The Consumer Financial Protection Bureau finalized amendments to Equal Credit Opportunity Act regulations on Wednesday to provide additional flexibility for mortgage lenders in the collection of consumer ethnicity and race information.
Tacked onto the announcement, the CFPB also said it is seeking comment on proposed policy guidance describing the Home Mortgage Disclosure Act data the bureau proposes to make available to the public beginning in 2019.
For the ECOA, the bureau originally announced the proposed amendments back in March, stating it intended to give lenders needed clarity on their obligations under the law, while promoting compliance with rules intended to ensure consumers are treated fairly. The final rule can be found here.
The Equal Credit Opportunity Act is a federal civil rights law that protects against discrimination in the financial marketplace.
To follow Regulation B, the CFPB’s rule implementing ECOA, there are restrictions regarding lenders’ 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 Regulation B.
Under these finalized changes, more lenders can adopt application forms that include expanded requests for information regarding a consumer’s ethnicity and race, including the revised Uniform Residential Loan Application, the standardized form used by borrowers to apply for a mortgage loan.
The bureau added that it also finalized other amendments to Regulation B and its commentary to facilitate compliance with Regulation 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 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.”
As for the CFPB’s request for public comment, the bureau is considering whether and how HMDA data should be modified prior to its disclosure to the public, in order to protect applicant and borrower privacy while also fulfilling HMDA’s public disclosure purposes.
HMDA, which was originally enacted in 1975, requires many lenders to report information about the home loans for which they receive applications or that they originate or purchase.
The public and regulators can use the information to monitor whether financial institutions are serving the housing needs of their communities, to assist in distributing public-sector investment so as to attract private investment to areas where it is needed, and to identify possible discriminatory lending patterns.
The rule made headlines back in October 2015 when the bureau first released updates to HMDA to improve the quality and type of data reported by financial institutions, most of those updated requirements are set to take effect January 2018.
In this latest update to HMDA, the CFPB explained that the proposed policy guidance issued describes the loan-level HMDA data that the bureau proposes to make available to the public beginning in 2019.
While the bureau proposes to make the bulk of this information public, it’s not set on making all of the data public in order to protect consumers’ privacy.
For example, the property address and applicant’s credit score should be excluded from what is shared publicly.
The public comment period will be open for 60 days following publication in the Federal Register.