regulation b disclosure

Accessed Sept. 4, 2020. [1] If a line item is not applicable within the area you are reviewing, indicate N/A., See Section B: Fair Lending Examination Procedures. More importantly, it gives applicants the chance to correct the creditor's mistakes in evaluating the applicant's creditworthiness.. Users can find information on a single credit union or analyze broader nation-wide trends. To determine whether the credit union is in compliance with those requirements of ECOA that are set forth in Regulation B. fbS`}R7E_ |.rgxp,gh bWFdd~N2 ]_r'xj`-]JRZPT/]kM;U::. The offers that appear in this table are from partnerships from which Investopedia receives compensation. Does the creditor not consider race, color, religion, or sex (or an applicants or other persons decision not to provide the information) in any aspect of a credit transaction? Equal Credit Opportunity Act (ECOA) Definition. Either: A statement of specific reasons for the action taken that is specific and indicates the principal reason(s) for the adverse action (Statements that the adverse action was based on the creditors internal standards or policies or that the applicant, joint applicant, or similar party failed to achieve a qualifying score on the creditors credit scoring system are insufficient); A disclosure (which contains the name, address, and telephone number of the person or office from which the statement of reasons can be obtained) of the applicants right to a statement of specific reasons within 30 days, if the statement is requested within 60 days of the creditors notification (and if, the creditor chooses to provide the reasons orally, the creditor shall also disclose the applicants right to have them confirmed in writing within 30 days of receiving the applicants written request for confirmation). Does the creditor not use words, symbols, models or other forms of communication in advertising that express, imply, or suggest a discriminatory preference or a policy of exclusion in violation of the ECOA? Does the credit union allow exceptions to its underwriting, pricing, or product recommendation policies and procedures to be made subjectively or without clear guidance? Housing Discrimination: What Is It, and What Can You Do About It? When an applicant relies on alimony, child support, or separate maintenance payments in applying for credit, does the creditor consider such payments as income to the extent that they are likely to be consistently made? Reg B also helps anyone who is denied credit by requiring lenders to give them an explanation. Does the creditor not inquire about birth control practices, intentions concerning the bearing or rearing of children, or capability to bear children? To the extent that a creditor takes into account an applicants age (assuming that the applicant has the capacity to enter into a binding contract), determine whether the creditor uses age in an empirically derived, demonstrably and statistically sound, credit scoring system or a judgmental system. Any written statement submitted by the applicant alleging a violation of ECOA or Regulation B? "Federal Fair Lending Regulations and Statutes: Equal Credit Opportunity (Regulation B)," Page 3. A No answer indicates a possible exception or deficiency and should be explained in the work papers. Chip Stapleton is a Series 7 and Series 66 license holder, CFA Level 1 exam holder, and currently holds a Life, Accident, and Health License in Indiana. [2]A creditor may obtain information that is otherwise restricted to determine eligibility for a special purpose program, as provided in 1002.8(b), (c), and (d) (opens new window). Conduct loan officer interviews to determine whether they show an understanding of the regulatory requirements and that policies and procedures are consistently applied. With respect to applications for credit to be secured by a first lien on a dwelling, in the absence of a waiver, does the creditor: Provide copies of all appraisals and other written valuations developed in connection with the application for credit promptly upon completion, or three business days prior to consummation of the transaction (for closed-end-credit) or at, or before, account opening (for open-end credit), whichever is earlier, whether credit is granted or denied or the application is withdrawn; or. (. Identify whether the creditor purports to conduct self-tests. (A creditor may charge a reasonable fee to reimburse for the cost of the appraisal or other written valuation unless otherwise provided by the law but a creditor may not charge an applicant for providing a copy of appraisals and other written valuations.). The NCUA protects the safety and soundness of the credit union system by identifying, monitoring and reducing risks to the National Credit Union Share Insurance Fund. Within 30 days after receiving a completed application, the creditor notified applicants concerning the creditors approval of, counteroffer to, or adverse action on the application orally or in writing (unless the parties contemplated that the applicant would inquire about the status, the application was approved, and the applicant failed to inquire within 30 days after applying, in which case the creditor may treat the application as withdrawn). Review that all of the information from the first day letter and request list has been provided by the credit union. =+f=?z)0p0+~#zSsTib5MuC={0z7&8J8],?8A