RegB_20150626_omb

Supporting Statement for the
Recordkeeping and Disclosure Requirements
Associated with CFPB’s Regulation B (Equal Credit Opportunity Act)
(Reg B; OMB No. 7100-0201)
Summary
The Board of Governors of the Federal Reserve System, under delegated authority from
the Office of Management and Budget (OMB), proposes to extend for three years, with revision,
the mandatory Recordkeeping and Disclosure Requirements Associated with CFPB’s
Regulation B (Equal Credit Opportunity Act) (Reg B; OMB No. 7100-0201). Since 2011, the
Consumer Financial Protection Bureau (CFPB) has been responsible for issuing Equal Credit
Opportunity Act (ECOA) regulations that apply to institutions the Federal Reserve supervises.1
However, the Federal Reserve continues to be responsible under the Paperwork Reduction Act
(PRA) for renewing every three years the information collections mandated by the regulation for
institutions supervised by the Federal Reserve. The PRA classifies reporting, recordkeeping, or
disclosure requirements of a regulation, including Regulation B, as an information collection.
On December 21, 2011, the CFPB published an interim final rule establishing a new
Regulation B, which did not impose any new substantive obligations on regulated persons or
entities.2 On January 31, 2013, the CFPB published a final rule amending its Regulation B to
require creditors to provide applicants with a copy of an appraisal or other written valuation
developed in connection with certain mortgage transactions as matter of course, rather than only
in response to an applicant’s request as previously required under Regulation B.3 The Federal
Reserve proposes to modify its information collection to reflect this new requirement, which
became effective January 18, 2014, and is discussed more fully below.
The Federal Reserve accounts for the paperwork burden associated with Regulation B
only for institutions for which the Board has enforcement authority under ECOA.4 The total
current annual burden is estimated to be 151,642 hours. With proposed revisions the annual
burden is estimated to be 167,587 hours.5

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The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) transferred
rulemaking authority for ECOA to the CFPB, except for certain motor vehicle dealers that are exclude from the
CFPB’s authority, which remain subject to the Federal Reserve’s Regulation B located at 12 C.F.R. Part 202. See
Section 1029(a) of the Dodd-Frank Act.
2
76 FR 79441 (Dec. 21, 2011).
3
78 FR 7216 (Jan. 31, 2013).
4
Other federal agencies account for the paperwork burden imposed under ECOA on the institutions for which they
have administrative enforcement authority. Other federal agencies with administrative enforcement authority
include the CFPB, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, National
Credit Union Administration, and the Federal Trade Commission.
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Pursuant to Section 704 of ECOA (15 U.S.C. § 1691b) and Regulation B, section 202.16 and Appendix A (Federal
Enforcement Agencies), the Federal Reserve enforces compliance with ECOA for the following institutions: state
member banks, branches and agencies of foreign banks (other than federal branches, federal agencies, and insured
state branches of foreign banks), commercial lending companies owned or controlled by foreign banks, and
organizations operating under section 25 or 25A of the Federal Reserve Act.

Background and Justification
ECOA was enacted in 1974 and is implemented by Regulation B.6 ECOA prohibits
discrimination in any aspect of a credit transaction because of race, color, religion, national
origin, sex, marital status, age (provided the applicant has the capacity to contract), or other
specified bases (receipt of public assistance, or the fact that the applicant has in good faith
exercised any right under the Consumer Credit Protection Act (15 U.S.C. § 1600 et seq.)). 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 the credit application, credit history reporting, monitoring rules, and recordkeeping
requirements. These requirements are triggered by specific events and disclosures must be
provided within the time periods established by the statute and regulation. There are no required
reporting forms associated with the CFPB’s Regulation B. To ease the burden and cost of
compliance (particularly for small entities), Regulation B provides model disclosure forms.
Description of Information Collection
The paperwork requirements of Regulation B are described below.
Notifications (Section 1002.9)
No other federal law mandates the following disclosures, although the Fair Credit
Reporting Act (FCRA) requires related, but different, disclosures in some of the same
circumstances. Moreover, some states may have similar requirements.
Consumer credit. Under ECOA and Regulation B, an applicant is entitled to notice of the
action taken on a credit application and, if the creditor’s decision results in the denial or
termination of credit, a written statement of the specific reasons for the adverse action (or
disclosure of the right to request the reasons). When adverse action is taken against a consumer
based on information from a consumer reporting agency, the FCRA requires additional
disclosures, which may be provided on the same document. The adverse action notice must
generally be in writing, except that creditors that did not receive more than 150 applications
during the preceding year may provide notices of adverse action orally.
Business credit. Generally, a business applicant’s asset size determines a creditor’s
precise obligations. When a creditor takes adverse action on an application from a business with
$1 million or less in annual revenues, the creditor may notify the business applicant orally or in
writing. The creditor must also provide the applicant with reasons for an adverse action or a
notice telling the applicant of its right to request the reasons within the same time periods that
apply in the case of consumer applicants. A business with more than $1 million in annual
revenues is entitled to oral or written notice of adverse action within a reasonable time of the
action taken and, if timely requested, a written statement of reasons for an adverse action.

