3170-0013 (ECOA-Reg B) Supporting Statement 30-dayFRN FO

30-day Federal Register Notice version

BUREAU OF CONSUMER FINANCIAL PROTECTION
SUPPORTING STATEMENT PART A
EQUAL CREDIT OPPORTUNITY ACT
(REGULATION B) 12 CFR 1002
(OMB CONTROL NUMBER: 3170-0013)
TERMS OF CLEARANCE: When the Office of Management and Budget (OMB) approved this
information collection in May 2016, it instructed the Bureau of Consumer Financial Protection
(Bureau) that it is required to display the OMB Control Number and inform respondents of its
legal significance in accordance with 5 CFR 1320.5(b). The collections of information contained
in Regulation B are recordkeeping and disclosure requirements, there are no reporting forms other
than model disclosures.
ABSTRACT: The Equal Credit Opportunity Act (“ECOA”) was enacted to ensure that credit is
made available to all creditworthy applicants without discrimination on the basis of sex, marital
status, race, color, religion, national origin, age, or other prohibited bases under the ECOA. The
ECOA allows for creditors to collect information for self-testing against these criteria, while not
allowing creditors to use this information in making credit decisions of applicants. For certain
mortgage applications, the ECOA requires creditors to ask for some of the prohibited information
for monitoring purposes. In addition, for certain mortgage applications, creditors are required to
send a copy of any appraisal or written valuation used in the application process to the applicant in
a timely fashion.
The ECOA also prescribes that creditors inform applicants of decisions made on credit
applications. In particular, where creditors make adverse actions on credit applications or existing
accounts, creditors must inform consumers as to why the adverse action was taken, such that credit
applicants can challenge errors or learn how to become more creditworthy. Creditors must retain
all application information for 25 months, including notices they sent and any information related
to adverse actions.
Finally, the ECOA requires creditors who furnish applicant information to a consumer reporting
agency to reflect participation of the applicant’s spouse, if the spouse if permitted to use or
contractually liable on the account.

1

30-day Federal Register Notice version

JUSTIFICATION
1. Circumstances Necessitating the Data Collection
The Equal Credit Opportunity Act (“ECOA”), 15 U.S.C. 1691 et seq., implemented by the Bureau
of Consumer Financial Protection’s (Bureau or CFPB) Regulation B, 12 CFR Part 1002, was
enacted to ensure that credit is made available to all creditworthy applicants without
discrimination on the basis of sex, marital status, race, color, religion, national origin, age, or other
prohibited bases under the ECOA. To aid in implementation of this prohibition, the statute and
regulation subject creditors to various mandatory disclosure requirements, notification provisions
informing applicants of action taken on their credit applications, credit history reporting,
monitoring rules, and recordkeeping requirements. These requirements are triggered by specific
events and creditors must provide disclosures within the time periods established by the statute and
regulation.
Recordkeeping/Collection of Information
Section 1002.12(b) of Regulation B requires creditors to retain records relating to consumer credit
applications for 25 months from the date that the applicant is notified of the action taken on the
application or, where notice is not required, for 25 months from the date of the application. When
a creditor takes adverse action on an existing account, the creditor must retain records for 25
months after the applicant is notified of the action taken. Records of business credit applications
generally must be retained for 12 months, with certain exceptions. Regulation B also requires
creditors who have been informed that they are the subject of an investigation regarding their
compliance with the ECOA to retain such records until the agency or a court informs them that
retention is no longer necessary. Regulation B also requires creditors to retain certain prescreened
solicitation materials for 25 months after the date on which an offer of credit is made to potential
customers (12 months for business credit, with certain exceptions). Moreover, Regulation B
requires creditors to retain all written or recorded information about a self-test (including
corrective action), as defined in Sections 1002.15 of Regulation B, for 25 months after a self-test
has been completed (and longer under some circumstances).
Section 1002.13 of Regulation B requires that creditors who receive applications for certain
mortgage credit requests, as part of the application process, obtain information about the
applicant’s race/national origin, sex, marital status, and age. The applicant is asked but not
required to supply the information. If the applicant chooses not to provide the information or any
part of it, the creditor must note that fact on the form and must note the applicant’s race/national
origin and sex, to the extent that it is possible to determine these characteristics based on a visual
observation or a surname. The creditor is required to inform the applicant that the information is
sought by the federal government to help monitor compliance with federal statutes that prohibit
creditors from discriminating against applicants based on the above-noted factors.

