81 FR 66930 - Status of New Uniform Residential Loan Application and Collection of Expanded Home Mortgage Disclosure Act Information About Ethnicity and Race in 2017

BUREAU OF CONSUMER FINANCIAL PROTECTION

Federal Register Volume 81, Issue 189 (September 29, 2016)

The Bureau of Consumer Financial Protection (Bureau) is publishing a notice pursuant to the Equal Credit Opportunity Act concerning the new Uniform Residential Loan Application and the collection of expanded Home Mortgage Disclosure Act information about ethnicity and race in 2017.

[Federal Register Volume 81, Number 189 (Thursday, September 29, 2016)]
[Notices]
[Pages 66930-66949]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-23555]


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BUREAU OF CONSUMER FINANCIAL PROTECTION


Status of New Uniform Residential Loan Application and Collection 
of Expanded Home Mortgage Disclosure Act Information About Ethnicity 
and Race in 2017

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Bureau Official Approval.

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SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is 
publishing a notice pursuant to the Equal Credit Opportunity Act 
concerning the new Uniform Residential Loan Application and the 
collection of expanded Home Mortgage Disclosure Act information about 
ethnicity and race in 2017.

DATES: This official approval is issued September 23, 2016. Entities 
may rely on part III of this Bureau official approval beginning January 
1, 2017.

FOR FURTHER INFORMATION CONTACT: James Wylie, Counsel, Office of 
Regulations, Consumer Financial Protection Bureau, 1700 G Street NW., 
Washington, DC 20552, at 202-435-7700.

SUPPLEMENTARY INFORMATION:

I. Background

    The Bureau of Consumer Financial Protection (Bureau) administers 
the Equal Credit Opportunity Act (ECOA), 15 U.S.C. 1691, et seq. and 
its implementing regulation, Regulation B, 12 CFR part 1002. Section 
706(e) of ECOA, as amended, provides that no provision of ECOA imposing 
liability shall apply to any act done or omitted in good faith in 
conformity with any official rule, regulation, or interpretation 
thereof by the Bureau or in conformity with any interpretation or 
approval by an official or employee of the Bureau duly authorized by 
the Bureau to issue such an interpretation or approval. This notice 
(Bureau official approval) constitutes such an interpretation or 
approval, and therefore section 706(e) protects a creditor from civil 
liability under ECOA for any act done or omitted in good faith in 
conformity with this notice.

II. New Uniform Residential Loan Application Status Under Regulation B

    The Federal Home Loan Mortgage Corporation and the Federal National 
Mortgage Association (collectively, the Enterprises), under the 
conservatorship of the Federal Housing Finance Agency (FHFA), issued a 
revised and redesigned Uniform Residential Loan Application on August 
23, 2016, included as an attachment to this notice (2016 URLA).\1\ This 
issuance was part of the effort of these entities to update the Uniform 
Loan Application Dataset (ULAD) in conjunction with the 2016 URLA. 
Bureau staff has reviewed the 2016 URLA in accordance with the request 
by FHFA and the Enterprises for a Bureau official approval of the 2016 
URLA under ECOA and Regulation B.
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    \1\ See 2016 URLA--Borrower Information, 2016 URLA--Additional 
Borrower, 2016 URLA--Unmarried Addendum, 2016 URLA--Lender Loan 
Information, 2016 URLA--Continuation Sheet, and 2016 URLA 
Demographic Information Addendum included as attachments in part V 
of this notice.
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A. Background

    A version of the URLA dated January 2004 is included in appendix B 
to Regulation B as a model form. Appendix B provides that the use of 
model forms included in appendix B 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 Sec.  
1002.5(b) through (d). Regulation B comment appendix B-1 provides that 
a previous version of the URLA, dated October 1992, may be used by 
creditors without violating Regulation B.
    This Bureau official approval is being issued separately from, and 
without amending, the official interpretations to Regulation B 
contained in Supplement I to Regulation B. The Bureau will consider 
whether to address the treatment of outdated versions of the URLA in 
appendix B and Supplement I to Regulation B at a later date.

