- DSNews - https://dsnews.com -

CFPB to Amend Equal Credit Opportunity Act

The Consumer Financial Protection Bureau [1]released a proposal to amend certain regulations in the Equal Credit Opportunity Act (ECOA). The intent is to provide additional flexibility for mortgage lenders in the collection of consumer ethnicity and race information. The proposed amendments should provide greater clarity to lenders regarding their obligations under the law, and according to the CFPB will promote compliance with rules intended to ensure customers are treated fairly.

"This law is a key part of the government's commitment to root out discrimination," said CFPB Director Richard Cordray. "This proposal will help industry comply with the law and help protect consumers against illegal discrimination."

The ECOA was enacted in October 1974 to make it unlawful to discriminate against any credit applicant based on race, race, color, religion, national origin or sex, except in certain circumstances. The CFPB’s proposal to amend Regulation B of the ECOA would provide compliance flexibility for individual mortgage lenders, and would also support the broader mortgage industry’s ability to use consistent forms and compliance practices. The proposal would allow more lenders to use application forms with expanded requests for information from a consumer regarding ethnicity and race.

Creditors may have to collect and retain certain information about applicants for certain loans under Regulation B, and in some cases, financial institutions may be required to report applicant information under Regulation C. The CFPB had previously issued amendments to Regulation C in October 2015, including changes to the collection of ethnicity and race information from applicants. The proposed amendments to Regulation B would give credit institutions additional flexibility in how it collects applicant information, so that they may better align with Regulation C.

The proposal would allow creditors to collect information from applicants in situations when they would otherwise not be required to do so.

The entire proposal can be found here [2].