National Monitoring Information criteria Under the HMDA and also the ECOA

By Aaron Thompson, Senior Examiner, Federal Reserve Bank of Richmond

Introduction

National monitoring information (GMI) means the loan applicant demographic data creditors must gather installment loans missouri under Regulation B, which implements the Equal Credit chance Act (ECOA), and Regulation C, which implements the house Mortgage Disclosure Act (HMDA), when customers make an application for specific home loans. The regulatory requirement of lenders to gather such information goes back to 1977 once the Federal Reserve Board (Board) amended Regulation B to need creditors to gather monitoring information 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. Customer groups additionally thought that this data could be valuable in detecting home loan lending discrimination. 2

Likewise, in 1989, the finance institutions Reform, healing 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 collection of battle and ethnicity information to modifications used because of the workplace of Management and Budget. 4 Overall, the range associated with the HMDA data collection demands is wider compared to the ECOA’s requirement due to the fact HMDA pertains to all home mortgages, 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 intercourse “to discourage discrimination, in line with the premise that when creditors cannot ask about or note candidates’ individual characteristics, such as for instance nationwide beginning or battle, these are generally more unlikely unlawfully to cons 5 But the legislation also includes an exclusion 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 several kinds of home loans. Therefore, creditors must be sure they will have procedures in position to make sure that applicant info is maybe maybe not gathered about battle, color, faith, nationwide beginning, or sex, except within the context of GMI for home loans, once they must collect particular information.

Analysis 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 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 credit card applicatoin for credit mainly for the purchase or refinancing of a dwelling occupied or even to be occupied because of the applicant as a major res 7 house equity personal lines of credit aren’t susceptible to this part unless its easily obvious into the creditor at application that the principal function would be to buy or refinance a principal dwelling. 8 The required information can be noted on the application type form or on a form that is separate references the application form. 9 The creditor must give an explanation for good explanation the knowledge is required. In the event that applicant doesn’t prov 10 Unlike voluntarily the HMDA, Regulation B doesn’t need creditors to aggregate the info into a register or report it.

HMDA/Regulation C

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

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