B. Bureau Official Approval

    Regulation B Sec.  1002.5(b) provides rules concerning requests for 
information about race, color, religion, national origin, or sex. 
Section 1002.5(c) provides rules concerning requests for information 
about a spouse or former spouse. Section 1002.5(d) provides rules 
concerning requests for information regarding marital status; income 
from alimony, child support, or separate maintenance; and childbearing 
or childrearing. Bureau staff has determined that the relevant language 
in the 2016 URLA is in compliance with these regulatory provisions. A 
creditor's use of the 2016 URLA is not required under Regulation B. 
However, a creditor that uses the 2016 URLA without any modification 
that would violate Sec.  1002.5(b) through (d) would act in compliance 
with Sec.  1002.5(b) through (d). The issuance of this Bureau official 
approval has been duly authorized by the Director of the Bureau and 
provides the protection afforded under section 706(e) of ECOA.

III. Collection of Expanded Home Mortgage Disclosure Act Information 
About Ethnicity and Race in 2017

    This part of this Bureau official approval addresses collection of 
information concerning the ethnicity and race of applicants in 
conformity with Regulation B from January 1, 2017, through December 31, 
2017.

A. Background

    With some exceptions, Regulation B Sec.  1002.5(b) generally 
prohibits a creditor from inquiring about the race, color, religion, 
national origin, or sex of an applicant or any other person in 
connection with a credit transaction. Regulation B Sec.  1002.5(a)(2) 
provides an exception to that prohibition for information, including 
information about ethnicity and race, for monitoring purposes that 
creditors are required to request for certain dwelling-secured loans 
under Sec.  1002.13, and for information required by a regulation, 
order, or agreement issued by or entered into with a court or an 
enforcement

[[Page 66931]]

agency to monitor or enforce compliance with ECOA, Regulation B, or 
other Federal or State statutes or regulations, including Regulation 
C.\2\ Under Regulation C Sec.  1003.4(a)(10), lenders covered by 
Regulation C are required to collect, record, and report certain 
information, including information regarding ethnicity and race, that 
would be otherwise prohibited.
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    \2\ Regulation B comment 5(a)(2)-2 explains that Regulation C 
generally requires creditors covered by HMDA to collect and report 
information about the race, ethnicity, and sex of applicants for 
home-improvement loans and home purchase loans, including some types 
of loans not covered by Sec.  1002.13.
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    Regulation C, as amended by the final rule published in the Federal 
Register at 80 FR 66127 on October 28, 2015 (2015 HMDA final rule), 
will require financial institutions to permit applicants to self-
identify using disaggregated ethnic and racial categories beginning 
January 1, 2018.\3\ However, before that date, such inquiries will not 
be required by Regulation C or allowed under Regulation B Sec.  
1002.5(a)(2), and therefore creditors would be prohibited by Regulation 
B Sec.  1002.5(b) from requesting applicants to self-identify using the 
disaggregated ethnic and racial categories.
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    \3\ 80 FR 66314, amendments to appendix B to Regulation C 
effective January 1, 2018.
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    The Bureau believes there will likely be significant benefits to 
permitting creditors to request, before January 1, 2018, that 
applicants self-identify using the disaggregated ethnic and racial 
categories under amended Regulation C, using the processes and 
instructions provided in amended appendix B to Regulation C. The Bureau 
believes such authorization may provide creditors time to begin to 
implement the regulatory changes and improve their compliance processes 
before the new requirement becomes effective, and therefore mandatory, 
on January 1, 2018. Allowing for this increased implementation period 
will reduce compliance burden and further the purposes of HMDA and 
Regulation C. Some creditors may be ready to permit applicants to self-
identify using disaggregated ethnic and racial categories before 
January 1, 2018, but could not fully transition to new forms and 
processes because of the prohibition in Regulation B Sec.  1002.5(b). 
It may help industry adoption of those standards to allow creditors to 
permit applicants to self-identify using disaggregated ethnic and 
racial categories before January 1, 2018. Moreover, permitting 
applicants to self-identify using the disaggregated ethnic and racial 
categories as instructed in appendix B to Regulation C, as amended by 
the 2015 HMDA final rule, before the effective date of that rule is 
consistent with the purposes of ECOA and Regulation B and does not pose 
a risk of harm to consumers. As the Bureau explained in the 2015 HMDA 
final rule, the Bureau believes that, among other things, 
disaggregation will encourage self-reporting by applicants by offering, 
as the Census does, categories that promote self-identification.\4\
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    \4\ HMDA Final Rule, 80 FR at 66190.
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B. Bureau Official Approval

    At any time from January 1, 2017, through December 31, 2017, a 
creditor may, at its option, 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. 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 to Regulation C, as amended by the 2015 HMDA 
final rule, shall not be deemed to violate Regulation B Sec.  
1002.5(b). 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 to Regulation C, as 
amended by the 2015 HMDA final rule, shall also be deemed to be in 
compliance with Regulation B Sec.  1002.13(a)(i) even though applicants 
are asked to self-identify using categories other than those explicitly 
provided in that section. The issuance of this Bureau official approval 
has been duly authorized by the Director of the Bureau and provides the 
protection afforded under section 706(e) of ECOA.