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15 U.S.C. § 1691. The CFPB’s Regulation B is located at 12 C.F.R. Part 1002.

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Furnishing of Credit Information (Section 1002.10)
Creditors that report credit history must report histories of accounts that spouses are
permitted to use or on which they are contractually liable in a fashion that reflects both spouses’
participation. This requirement applies to any creditor that reports credit history to credit
reporting agencies or to other creditors.
Record Retention (Section 1002.12)
A creditor must retain for 25 months any written or recorded material related to a
consumer credit application, as well as copies of any notification of action taken and statement of
specific reasons for adverse action (or any written notation or memo of an oral notification and
statement), and any written statement submitted by the applicant alleging a violation of ECOA or
Regulation B. Comparable records of business credit applications must be retained for 12
months. The record retention requirements also extend to information used in prescreened credit
solicitations.
If the creditor conducts a self-test (as defined under section 1002.15), the creditor
ordinarily must retain all written or recorded information about a self-test for 25 months. If a
creditor has actual notice that it is under investigation or is subject to an enforcement proceeding
for an alleged violation, or if it has been served with notice of a civil action, the creditor must
retain the information until final disposition of the matter, unless an earlier time is allowed by the
appropriate agency or court order.
Information for Monitoring Purposes (Section 1002.13)
A creditor is required to request that an applicant indicate his or her race, ethnicity, sex,
age, and marital status in connection with applications for credit primarily for purchasing or
refinancing a dwelling to be occupied by the applicant as a principal residence and secured by a
lien on the dwelling. Creditors are otherwise prohibited from collecting such applicant data with
some exceptions. The applicant must be informed that the information is being requested by the
federal government for the purpose of monitoring the creditor’s compliance with federal law and
if the applicant declines to provide the information, the bank will note the applicant’s ethnicity,
race, and sex based on visual observation or surname.
Rules Concerning Requests for Information (Section 1002.5)
When a creditor inquires about, and notes, personal characteristics such as race or
national origin for the purpose of conducting a self-test under section 1002.15, the creditor must
disclose orally or in writing to the consumer at the time of the information request that providing
the information is optional, that the information request is to monitor compliance with ECOA,
that federal law prohibits discrimination on the basis of this information or on the basis of an
applicant’s decision not to furnish this information, and that, if applicable, certain information
may be noted by visual observation or surname.

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Proposed Revisions Associated with Rules on Providing Appraisal Reports
(Section 1002.14)
The Federal Reserve proposes to modify its information collection to reflect the CFPB’s
recent amendments to Regulation B, which became effective January 18, 2014. Previously, an
applicant had a right to a copy of any appraisal report used in connection with an application for
credit to be secured by a dwelling. Creditors could elect either to provide a copy of the appraisal
report to all applicants for covered loans or provide the appraisal only upon request. Creditors
who choose to provide the appraisal only upon request had to notify all applicants for covered
loans of their right to request a copy of the appraisal. The notice was not required to be in any
particular format, but the regulation contained model language to ease compliance.
The CFPB recently amended Regulation B to now require creditors to provide to an
applicant, as a matter of course, a copy of all appraisals and other written valuations developed in
connection with an application for credit that is to be secured by a first lien on a dwelling within
specified time periods. Applicants are permitted to waive the timing requirements for receipt of
the appraisals and other written valuations, but in such cases the creditor must generally provide
the copies to the applicant prior to consummation (if closed-end credit) or account opening (if
open-end credit). Creditors must also notify applicants in writing within three business days of
receiving an application that a copy of all appraisals and other written valuations developed in
connection with applications for covered mortgage credit transactions will be provided to the
applicant promptly. The notice of an applicant’s right to receive a copy of appraisals is not
required to be in any particular format, but the regulation contains model language to ease
compliance.
Time Schedule for Information Collection
Recordkeeping and disclosure requirements associated with Regulation B are triggered
by certain events, and disclosures must be provided to applicants within prescribed times, and
records must be retained for specified periods.
Legal Status
The Federal Reserve Board’s Legal Division has determined that 15 U.S.C. § 1691b
authorizes the CFPB to prescribe regulations to carry out the purposes of ECOA. An
institution’s recordkeeping and disclosure obligations under Regulation B are mandatory. The
Federal Reserve does not collect any information; therefore, no issue of confidentiality normally
arises. However, records obtained as a part of an examination or supervision on an institution
may be protected from disclosure under the exemptions (b)(4), (6), and (8) of the Freedom of
Information Act (5 U.S.C. § 522 (b)(4), (6), and (8)).
Consultation Outside the Agency
On January 28, 2015, the Federal Reserve published a notice in the Federal Register
(80 FR 4571) requesting public comment for 60 days on the extension, with revision, of this
information collection. The comment period for this notice expired on March 30, 2015. The

