Rule aims at more flexibility for mortgage lenders in collecting consumer ethnic, race info

A modification in federal mortgage rules that the Consumer Financial Protection Bureau (CFPB) said is aimed at providing additional flexibility for lenders in collecting consumer ethnicity and race information was finalized and published Wednesday by the bureau.

Additionally, the consumer bureau said it is seeking comment on proposed policy guidance it unveiled the same day regarding information gathered about borrowers, making that information public, and modifying some data to protect consumers’ privacy.

The changes to the lending rules, under the Equal Credit Opportunity Act (ECOA; Regulation B) – proposed in March – affect the questions a lender may ask a consumer when considering whether to lend money. The existing rules, CFPB stated, include 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.

Under the rules finalized Wednesday, CFPB said, mortgage lenders will not be required to maintain different practices depending on their loan volume or other characteristics. The agency said that change would allow 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 new rules, CFPB said, would “provide compliance flexibility for individual mortgage lenders, and also support the broader mortgage industry’s ability to use consistent forms and compliance practices.”

The bureau also said it finalized other amendments to Regulation B and its commentary to facilitate compliance with Regulation B’s requirements for the collection and retention of information about the ethnicity, race, and sex of applicants seeking certain types of mortgage loans.

Under the policy guidance proposal about modifying information to protect the privacy of consumers before releasing the data, the bureau said it proposes, for example, excluding certain data fields from what is shared publicly, including the property address and applicant’s credit score. CFPB said it 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 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 agency said in a statement “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.”

The proposal is being issued for a 60-day comment period.

CFPB amends rules to provide flexibility and clarity to certain mortgage lenders in collecting information