eMa`?P2EDJaq{%c diebold analyst %PDF-1.6 % No single fair lending examination can reasonably be expected to scrutinize every aspect of a credit unions credit operations. Federal Reserve. In an empirically derived, demonstrably and statistically sound, credit scoring system, is age a predictive variable and is the age of an elderly applicant (62 or older) not assigned a negative factor or value? These include white papers, government data, original reporting, and interviews with industry experts. The federal agency that administers compliance with this law concerning this creditor is [name and address as specified by the appropriate agency listed in appendix A of this regulation]. (12 CFR 1002.9(b)(1) (opens new window)). You can find the full text of ECOAhere (opens new window). Does the creditor not use scripts that discourage applications on a prohibited basis? Verify that ECOA compliance is effectively integrated into the credit unions compliance management program. The Fair Housing Act is the federal law forbiding discrimination in housing based on race, sex, religion, nationality, disability, and family status. Review the results of analysis from the fair lending software to identify possible examination focal points. Furthermore, an applicant's age can be requested if it appears that they cannot legally sign a contract. To the extent the creditor considers credit history in evaluating the creditworthiness of similarly qualified applicants for a similar type and amount of credit, in evaluating an applicants creditworthiness, does the creditor consider: The credit history, when available, of accounts designated as accounts that the applicant and the applicants spouse are permitted to use or for which both are contractually liable? Does the credit union rely on third parties for a significant part of its credit operations? With respect to applications for credit to be secured by a first lien on a dwelling, does the creditor mail or deliver a written notice of the applicants right to receive a copy of all written appraisals developed in connection with the application no later than the third business day after the creditor receives the application for credit; or if the creditor determines that credit was not to be secured by a first lien on a dwelling at the time of application but later determined the credit will be secured by a first lien on a dwelling, does the creditor mail or deliver the same written notice no later than the third business day after such determination? Does it allow the account holder full access to the account under the existing contract terms while the reapplication is pending? Where the loan is not consummated or the account is not opened, provide the applicant with copies no later than 30 days after determining the consummation will not occur or the account will not be opened? (, Does the creditor allow an applicant who is individually creditworthy to obtain credit without a spouses or other persons signature (other than as a joint applicant)? NCUA is not the primary enforcement authority for ECOA in federally-insured, state-chartered credit unions (FISCUs). Assess possible violations and discuss results with the credit union, including sharing the statistical analyses with the credit union and asking for comments and explanations. Compliance riskcan occur when the credit union fails to implement the necessary controls to comply with ECOA. endstream endobj 2431 0 obj <>/Metadata 156 0 R/Outlines 270 0 R/Pages 2420 0 R/StructTreeRoot 365 0 R/Type/Catalog>> endobj 2432 0 obj <>/Font<>>>/Rotate 0/StructParents 0/Type/Page>> endobj 2433 0 obj <>stream Does the creditor only request any information concerning the spouse or former spouse of an applicant when: The spouse will be permitted to use the account; The spouse will be contractually liable on the account; The applicant is relying on the spouses income as a basis for repayment of the credit requested; The applicant resides in a community property state or is relying on property located in such a state as a basis for repayment of the credit requested; or. Redlining has often been used to discriminate against Black Americans. The NCUAs economists and analysts compile data on the credit union systems financial performance, merger activity, changes in credit union chartering and fields of membership, as well as broader economic trends affecting credit unions. Reg B mandates that lenders provide explanations to rejected applicants within 30 days of receiving their completed applications. Does the creditor not take into account whether there is a telephone listing in the name of an applicant for consumer credit? You can learn more about the standards we follow in producing accurate, unbiased content in our. Review information from previous examinations that could inform potential focal points of the current examination. (, If the creditor collects information (in addition to information required for government monitoring purposes, such as, Does the creditor meet the self-test requirements of. These examination procedures reference the Interagency Fair Lending Examination Procedures (IFLEP), which are followed during fair lending examinations. (. Does the creditor not make any oral or written statements, in advertising or otherwise, to applicants or prospective applicants that would discourage on a prohibited basis a reasonable person from making or pursuing an application? Import