All in Regulation B

CFPB Issues Outline of Proposals for Small Business Data Collection

Adam Witmer
Fair Lending, Regulation B, Regulatory Update

On 9/15/20, the Consumer Financial Protection Bureau (CFPB) issued an “Outline of Proposals Under Consideration and Alternatives Considered for Section 1071 of the Dodd-Frank Act.” This release explains how the CFPB is currently working to implement Section 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act that will create a requirement for financial institutions to compile, maintain, and report certain data on applications for credit from women-owned, minority-owned, and small businesses.

VIDEO: Reg B Data Collection for Ag or Commercial Loans

VIDEO: Reg B Data Collection for Ag or Commercial Loans

Adam Witmer
Regulation B

In this Compliance Clip (video), Adam answers a question for a member about Reg B data collection of government monitoring information (GMI) for agricultural loans. This abnormally long Compliance Clip lasts over 10 minutes and goes over three different scenarios. This clip would be great for any newly exempt HMDA reporter who will soon be transitioning to GMI collection under Reg B instead of DI information under HMDA.

CFPB Issues Guidance on ECOA and PPP Loans

Adam Witmer
Regulatory Update, Regulation B

On May 6, 2020, the CFPB issued three clarifying FAQs, in a “Compliance Aid” document, to support small businesses who have applied for a loan from their financial institution under the Small Business Administration’s (SBA) Paycheck Protection Program (PPP). In its FAQs, the Bureau clarifies that a PPP application is only a “completed application” once the creditor has received a loan number from the SBA or a response about the availability of funds. This ensures that the time awaiting this information from the SBA does not count towards the 30-day notice requirement, and that applications will therefore not “time out” during the process.

The FAQs also make clear that if the creditor denies an application without ever sending the application to the SBA, the creditor must give notice of this adverse action within 30 days. It further clarifies that a creditor cannot deny a loan application based on incompleteness where the creditor has enough information for a credit decision but has yet to receive a loan number or response about the availability of funds from the SBA.

Incomplete Applications

Adam Witmer
Regulation B, Fair Lending

This is a guest post by one of our Compliance Cohort members, Jennifer Johnson.  Jennifer is a Vice President and Chief Risk Officer at a $225 million community bank, and shares her years of experience in multiple banks with us in this article.

In a previous article, we discussed those frustrating customers who come to us with bits and pieces of the information we need to make a loan decision, providing us with an incomplete application. If you’re OCD like me, those situations drive you more than a little crazy, especially when you know that you have obligations to notify the customer of your decision within 30 days of receipt of the request. So how do you handle these scenarios without pulling out your hair? I have a simple solution…

What is the 30-Day ECOA Rule?

Adam Witmer
Adverse Action, Regulation B

GUEST POST! This is another feature article by one of our Compliance Cohort members, Jennifer Johnson.  Jennifer is a Vice President and Chief Risk Officer at a $225 million community bank, and shares her years of experience in multiple banks with us in this fantastic article on the 30-day Reg B rule.

In an ideal world, loan applicants would come to us fully prepared with all the documentation we need to make a loan decision. I don’t know about you, but I certainly do not live in that ideal world. More commonly, applicants come to us with a loan request and bits and pieces of what we need, which can lead us to stash applications on the shelf while we wait for more information. Time passes, and before you know it, we have violated Regulation B’s 30-day rule. “Wait!” you may say, “what are you talking about? I didn’t have a completed application! How could I have violated ECOA’s 30-day rule?”  While it may be true that you didn’t have a completed application, if you stop there, you’re missing some of the important nuances of Regulation B’s notification requirements…

CFPB Releases Annual Fair Lending Report for 2018

Adam Witmer
Regulatory Update, Fair Lending, Regulation B

On June 28, 2019, the CFPB released their annual report on fair lending.  Coming just seven months after the last annual report to congress (12/4/18), this annual report to Congress describes the Bureau’s fair lending activities in innovation, outreach, prioritization, guidance and rulemaking, supervision, and enforcement for calendar year 2018.  This is the first report released under new CFPB Director, Kathleen Kraninger.

NOTE: The 2018 CFPB fair lending report to Congress will be included in our 2Q 2019 Regulatory Update program, which will be released in July of 2019, covering all of the regulatory changes that a compliance professional needs to be aware of from the activity that occurred during the 2nd Q of 2019.

Comparative vs Overt Disparate Treatment

Adam Witmer
Fair Lending, Regulation B

Fair lending continues to be one of the highest risk areas for any creditor.  Deficiencies can result in significant penalties, fines, and other enforcement actions.  Therefore, each creditor must understand the different types of fair lending violations that could be cited during a fair lending audit or compliance examination.  In other words, if a creditor if familiar with what an examiner will be looking for, they will be more likely to self-identify and correct the issue before it becomes a significant exam violation.

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