All in Regulation B

CFPB Issues Advisory Opinion on Special Purpose Credit

Adam Witmer
Regulatory Update, Regulation B

On 12/21/2020, the CFPB issued an advisory opinion related to special purpose credit programs (SPCPs) as it relates to uncertainty under Regulation B. The ECOA and Regulation B prohibit discrimination on certain prohibited bases in any aspect of a credit transaction, but they clarify that it is not discrimination for for-profit organizations to provide SPCPs designed to meet special social needs. In their release, the Bureau clarifies that they have issued this advisory opinion to clarify the content that a for-profit organization must include in a written plan that establishes and administers a SPCP under Regulation B. The advisory opinion also clarifies the type of research and data that may be appropriate to inform a for-profit organization’s determination that a SPCP would benefit a certain class of people.

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…

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