2

30-day Federal Register Notice version

Disclosure
Section 1002.9 of Regulation B requires creditors to provide notice, within specified time periods,
to applicants for credit against whom creditors take adverse action. Generally, the required notice
must be in writing and contain: a statement of the action taken; the name and address of the
creditor; a statement describing the anti-discrimination provisions of the ECOA; the name and
address of the federal agency that administers compliance with the ECOA and Regulation B as to
the creditor; and either a statement of specific reasons for the action taken or a notice of the
applicant’s right to obtain such a statement.
Section 1002.10 of Regulation B requires creditors that furnish credit information to consumer
reporting agencies to designate accounts to reflect the participation of both spouses, if the
applicant’s spouse is permitted to use or is contractually liable on the account.
Section 1002.13(c) of Regulation B requires the creditor to inform the applicant that ethnicity,
race, sex, marital status, and age are being requested by the federal government for the purpose of
monitoring compliance. The creditor shall also inform the applicant that he or she has the option of
not providing the information, and that if the applicant chooses to not provide it, the creditor is
required to note it by visual observation or surname.
Section 1002.14 of Regulation B requires that creditors provide applicants for a mortgage loan
with a first lien on the dwelling a copy of the appraisal report or other written valuation prepared
in connection with an application. The material must be furnished free of charge and promptly
upon completion, or no later than three business days prior to consummation of the transaction
(closed-end credit) or account opening (open-end credit), whichever is earlier.
Under Sections 1002.5(b) and 1002.15 of Regulation B, creditors that collect applicant
characteristics for purposes of conducting a self-test under Regulation B must disclose, orally or in
writing, to applicants that providing the information is optional, that the creditor will not take into
account the information in any aspect of the credit transactions, and, if applicable, that the
information will be noted by visual observation or surname, if the applicant chooses not to provide
it.
2. Use of the Information
The Bureau and other agencies use recordkeeping information to compare accepted and rejected
applicants in order to determine whether applicants are treated less favorably on the basis of race,
sex, age, or other prohibited bases under the ECOA. Self-testing records (including for corrective
action) are used by creditors to identify potential violations and reflect their efforts to correct the
problem. Absent the Regulation B requirement that creditors retain monitoring information, the
agencies’ ability to detect unlawful discrimination and enforce the ECOA would be significantly
impaired.
The adverse action notice requirement apprises applicants of their rights under the ECOA and of
3

30-day Federal Register Notice version

the basis for a creditor’s decision. Applicants use their copy of the appraisal to review (and
possibly challenge) the accuracy and/or fairness of the information contained within, and to
determine the role that the appraisal played in the credit decision. Applicants use the self-testing
disclosure to facilitate understanding of creditors’ information collection, including that applicants
have the option of not providing the information.
3. Use of Information Technology
The disclosures required by Regulation B may be provided to the consumer in electronic form,
subject to compliance with the consumer consent and other applicable provisions of the Electronic
Signatures in Global and National Commerce Act (E-Sign Act), 15 U.S.C. 7001 et seq. Use of
such electronic communications is consistent with the Government Paperwork Elimination Act
(GPEA), Title XVII of Pub. L. 105-277, codified at 44 U.S.C. 3504 note. The E-Sign Act and
GPEA serve to reduce businesses’ compliance burden related to federal requirements, including
Regulation B, by enabling creditors to utilize more efficient electronic media for disclosures and
compliance.
Regulation B also permits creditors to retain records on any method that reproduces records
accurately, including digitally. Creditors need only retain enough information to reconstruct the
required disclosure or other records. Most creditors use computer support to calculate the required
information and generate the mandated disclosures, thereby limiting the burden on these entities.
4. Efforts to Identify Duplication
For the most part, the information collections in Regulation B do not duplicate other regulations.
There is some overlap with the Fair Credit Reporting Act (FCRA) for disclosure and retention of
certain information, but they focus on populations which are not necessarily the same, and
Regulation B is necessary to avoid circumvention by creditors of the ECOA. Additionally, there is
some overlap with the Home Mortgage Disclosure Act (HMDA) for collection of certain
information, although in 2017 the Bureau updated Regulation B to ensure consistency among
regulations and facilitate compliance with Regulation B and Regulation C by financial institutions.
The appraisals information collection does duplicate, in part, two other Federal requirements.
Specifically, the information collection requirement duplicates in part the Truth in Lending Act
requirement to provide free copies of written appraisals for higher-risk mortgages. See 15 U.S.C.
1639(h). In addition, the requirement also duplicates in part the National Credit Union
Administration’s (NCUA) regulation requiring national credit unions to provide copies of
appraisal reports to loan applicants upon request. See 12 CFR 701.31(c)(5). However, where
Regulation B and a duplicative requirement apply, a creditor need only provide an applicant one
copy of each appraisal and other written valuation to comply with all Truth in Lending Act,
ECOA, and the NCUA requirements in order to minimize burden.
5. Efforts to Minimize Burdens on Small Entities
4

