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 Home Mortgage Disclosure Act (HMDA), whenever customers make an application for specific home loans. The requirement that is regulatory loan providers to get such information goes back to 1977 if the Federal Reserve Board (Board) amended Regulation B to need creditors to gather 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 lending discrimination. 2

Similarly, in 1989, the finance institutions Reform, healing and Enforcement Act amended the HMDA to need creditors to get race, intercourse, and earnings information from candidates for home loan loans to greatly help 3 In 2002, the Board amended Regulation C to conform the number of battle and ethnicity information to modifications used by the workplace of Management and Budget. 4 Overall, the range for the HMDA information collection demands is broader compared to the 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. In the one hand, Regulation B generally forbids creditors from gathering information on competition, color, religion, nationwide beginning, or intercourse “to discourage discrimination, in line with the premise that when creditors cannot ask about or note candidates’ individual characteristics, such as for example nationwide beginning or race, these are typically more unlikely unlawfully to cons 5 But the legislation also includes an exclusion in 12 C.F.R. §1002.13 that will require creditors to gather GMI for home-purchase and refinanced loans secured by an owner-occupied dwelling. 6 likewise, Regulation C requires that creditors gather GMI for many forms of home loans. Therefore, creditors must be sure they usually have procedures set up to make sure that applicant info is maybe not gathered about competition, color, faith, nationwide beginning, or intercourse, except into the context of GMI for home mortgages, if they must gather specific information.

Overview of supervisory information from Federal Reserve System conformity exams reveals that GMI requirements regularly appear on the menu of the absolute most often violated laws. These violations include failing woefully to gather GMI whenever needed, gathering it if not 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 software for credit mainly for the purchase or refinancing of the dwelling occupied or even to be occupied by the applicant as being a major res 7 house equity personal lines of credit aren’t at the mercy of this part unless it really is easily obvious towards the creditor at application that the principal function installment loan in oregon is always to buy or refinance a dwelling that is principal. 8 The required information might be noted on the program form or on a split kind that references the applying. 9 The creditor must give an explanation for good reason the information and knowledge is requested. In the event that applicant doesn’t prov 10 Unlike voluntarily the HMDA, Regulation B will not need creditors to aggregate the details into a register or report it.

HMDA/Regulation C

The dining table below compares the information creditors must collect under laws B and C.