By Aaron Thompson, Senior Examiner, Federal Reserve Bank of Richmond
Introduction
National monitoring information (GMI) identifies 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 regulatory requirement of 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 information about age, intercourse, marital status, and battle 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 is valuable in detecting home loan discrimination that is lending. 2
Likewise, in 1989, the banking institutions Reform, Recovery and Enforcement Act amended the HMDA to need creditors to get battle, intercourse, and earnings information from candidates for mortgage loans to assist 3 In 2002, the Board amended Regulation C to conform the number of competition and ethnicity information to modifications used because of the workplace of Management and Budget. 4 Overall, the range associated with HMDA data collection needs is wider compared to ECOA’s requirement as the HMDA pertains to all home mortgages, including home-improvement loans.
On the basis of 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 inquire about or note applicants’ individual characteristics, such as for instance national beginning or battle, they’ve been more unlikely unlawfully to cons 5 But the legislation also incorporates an exclusion in 12 C.F.R. §1002.13 that needs creditors to gather GMI for home-purchase and refinanced loans secured by the dwelling that is owner-occupied. 6 likewise, Regulation C requires that creditors gather GMI for many kinds of home loans. Hence, creditors must be sure they usually have procedures in position to ensure applicant info is maybe perhaps not gathered about competition, color, religion, nationwide beginning, or intercourse, except when you look at the context of GMI for home mortgages, when they must gather information that is certain.
Analysis supervisory data from Federal Reserve System conformity examinations reveals that GMI requirements regularly show up on the menu of the essential usually violated laws. These violations include failing continually to gather GMI when needed, gathering it you should definitely needed, and recording the GMI information wrongly. To facilitate compliance, 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 the 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 a dwelling occupied or even be occupied by the applicant as being a major res 7 house equity personal lines of credit are not at the mercy of this area unless it really is easily obvious into the creditor at application that the main function is always to buy or refinance a dwelling that is principal. 8 The required information can be noted on the check city program form or for a separate form that references the application form. 9 The creditor must give an explanation for explanation the data is required. If the applicant will not voluntarily prov 10 Unlike the HMDA, Regulation B will not need creditors to aggregate the data in to 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.