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From Banking and Finance Law Daily, September 20, 2017

CFPB provides flexibility and clarity to mortgage lenders on collecting information

By Stephanie K. Mann, J.D.

In order to provide greater clarity for mortgage lenders regarding their obligations in collecting consumer ethnicity and race information, while promoting compliance with rules intended to ensure consumers are treated fairly, the Consumer Financial Protection Bureau has modified Equal Credit Opportunity Act regulations. Separately, the CFPB is also seeking comments on a proposed policy guidance describing the Home Mortgage Disclosure Act data the Bureau hopes to make available to the public beginning in 2019, including modifications to protect consumers’ privacy.

"The Home Mortgage Disclosure Act helps shine a light on how consumers are treated in the nation’s largest consumer financial market," said CFPB Director Richard Cordray. "The Consumer Bureau is committed to promoting fair lending and protecting consumer privacy, and will continue working to ensure that the rules work as intended."

ECOA. Regulation B restricts a lender’s ability to ask consumers about their race, color, religion, national origin, or sex, except in certain circumstances. These circumstances include required collection of the information for some mortgage applications under Reg. B. The Bureau’s amendments would allow mortgage lenders to adopt application forms that include expanded requests for information regarding a consumer’s ethnicity and race as they will no longer be required to maintain different practices depending on their loan volume or other characteristics.

The Bureau also finalized additional amendments to facilitate compliance with Reg. B’s requirements for the collection and retention of information about the ethnicity, race, and sex of applicants seeking certain types of mortgage loans.

The rule amendments are effective on Jan. 1, 2018, except that the amendment to Appendix B removing the existing "Uniform Residential Loan Application" form in amendatory instruction 6 is effective January 1, 2022.

HMDA. Regulation C requires many lenders to report and disclose certain information about their mortgage lending activities. Beginning in 2018, financial institutions will begin collecting new information which includes data fields such as the property value, the interest rate of the loan, and the applicant’s debt-to-income ratio.

In the proposed policy guidance, the Bureau is seeking comments on how to best protect consumers’ privacy while still disclosing important mortgage information. The guidance describes the loan-level HMDA data that the Bureau proposes to make available to the public beginning in 2019 with important modifications to exclude certain data fields, including the property address and the applicant’s credit score. The CFPB is also proposing to disclose certain information with reduced precision, for instance by disclosing an applicant’s age as a range rather than as a specific number.

All comments must be received within 60 days after publication in the Federal Register.

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