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 make an application for particular home loans. The requirement that is regulatory loan providers to get such information goes back to 1977 as soon as 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 records would assist federal regulators detect home loan lending discrimination. Consumer groups additionally thought that this information could be 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 gather battle, intercourse, and earnings information from candidates for home loan loans to greatly help 3 In 2002, the Board amended Regulation C to conform the assortment of competition and ethnicity information to modifications used because of the working office of Management and Budget. 4 Overall, the range associated with the HMDA information collection needs is wider compared to the ECOA’s requirement since the HMDA pertains to all home loans, including home-improvement loans.
In line with the regularity of assessment violations, complying with GMI demands could be challenging. From the one hand, Regulation B generally forbids creditors from gathering information regarding battle, color, faith, nationwide origin, or sex “to discourage discrimination, in line with the premise that when creditors cannot inquire about or note candidates’ individual characteristics speedyloan.net/reviews/cash-store/, such as for example nationwide beginning or competition, they truly are more unlikely unlawfully to cons 5 But the legislation also includes an exception 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 forms of home loans. Therefore, creditors need to ensure they usually have procedures in position to ensure applicant info is perhaps perhaps not gathered about battle, color, faith, nationwide origin, or intercourse, except within the context of GMI for home mortgages, once they must gather information that is certain.
Overview of supervisory information from Federal Reserve System conformity exams reveals that GMI requirements regularly show up on the menu of the absolute most usually violated laws. These violations include neglecting to gather GMI when required, gathering it you should definitely needed, and recording the information that is GMI. This article reviews the GMI requirements under Regulations B and C, identifies common GMI violations in Federal Reserve System compliance examinations, and discusses the new GMI provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) to facilitate compliance.
ECOA/Regulation B
Under 12 C.F.R. §1002.13(a)(1), a “creditor that gets a credit card applicatoin for credit mainly for the acquisition or refinancing of the dwelling occupied or even be occupied by the applicant as a major res 7 house equity personal lines of credit aren’t susceptible to this part unless its easily obvious towards the creditor at application that the main function would be to buy or refinance a dwelling that is principal. 8 The requested information can be noted on the application kind form or for a form that is separate references the application form. 9 The creditor must give an explanation for good explanation the information and knowledge is requested. If the applicant will not voluntarily prov 10 Unlike the HMDA, Regulation B will not need creditors to aggregate the information and knowledge right into a register or report it.
HMDA/Regulation C
The dining table below compares the information creditors must collect under laws B and C.