HMDA data and any additional information into the fair lending software program and run analysis. form oir b1 1571 disclosure acknowledgement standard 2004 injury personal sign protection pdffiller signnow Note: When performing 1 and 2 above, pay close attention to the credit unions compliance management policies and procedures with respect to the following: These factors create conditions under which the risk of fair lending violations may be increased. hmda deadline compliance rules ring mortgage disclosure act "Federal Fair Lending Regulations and Statutes: Equal Credit Opportunity (Regulation B)." If a borrowers creditworthiness is reevaluated when a credit obligation is renewed, does the creditor determine whether an additional party is still warranted and, if not warranted, release the additional party? Any information required to be obtained concerning characteristics of the applicant to monitor compliance with ECOA and Regulation B or other similar law, such as the Home Mortgage Disclosure Act or Home Affordable Modification Program? Federal Fair Lending Regulations and Statutes: Equal Credit Opportunity (Regulation B). hXmo6+}wR@ N@WMv3Asc~HRHmP0(@J-,9)|PP9hZhkhF4+Ao j1x- sjzIwK[MvS}4=$BUzw3$ Do the credit unions underwriting or pricing guidelines contain any unusual criteria that could have a possibly negative disparate impact on a protected class? (, If the creditor has actual notice that it is under investigation or is subject to an enforcement proceeding for an alleged violation of the ECOA or Regulation B by the Attorney General of the United States or by the NCUA, CFPB or other enforcement agency charged with monitoring the creditors compliance with ECOA and Regulation B, or if it has been served with notice of an action filed pursuant to. It is important to supplement the IFLEP examination procedures whenever statistical analysis is involved. Does the creditor refrain from routinely requiring a non-applicant joint owner to sign an instrument (such as a quitclaim deed) that would result in the forfeiture of the joint owners interest in the property? Does the creditor inform applicant(s): (a) that the information regarding ethnicity, race, sex, marital status, and age is being requested by the federal government for the purpose of monitoring compliance with federal statutes that prohibit creditors from discriminating against applicants on those bases; and (b) that if the applicant(s) chooses not to provide the information, the creditor is required to note the ethnicity, race and sex on the basis of visual observation or surname? Has the creditor not disclosed any part of the report or results, or any other information privileged as a self-test, as a defense to charges that the creditor has violated ECOA or Regulation B? Accessed Sept. 4, 2020. Does the creditor not refuse to extend credit and not terminate an account because credit life, health, accident, or disability insurance is not available because of the applicants age? Within 90 days after notifying the applicant of a counteroffer, if the applicant does not expressly accept or use the credit offered, the creditor notified applicants of the adverse action taken in writing (unless the counteroffer was accompanied by the notice of adverse action on the credit terms originally sought). The NCUA provides a number of support services to the credit union system, such as providing training, grants and loans, chartering, and field-of-membership services; maintaining the health and stability of Share Insurance Fund; managing the assets of failed credit unions; and providing emergency liquidity. Conduct loan officer interviews to determine whether they show an understanding of the regulatory requirements and that policies and procedures are consistently applied. Errors in credit reports are fairly common, and many people only find out about them after being denied credit. The most important benefit of Regulation B is that it helps to prevent discrimination against women and minorities. We've updated our Privacy Policy, which will go in to effect on September 1, 2022. Accessed Sept. 4, 2020. Does the creditor count, and not discount or exclude from consideration, the income of an applicant or the spouse of an applicant because the income is derived from part-time employment, is an annuity, pension, or other retirement benefit, or comes from multiple income streams? In a judgmental system of evaluating creditworthiness, is the applicants age considered only for the purpose of determining a pertinent element of creditworthiness? 2458 0 obj <>stream (, To the extent the creditor furnishes consumer credit information in response to inquiries about accounts designated to reflect the participation of both spouses, does the creditor furnish the information in the name of the spouse about whom the information is requested? If an applicant chooses not to provide the requested information or any part of it, does the creditor note that on the monitoring form and note on the form, to the extent possible, the ethnicity, race, and sex of the applicant(s) on the basis of visual observation or surname? A statement of the provisions of Section 701(a) of ECOA; The name and address of the federal agency that administers compliance with respect to the creditor (namely, NCUA); and. He previously held senior editorial roles at Investopedia and Kapitall Wire and holds a MA in Economics from The New