CFPB proposes amendments to ECOA Regulation B

Written By: Joel Palmer, Op-Ed Writer

The Consumer Financial Protection Bureau (CFPB) wants to give mortgage lenders more flexibility in complying with the Equal Credit Opportunity Act (ECOA) while also clarifying their obligations under the law.

The bureau released a 55-page proposal in late March that, if enacted, would make three “substantive changes” to Regulation B, the CFPB’s rule implementing ECOA that restricts lenders’ ability to ask consumers about their race, color, religion, national origin or sex, except in certain circumstances. 

One of those circumstances in which this exception applies requires creditors to collect and retain applicant information for certain dwelling-secured loans under Regulation B. Another exception is required information collected by creditors under Regulation C, which implements the Home Mortgage Disclosure Act. 

In October 2015, the CFPB amended Regulation C, including changes to the collection of ethnicity and race information from applicants. This Final Rule goes into effect on January 1, 2018. According to the CFPB proposal, the three major changes to Regulation B would “align the language of Regulation B with Regulation C.”

In general terms, the proposed amendments would enable the mortgage industry to use consistent forms and compliance practices, regardless of volume or other criteria.

One of the three major changes would provide mortgage professionals who collect race and ethnicity information the option of allowing applicants to self-identify using the same categories required by the HMDA Final Rule. The Bureau wrote that without this change, entities could conclude that they have different obligations under the two regulations that would create an “unnecessary burden” when collecting data.

The CFPB proposal states: “In practice, this would allow entities that report race and ethnicity in accordance with the 2015 HMDA Final Rule and Regulation C to comply with Regulation B without further action, while entities that do not report under HMDA but record and retain race and ethnicity data under Regulation B would have the option of recording data either using the existing aggregated categories or the new disaggregated categories.”

The second change would remove the outdated 2004 Uniform Residential Loan Application. The bureau proposes two alternative data collection model forms for collecting ethnicity and race information. Furthermore, the CFPB amended Regulation B to help the mortgage industry have greater compliance flexibility going forward as it adopts new application forms.

The third change in the CFPB’s proposal would allow creditors Bureau to collect ethnicity, race and sex from mortgage applicants in certain cases where it is not required under HMDA and Regulation C. 

According to the proposal, this change would primarily benefit institutions whose loan volume requires them to report under HMDA in some years but not in others. “The Bureau believes that allowing voluntary collection will reduce the burden of compliance with Regulation C on some entities and provide certainty regarding Regulation B compliance over time,” states the proposal.

Industry stakeholders, including mortgage processors and mortgage underwriters, can comment on the proposal within 30 days of its publication in the Federal Register via email Include Docket No. CFPB-2017-0009 or RIN 3170-AA65 in the subject line of the email. You can also submit comments at

About the Author

As an NAMP® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.

Opinion-Editorial (Op-Ed) Disclaimer For NAMP® Library Articles: The views and opinions expressed in the NAMP® Library articles are those of the authors and do not necessarily reflect any official NAMP® policy or position. Examples of analysis performed within this article are only examples. They should not be utilized in real-world application as they are based only on very limited and dated open source information. Assumptions made within the analysis are not reflective of the position of NAMP®. Nothing contained in this article should be considered legal advice.