C. Instructions for Submitting Data Collected Under This Approval

    For purposes of submitting HMDA data for applications received from 
January 1, 2017, through December 31, 2017, and on which final action 
is taken during the 2017 calendar year, a financial institution shall 
submit the information concerning ethnicity and race pursuant to Sec.  
1003.4(a)(10), using only aggregate categories and the codes provided 
in the filing instructions guide for HMDA data collected in 2017, even 
if the financial institution has permitted applicants to self-identify 
using disaggregated categories pursuant to this Bureau official 
approval.\5\ For such applications, if an applicant selects multiple 
disaggregated ethnicity or race categories that correspond to a single 
aggregate ethnicity or race category, the financial institution shall 
submit the applicable code for that aggregate ethnicity or race 
category. If an applicant selects multiple disaggregated race 
categories that correspond to multiple aggregate race categories, the 
financial institution shall submit the applicable code for each of 
those aggregate race categories. If an applicant selects an ``other'' 
race or ethnicity category, with or without providing a written 
response, the financial institution shall submit the applicable code 
for that aggregate race or ethnicity category. If an applicant selects 
multiple aggregate ethnicity categories by either selecting both 
Hispanic or Latino and Not Hispanic or Latino or selecting Not Hispanic 
or Latino and selecting the ``other'' ethnicity category, with or 
without providing a written response, the financial institution may 
submit either the applicable code for Hispanic or Latino or the 
applicable code for Not Hispanic or Latino.
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    \5\ See 2017 File Specifications in filing instructions guide 
for HMDA data collected in 2017, available at: http://www.consumerfinance.gov/data-research/hmda/static/for-filers/2017/2017-HMDA-FIG.pdf.
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    For purposes of submitting HMDA data for applications received on 
or after January 1, 2017, and before January 1, 2018, and on which 
final action is taken on or after January 1, 2018, the financial 
institution, at its option, may submit the information concerning 
ethnicity and race under Sec.  1003.4(a)(10)(i) using disaggregated 
categories if the applicant provided such information instead of using 
the transition rule in Regulation C comment 4(a)(10)(i)-2 as adopted by 
the 2015 HMDA final rule, or it may submit the information in 
accordance with that transition rule.

IV. Regulatory Requirements

    This Bureau official approval is an approval or interpretation 
exempt from notice and comment rulemaking requirements under the 
Administrative Procedure Act. See 5 U.S.C. 551, 553(b). Because no 
notice of proposed rulemaking is required, the Regulatory Flexibility 
Act does not require an initial or final regulatory flexibility 
analysis. 5 U.S.C. 603(a), 604(a). The Bureau has determined that this 
notice does not impose any new or revise any existing recordkeeping, 
reporting, or disclosure requirements on covered entities or members of 
the public that would be collections of information requiring OMB 
approval under the Paperwork Reduction Act, 44 U.S.C. 3501, et seq. The 
existing information collections required by the Equal Credit 
Opportunity Act (ECOA) and Regulation B have been approved by the 
Office Of Management and Budget under OMB

[[Page 66932]]

Control #3170-0013, and the information collections for the Home 
Mortgage Disclosure Act (HMDA) and Regulation C are approved under OMB 
Control #3170-0008. The Bureau's approval of the revised Uniform 
Residential Loan Application (2016 URLA) does not add or alter any 
information collections approved under either rule.

V. 2016 Uniform Residential Loan Application

BILLING CODE 4810-AM-P

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    Dated: September 23, 2016.
David Silberman,
Associate Director, Division of Research, Markets, and Regulations, 
Bureau of Consumer Financial Protection.
[FR Doc. 2016-23555 Filed 9-28-16; 8:45 am]
 BILLING CODE 4810-AM-C