CFPB Modifies ECOA, Seeks Comment on HMDA Changes
The Consumer Financial Protection Bureau this week issued changes to the Equal Credit Opportunity Act it said would provide more flexibility for mortgage lenders in collecting data on consumer ethnicity and race.
The Bureau also asked for comment on proposed policy guidance for Home Mortgage Disclosure Act data it proposes to make available to the public beginning in 2019.
ECOA is a federal civil rights law that protects against discrimination in the financial marketplace. Regulation B, the CFPB’s rule implementing ECOA, includes 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.
The changes finalized Sept. 21 (http://files.consumerfinance.gov/f/documents/201709_cfpb_final-rule_regulation-b.pdf), initially proposed in March, would provide compliance flexibility for individual mortgage lenders and also support the broader mortgage industry’s ability to use consistent forms and compliance practices. Mortgage lenders will not be required to maintain different practices depending on their loan volume or other characteristics, allowing more lenders to adopt application forms that include expanded requests for information regarding a consumer’s ethnicity and race, including the revised Uniform Residential Loan Application.
The CFPB said modified ECOA regulations would provide additional flexibility for mortgage lenders in collection of consumer ethnicity and race information. “These amendments will provide greater clarity for mortgage lenders regarding their obligations under the law, while promoting compliance with rules intended to ensure consumers are treated fairly,” said Director Richard Cordray.
Separately, the CFPB seeks comment (http://files.consumerfinance.gov/f/documents/201709_cfpb_hmda-disclosure-policy-guidance.pdf) on proposed policy guidance describing HMDA data the Bureau proposes to make available to the public beginning in 2019, including modifications to protect consumers’ privacy, designed to facilitate compliance with Regulation B’s requirements for collection and retention of information about the ethnicity, race, and sex of applicants seeking certain types of mortgage loans.
HMDA requires many lenders to report and disclose to the public certain information about their mortgage lending activities. In 2015 the CFPB finalized changes to Regulation C, the CFPB’s rule implementing HMDA, updating the quality and type of data that financial institutions report. Financial institutions will begin collecting the new information in 2018, which includes data fields such as the property value, the interest rate of the loan,and the applicant’s debt-to-income ratio.
“Public disclosure of mortgage data is central to the achievement of HMDA’s goals,” the CFPB said. “The Bureau has considered 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. The proposed policy guidance issued today 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 also proposes important modifications to the data to protect consumers’ privacy.”
For instance, the Bureau proposes to exclude certain data fields from what is shared publicly, including the property address and applicant’s credit score. The Bureau also proposes to disclose certain information with reduced precision, for instance by disclosing an applicant’s age as a range rather than a specific number.
The public comment period will be open for 60 days following publication in the Federal Register.
