National Monitoring Information needs Under the HMDA while the ECOA

National Monitoring Information needs Under the HMDA while the ECOA

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

Introduction

National monitoring information (GMI) is 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 specific home loans. The regulatory check city near me dependence on loan providers to get such information goes back to 1977 if the Federal Reserve Board (Board) amended Regulation B to need creditors to get monitoring details about age, intercourse, marital status, and competition or nationwide beginning on home-purchase loans and refinancing deals. 1 The Board explained that these details would help federal regulators detect home loan discrimination that is lending. Customer groups additionally thought that this information could be valuable in detecting home loan discrimination that is lending. 2

Likewise, in 1989, the finance institutions Reform, healing and Enforcement Act amended the HMDA to need creditors to get battle, intercourse, and earnings data from candidates for home loan loans to assist 3 In 2002, the Board amended Regulation C to conform the number of competition and ethnicity information to modifications adopted by the working office of Management and Budget. 4 Overall, the range associated with the HMDA information collection demands is wider as compared to ECOA’s requirement due to the fact HMDA pertains to all home loans, including home-improvement loans.

In line with the regularity of assessment violations, complying with GMI needs could be challenging. In the one hand, Regulation B generally forbids creditors from gathering information on competition, color, faith, nationwide beginning, or intercourse “to discourage discrimination, in line with the premise that when creditors cannot ask about or note candidates’ individual characteristics, such as for example nationwide beginning or competition, they truly are 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 the owner-occupied dwelling. 6 likewise, Regulation C requires that creditors gather GMI for many kinds of home mortgages. Hence, creditors need to ensure they have procedures in position to make sure that applicant info is perhaps maybe not gathered about competition, color, faith, nationwide beginning, or intercourse, except when you look at the context of GMI for home mortgages, if they must gather specific information.

Analysis 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 continually to collect GMI whenever needed, gathering it you should definitely needed, and recording the information that is GMI. 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 software for credit mainly for the acquisition or refinancing of the dwelling occupied or even be occupied because of the applicant as being a principal res 7 house equity personal lines of credit aren’t subject to this area unless it really is easily obvious towards the creditor at application that the principal function would be to buy or refinance a dwelling that is principal. 8 The required information are noted on the application kind form or for a split kind that references the applying. 9 The creditor must give an explanation for explanation the knowledge is requested. In the event that applicant will not voluntarily prov 10 Unlike the HMDA, Regulation B doesn’t need creditors to aggregate the info into a register or report it.

HMDA/Regulation C

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