30-day Federal Register Notice version

The ECOA and Regulation B accord special treatment to creditors that receive fewer than 150
applications each year. Section 1002.9(d) of the Regulation states that such creditors may provide
required notices to rejected applicants orally rather than in writing. Where fewer written records
are required to be created, the recordkeeping burden is correspondingly reduced. In addition,
Section 1002.3(c) of the Regulation exempts providers of incidental credit, such as a doctor or
lawyer who allows a patient or client to defer payment of a bill, from many requirements including
notifications under Section 1002.9 of the Regulation and recordkeeping. Additionally, as noted
above, the Bureau has taken steps to minimize the situations in which creditors would need to
provide copies of multiple versions of the same appraisal or other written valuation.
Regulation B provides model forms that may be used in compliance with its requirements.
6. Consequences of Less Frequent Collection and Obstacles to Burden Reduction
Were the requirement that creditors provide notice of adverse action eliminated, applicants could
be deprived of the right to receive timely notice of the creditor’s decision, the reasons for any
adverse action by the creditor, and the applicants’ rights under the ECOA. Eliminating the
requirement that creditors provide a copy of the appraisal report or notice of its availability would
greatly impair applicants’ ability to assess the report’s impact on the creditor’s decision and to
challenge it in timely fashion. Were the requirement that creditors collect information about an
applicant’s race or national origin eliminated or changed, the creditor would still have access to
this information when obtained through a face-to-face interview with the applicant and could use
the information to discriminate. However, the Bureau and others seeking to enforce compliance
with the ECOA would not have that information and would thereby be disadvantaged in taking
action against that creditor. Eliminating the self-test disclosure (which can be made orally or in
writing) could disadvantage consumers who may then not understand the purpose of the
information being collected, or their option not to provide it. Finally, eliminating the credit history
reporting requirement regarding spouses with shared accounts would undermine the goal of
affording both spouses the benefit of that shared credit history in seeking further credit.
The current record retention period of 25 months supports the need for sufficient time to bring
enforcement actions regarding ECOA issues. If the retention period were shortened, applicants
who sue under the ECOA, and administrative agencies that enforce the ECOA, might find that the
records needed to prove ECOA violations no longer exist.
This information is not collected by the federal government. The burdens on respondents are the
minimum necessary to comply with the statute, and to assist borrowers in obtaining information
with respect to application decisions.
7. Circumstances Requiring Special Information Collection
Information is not reported to the Bureau. There are no special circumstances. The collection of
information requirements in Regulation B are consistent with the applicable guidelines contained
5

30-day Federal Register Notice version

in 5 CFR1320.5(d)(2).
8. Consultation Outside the Agency
In accordance with 5 CFR §1320.8(d)(1), the Bureau published a notice in the Federal Register
allowing the public 60 days to comment on this proposed extension (renewal) of this currently
approved collection of information. The Bureau received no comments in response to this notice.
Additionally, and in accordance with 5 CFR §1320.5(a)(1)(iv), the Bureau published a notice in
the Federal Register allowing the public 30 days to comment on the submission of this
information collection request to the OMB.
9. Payments or Gifts to Respondents
No payments or gifts are provided to respondents.
10. Assurances of Confidentiality
Some of the recordkeeping requirements contain private information about consumers who apply
for and/or obtain financial credit. Such information is protected by the Right to Financial Privacy
Act, 12 U.S.C. 3401 et seq. There is no part of the rule that mandates information collection by the
Bureau, and this information is used exclusively to ensure compliance with the ECOA, and that
creditors are not discriminating against applicants.
To the extent that information covered by a recordkeeping requirement is collected by the Bureau
for law enforcement purposes, the confidentiality provisions of the Bureau’s rules on Disclosure of
Records and Information, 12 CFR Part 1070, would apply.
The information that may be collected for law enforcement purposes would be covered by the
following Systems of Records Notices (SORNs): CFPB.004 Enforcement Database, 83 FR23435,
that can be found athttps://www.federalregister.gov/documents/2018/05/21/2018-10809/privacyact-of-1974-system-of-records; and the CFPB.018 CFPB Litigation Files SORN, 83 FR 23435,
that can be found at https://www.federalregister.gov/documents/2018/05/21/2018-10809/privacyact-of-1974-system-of-records.
11. Justification for Sensitive Questions
The sensitive information asked of applicants by creditors is either mandated for mortgage loan
applications, or optionally used for self-tests. The information collected is used to ensure
compliance with the ECOA, and that creditors are not discriminating against applicants.
12. Estimated Burden of Information Collection

6

30-day Federal Register Notice version

Information
Collection
Requirement
Notice of Action
1002.9
Furnishing of Credit
Information 1002.10
Record Retention
1002.12
Information Collected
for Monitoring
Purposes
1002.13(a)&(b)
Disclosure or Intent of
Information Collected
for Monitoring
Purposes 1002.13(c)
Copy of Appraisal
1002.14(a)(1)&(3)
Disclosure of SelfTest Inquiries
1002.5(b)(1)
Total Burden
CFPB Portion of
Burden

