On Sept. 29, 2016, the Consumer Financial Protection Bureau (CFPB) published a notice pursuant to the Equal Credit Opportunity Act (ECOA) concerning the use by creditors of the new
FNMA/FHLMC Uniform Residential Loan Application (URLA) and its approval for the creditor, at its option, to permit applicants to self-identify using disaggregated ethnic and racial categories as instructed in appendix B to Regulation C, as amended by the 2015 HMDA final rule (2015 HMDA rule), at any time from Jan. 1, 2017, through Dec. 31, 2017.
Under the 2015 HMDA rule, financial institutions will be required to permit applicants to self-identify using disaggregated ethnic and racial categories beginning Jan. 1, 2018. However, before that date, such inquiries will not be required by Regulation C or allowed under Regulation B § 1002.5(a)(2), and, therefore, creditors would be prohibited by Regulation B § 1002.5(b) from requesting applicants to self-identify using the disaggregated ethnic and racial categories.
However, with the CFPB’s approval, a creditor that uses the new URLA without any modification that would otherwise violate § 1002.5(b) through (d) would now act in compliance with § 1002.5(b) through (d). In addition, creditors are now free, at their option, to permit applicants to self-identify using disaggregated ethnic and racial categories as instructed in appendix B to the 2015 HMDA rule. During this period, a creditor adopting the practice of permitting applicants to self-identify using disaggregated ethnic and racial categories pursuant to appendix B of the 2015 HMDA rule shall not be deemed to violate Regulation B § 1002.5(b). Also during this period, a creditor adopting the practice of permitting applicants to self-identify using disaggregated ethnic and racial categories as instructed in appendix B of the 2015 HMDA rule shall also be deemed to be in compliance with Regulation B § 1002.13(a)(i) even though applicants are asked to self-identify using categories other than those explicitly provided in that section.
The CFPB is issuing its approval pursuant to a notice in the Federal Register (the “Notice”) to permit applicants to self-identify using disaggregated ethnic and racial categories as instructed in appendix B to the 2015 HMDA rule, because it believes significant benefits would result. Some of the benefits mentioned in the CFPB’s Notice include allowing for an increased implementation period that reduces creditors’ compliance burden and furthers the purposes of HMDA and Regulation C and facilitating industry adoption of self-identification using disaggregated ethnic and racial categories.
Gavin T. Ales is chief compliance officer with Torrance, Calif.-based DocMagic Inc. He may be reached by phone at (800) 649-1362, ext. 6446 or e-mail [email protected].
This article originally appeared in the November 2016 print edition of National Mortgage Professional Magazine.