School for Social Research and Doctor of Philosophy in English literature from NYU. Does the creditor retain for 25 months (12 months for business credit regarding businesses with gross revenues of $1 million or less in the previous fiscal year, except an extension of trade credit, credit incident to a factoring agreement, or other similar types of business credit) after the date the creditor receives an application for which 1002.9s notification requirements do not apply (e.g., when an application is expressly withdrawn, or an application is submitted to more than one creditor on behalf of the applicant, and the application is approved by one of the other creditors) all written or recorded information in its possession concerning the applicant, including any notation of action taken? "Federal Fair Lending Regulations and Statutes: Equal Credit Opportunity (Regulation B)," Page 1. Obtain and review policies and procedures, training materials, and a sample of loan files, audits related to disclosures, and disclosures. Obtain and review policies and procedures, training materials, and audits pertaining to the designation of accounts on furnishing them to credit reporting agencies, as well as a sample of information reported to the credit reporting agencies. This list also includes refinancing, credit applications, information requirements, standards of creditworthiness, investigation procedures, and revocation or termination of credit. (, With respect to applications for credit that are primarily for the purchase or refinancing of dwellings (as defined in, Ethnicity, using the categories Hispanic or Latino, and Not Hispanic or Latino; and race, using the categories American Indian or Alaska Native, Asian, Black or African American, Native Hawaiian or Other Pacific Islander, and White, and allowing applicants to select more than one racial designation? In the case of applications for individual unsecured credit, does the creditor inquire about the applicants marital status only when the applicant resides in a community property state or is relying on property located in such a state as a basis for repayment of the credit requested? Are the creditors written disclosures that are required by Regulation B clear, conspicuous, and except for those required by. (. In January 2013, CFPB amended Regulation B to reflect the Dodd-Frank Act amendments requiring creditors to provide applicants with free copies of all appraisals and other written valuations developed in connection with all credit applications to be secured by a first lien on a dwelling. Examples: (i) The credit union establishes most of its branches in predominately non-minority neighborhoods and does not have a presence in nearby minority neighborhoods; or (ii) Spanish and English advertisements emphasize different credit products. Investopedia does not include all offers available in the marketplace. For class actions, the creditor could face a penalty of $500,000 or 1% of the creditors net worth, whichever is lower. Reg B implements the Equal Credit Opportunity Act (ECOA), which is regulated and enforced by the Consumer Financial Protection Bureau (CFPB). A reverse mortgage financial assessment is a review of the borrowers credit history, employment history, debts, and income during the reverse mortgage application process. In evaluating joint applicants, are joint applicants treated in the same manner regardless of the existence, absence, or likelihood of a marital relationship between the parties? Without Regulation B's explanation requirement, many potential borrowers with errors in their credit reports would become discouraged and give up. hbbd``b`>$[A#` , b)@,k $301rY~0 # Follow Part III of the IFLEP to examine the credit union, including conducting comparative file reviews as appropriate. Does the creditor retain for 25 months (12 months for business credit regarding businesses with gross revenues of $1 million or less in the previous fiscal year, except an extension of trade credit, credit incident to a factoring agreement, or other similar types of business credit) after the date that the creditor notifies an applicant of adverse action regarding an existing account, an original or copy of the following: Any written or recorded information concerning the adverse action? Inquire as to whether the creditor offers a special-purpose credit program. distefano acg greenberg ( 1002.12(a) (opens new window)), [4]This statement must be substantially similar to the following: The federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age (provided the applicant has the capacity to enter into a binding contract); because all or part of the applicants income derives from any public assistance program; or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act. Federal Reserve. (A creditor may inquire about the number and ages of an applicants dependents or about dependent-related financial obligations or expenditures, provided such information is requested without regard to sex, marital status, or any other prohibited basis.). Federal Reserve. Marital status, using the categories married, unmarried, and separated? Does the creditor not deny credit in whole or in part based on the country an applicant is from? Does any employee receive incentives depending, directly or indirectly, on the terms or conditions of the credit product sold or the price (including both interest rates and fees) charged?