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Federal Reserve did not receive any comments. On April 21, 2015, the Federal Reserve
published a final notice in the Federal Register (80 FR 22186).
Estimates of Respondent Burden
The current annual burden for this information collection is estimated to be 151,642
hours, and with the proposed revisions is estimated to be 167,587 hours, a net increase of 15,945
hours. The Federal Reserve estimates that 1,063 institutions would take, on average, 3 hours per
month to comply with disclosure requirements in accordance with section 1002.14. The net
increase is offset by adjustments to current disclosures, optional requests, and required notices.
These recordkeeping and disclosure requirements represent 1.06 percent of the total Federal
Reserve System annual paperwork burden.

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Estimated
average time
per response

Estimated
annual burden
hours

Number of
respondents

Annual
frequency

1,063

12

6 hours

76,536

1,063

12

2.50 hours

31,890

Record retention (Section 202.12)
Applications, actions,
and prescreened solicitations7

1,063

1

8 hours

8,504

Information for monitoring
purposes (Section 202.13)

1,063

12

15 minutes

3,189

Rules on providing
appraisal reports (Section 202.14):
Appraisal report upon request

1,063

12

1.25 hours

15,945

Notice of right to appraisal

1,063

12

30 minutes

6,378

Self-testing
Record retention:
Incentives (Section 202.12)
Self-correction (Section 202.15)

200
50

1
1

2 hours
8 hours

400
400

Rules concerning requests for
information (Section 202.5)
Disclosure for optional self-test

200

12

3.5 hours

8,400

Current
Notifications (Section 202.9)
Furnishing of credit information
(Section 202.10)

Current Total

151,642

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For purposes of the PRA, no paperwork burden is associated with the recordkeeping requirement for information
about prescreened solicitations (section 202.12(b)(7)) because the regulation does not specify records to be retained
as evidence of compliance.

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Estimated
average time
per response

Estimated
annual burden
hours

Number of
respondents9

Annual
frequency

Notifications (Section 1002.9)

1,063

12

6 hours

76,536

Furnishing of credit information
(Section 1002.10)

1,063

12

2.50 hours

31,890

Record retention
(Section 1002.12)
Applications, actions, and
prescreened solicitations10

1,063

1

8 hours

8,504

Information for monitoring
purposes (Section 1002.13)

1,063

12

15 minutes

3,189

1,063

12

3.0 hours

38,268

Self-testing
Record retention:
Incentives (Section 1002.12)
Self-correction (Section 1002.15)

200
50

1
1

2 hours
8 hours

400
400

Rules concerning requests for
information (Section 1002.5)
Disclosure for optional self-test

200

12

3.5 hours

8,400

Proposed8

Rules on providing appraisal
reports (Section 1002.14)
Providing appraisal report

Proposed Total

167,587

Change

15,945

Section citations were renumbered to reflect the CFPB’s Regulation B.
Of these respondents required to comply with this information collection, 738 are considered small entities as
defined by the Small Business Administration (i.e., entities with less than $550 million in total assets)
www.sba.gov/content/small-business-size-standards.
10
For purposes of the PRA, no paperwork burden is associated with the recordkeeping requirement for information
about prescreened solicitations (section 1002.12(b)(7)) because the regulation does not specify records to be retained
as evidence of compliance.
8
9

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The total current cost to the public is estimated to be $7,847,474, and with the proposed revisions
would increase to $8,672,627.11
Sensitive Questions
Sensitive questions are not contained in any report or survey sponsored by the Federal
Reserve in connection with Regulation B. However, applicants for mortgage loans are asked to
voluntarily provide information on ethnicity, sex, age, and marital status so that regulators may
monitor for compliance with the law. If they do not provide the information, certain information
may be noted by visual observation or surname. For all non-mortgage credit, a creditor may not
ask or note applicants’ sex, race, color, religion, or national origin. There is an exception
permitting collection of this information for purposes of conducting a self-test that meets the
requirements of section 1002.15. It is at the option of the applicant to provide this information.
Estimate of Cost to the Federal Reserve System
Since the Federal Reserve does not collect any information in connection with
Regulation B, the related cost to the Federal Reserve System is negligible.

11

Total cost to the public was estimated using the following formula: percent of staff time, multiplied by annual
burden hours, multiplied by hourly rates (30% Office & Administrative Support at $17, 45% Financial Managers at
$63, 15% Lawyers at $64, and 10% Chief Executives at $87). Hourly rates for each occupational group are the
(rounded) mean hourly wages from the Bureau of Labor and Statistics (BLS), Occupational Employment and Wages
2014, published March 25, 2015, www.bls.gov/news.release/ocwage.nr0.htm. Occupations are defined using the
BLS Occupational Classification System, www.bls.gov/soc/.

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