Regulation B and revised Regulation C. The Bureau considered requiring all creditors subject to the collection and retention requirement of Regulation B to permit applicants to self-identify using disaggregated race and ethnicity categories. 8. The regulation covers topics such as: Prohibition on kickbacks and unearned fees Mortgage origination and servicing disclosures Affiliated business arrangements Title insurance Escrow accounts List of homeownership counseling organizations Mortgage loan servicing requirements Force-placed insurance The Bureau believes that permitting collection of applicant demographic information in this narrowly tailored circumstance may be beneficial for some financial institutions because it would allow them to collect applicant demographic information early in the collection process, when they have determined that the loan would be dwelling secured and primarily for a business or commercial purpose but may not yet have determined whether it meets the definition of a home purchase loan, refinancing, or home improvement loan under revised Regulation C. Collection of applicant demographic information at that point in the application process may allow for more consistent collection and may be easier to integrate into the application process when compared with collection after HMDA coverage has been determined. Although some entities subject to Regulation B but not Regulation C may choose to voluntarily Start Printed Page 45694begin collecting disaggregated race and ethnicity information, the Bureau believes the most likely reason for this to occur is through adoption of the 2016 URLA, which is not part of the final rule. The Bureau received no comments specifically addressing the revisions to proposed comment 13(b)-1, and so is finalizing it as proposed. Removing the Regulation B requirement altogether would make detection of any discrimination by these entities more difficult, with potentially large costs to consumers where such discrimination exists. The information provided to applicants about the rejection helps them take constructive steps to build their credit. You can find out more about our use, change your default settings, and withdraw your consent at any time with effect for the future by visiting Cookies Settings, which can also be found in the footer of the site. Under 1002.12(b)(1)(i), these records include any information required to be obtained concerning characteristics of credit applicants to monitor compliance with ECOA and Regulation B or other similar law. Cookies collect information about your preferences and your devices and are used to make the site work as you expect it to, to understand how you interact with the site, and to show advertisements that are targeted to your interests. Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. The Bureau received some comments on the topic. documents in the last year, 940 Information about this document as published in the Federal Register. Financial institutions that report under Regulation C, have reported in the prior five years, or may report in the near future may also be affected by this rule. the current document as it appeared on Public Inspection on Until the ACFR grants it official status, the XML Federal Register provide legal notice to the public and judicial notice Z8m'POn0k6j'T]]>o:gzwzBOLLX6XaXDfB{cQftl9GTFS7_^W/nX6[ When a creditor collects ethnicity and race information pursuant to 1002.13 (a) (1) (i) (B), the creditor must comply with any restrictions on the collection of an applicant's ethnicity or race on the basis of visual observation or surname set forth in appendix B to 12 CFR part 1003. This information is not part of the official Federal Register document. Regulation B 1002.5(a)(4)(i) and (ii) as finalized in this rule correspond to those provisions in revised Regulation C and permit the collection of applicant demographic information necessary to facilitate that optional reporting. The Bureau believes that making collection of disaggregated race and ethnicity an option for all entities covered by Regulation B will pose little or no additional burden on those entities who are not HMDA reporters. The changes to Regulation B in this rule are summarized briefly in this section and discussed in detail below. 03/01/2023, 267 [FR Doc. Regulation B is intended to prevent applicants from discrimination in any aspect of a credit transaction. 16. This Regulation has amendments effective January 1, 2019. documents in the last year, 1479 Comment 5(a)(4)-1 provides that information regarding ethnicity, race, and sex that is not required to be collected pursuant to Regulation C may nevertheless be collected under the circumstances set forth in 1002.5(a)(4) without violating 1002.5(b). The final rule will provide creditors flexibility in complying with Regulation B in order to facilitate compliance with Regulation C and transition to the 2016 URLA. No commenters provided such data. [11] Moreover, because both methods use the same aggregate categories, a creditor can compare information collected under either method by rolling up the disaggregated subcategories into their corresponding aggregate categories. The creditor shall then also note on the form, to the extent possible, the ethnicity, race, and sex of the applicant(s) on the basis of visual observation or surname. They must tell you the name of the creditor (company or person you owe), the amount you owe and how you can dispute the debt or seek verification of the debt.