CFPB Issues Official Approval Regarding HMDA Collection of Self-Identified Ethnicity and Race Prior to January 1, 2018

On September 23, 2016, the Consumer Financial Protection Bureau (CFPB) issued an official approval regarding the collection of self-identified ethnicity and race data prior to January 1, 2018. Starting January 1, 2018, the revised Home Mortgage Disclosure Act (HMDA) data collection and reporting requirements will require financial institutions to permit applicants to self-identify using disaggregated ethnic and racial categories. The timing of this requirement is meant to co-inside with the effective date of the revised and redesigned Uniform Residential Loan Application (2016 URLA).

Previously, many in the industry raised the issue that in order to comply with the revised HMDA reporting requirements set to take effect on January 1, 2018, creditors may need to start collecting such data prior to the date set by the rule in order to account for loan applications taken at the end of one calendar year (2017), but where “action taken” is not until the beginning of the next calendar year (2018). Under a strict reading of the applicable rules and regulations, this raised a potential conflict regarding whether or not creditors could legally request self-identified ethnicity and race data from consumers prior to January 1, 2018.

The Bureau’s official approval, released on September 23, 2016, stated that the collection of self-identified ethnicity and race during 2017 will not violate Regulation B § 1002.5, which provides rules concerning requests for information about race, color, religion, national origin, or sex. This official interpretation allows the creditor the option to collect such data prior to the effective date of January 1, 2018.

The official approval also provides that for reporting purposes, if a final action is taken during 2017, the creditor will continue to submit data according to the filing instructions for 2017, even if the creditor elects to accommodate the self-identification option for consumers in 2017.

As a mortgage banking focused law firm, AMLG continues to be closely involved with our clients’ implementation of the amended HMDA reporting requirements. If you need further assistance with HMDA-related issues, including deciphering the reporting requirements applicable to your organization, assistance with implementation, updates to your policies and procedures, and/or counsel regarding fair lending best practices, please contact AMLG by clicking here.  AMLG clients and newsletter readers may receive a complimentary copy of the firm’s HMDA Reporting Implementation Checklist by clicking here.