Number
of
Responde
nts

Annual
Responses per
Respondent

Total
Annual
Responses

Average
Response
Time
(Minutes)

Total
Annual
Burden
(Hours)

Hourly
Rate
(USD)

472,000

175

169,465,000

0.25

706,000

31

136,000

413

115,228,000

0.25

480,000

31

472,000

175

169,465,000

0.25

706,000

31

2,100

4,814

20,723,000

1

345,000

31

Labor
Costs
(USD)

21,886,00
0
14,880,00
0
21,886,00
0
10,695,00
0
10,695,00
0

2,100

4,814

20,723,000

0.25

345,000

31

2,100

4,814

20,723,000

0.5

345,000

31

1,900

362

1,505,000

0.25

6,000

31

472,000*

////////////////

517,832,000

/////////////

2,933,000

//////////

90,923,000

188,800*

////////////////

82,666,000

/////////////

1,220,992

//////////

33,150,742

*Unduplicated respondent count

10,695,00
0
186,000

The Bureau and Federal Trade Commission (FTC) share enforcement authority for those nondepository institutions subject to the Bureau’s Regulation B, with the Bureau assuming burden for
half of all non-depository institutions excluding the burden for motor vehicle dealers, for which
the FTC assumes burden. The Bureau estimates that there are about 460,000 non-depository
institutions and about 55% of burden can be attributed to non-depository institutions. The Bureau
estimates about 12,000 depository institutions, and assumes the burden of 132 depository
institutions with more than $10B in assets. Of the total 472,000 potential respondents,
approximately 188,800 are Bureau respondents.
The Bureau assumes labor burden for ongoing recordkeeping and disclosure requirements under
Regulation B of 1,220,992 hours. To calculate labor costs, the Bureau applies a market rate of $31,
the rounded hourly mean wage for loan officers in BLS. 1 Staff anticipates that the above
Hourly rate labor costs are the median hourly wages from the Bureau of Labor and Statistics (BLS) for affected
occupational groups. Occupational groups for the PRA burden of regulation G are defined as loan officers
(http://www.bls.gov/ooh/business-and-financial/loan-officers.htm#tab-5) as of February 2019.

1

7

30-day Federal Register Notice version

requirements necessitate ongoing, regular training so that lenders stay current and have a clear
understanding of federal mandates. This training, however, would be a small portion of and
subsumed within the ordinary training that employees receive apart from that associated with
collecting information to comply with Regulation B.
13. Estimated Total Annual Cost Burden to Respondents or Recordkeepers
The applicable requirements impose minimal start-up costs, as lenders generally have or obtain
necessary equipment for other business purposes. For the same reason, staff believes that the cost
of printing and copying needed to comply with Regulation B is minimal, as many disclosures can
be sent electronically.
14. Estimated Cost to the Federal Government
As the Bureau does not collect any information, there are no costs to the Bureau associated with
this information collection.
15. Program Changes or Adjustments

Total Annual Burden
Requested
Current OMB
Inventory
Difference (+/-)
Program Change
Discretionary
New Statute
Violation
Adjustment

Total
Respondents

Annual
Responses

Burden Hours

Cost Burden
(O & M) (USD)

188,800

82,666,000

1,220,992

0

514,000

183,855,000

1,450,250

0

0
0
0
0
-325,200

0
0
0
0
-101,189,000

0
0
0
0
-229,258

0
0
0
0
0

The new estimates calculated by the Bureau reflect the decrease in number of mortgage loans
observed by the Bureau between spring 2016 and spring 2019. Fewer loans lead to fewer
disclosures, which reduces the absolute burden associated with the ECOA and Regulation B.
There have been no programmatic or regulatory changes leading to the reduction in burden. The
Bureau previously accounted for the burden of all respondents, rather than only its share of
respondents. The adjustments account for that share.
16. Plans for Tabulation, Statistical Analysis, and Publication
The results of the information collection will not be published.
17. Display of Expiration Date

8

30-day Federal Register Notice version

The collections of information contained in Regulation B are recordkeeping and disclosure
requirements, there are no reporting forms. The OMB control number and expiration date
associated with the information collection requirements contained in Regulation B are displayed
on the Federal government’s electronic PRA docket at www.reginfo.gov, as well as in the Federal
Register Notice of the submission.
18. Exceptions to the Certification Requirement
The Bureau certifies that this collection of information is consistent with the requirements of
5 CFR 1320.9, and the related provisions of 5 CFR 1320.8(b)(3) and is not seeking an exemption
to these certification requirements.
###

9