Question of the Week

  • QUESTION: Some lenders are sticking to the ECOA having a section entitled “husband and wife”. They are using this phrasing in order to deny same sex married couples. How is this viewed by examiners in regards to fair lending?

    ANSWER:  Under Regulation B discrimination based on marital status is prohibited. Regulation B does not distinguish or define marital status as “husband and wife”. The CFPB policy applies to all of the laws, regulations, and policies that we administer, including the Equal Credit Opportunity Act (ECOA), Fair Debt Collection Practices Act (FDCPA), Truth in Lending Act (TILA), and Real Estate Settlement Procedures Act (RESPA). That means that when it comes to administering, enforcing, or interpreting the laws, regulations, and policies within our jurisdiction, we use and interpret the terms like “spouse,” “marriage,” “married,” “husband,” “wife,” and any other similar terms related to family or marital status to include lawful same-sex marriages and lawfully married same-sex spouses.

    Reference: Regulation B 12 CFR 1002.4, 1002.5, 1002.6. CFPB memo: Memorandum on Ensuring equal treatment for same sex couples, issued June 25, 2014.

  • QUESTION: A borrower's flood insurance was cancelled. The bank was including the premium payments in the escrow account. Because flood insurance wasn’t required by the bank due to the SFHD, is it the bank’s responsibility to replace the insurance?


    Under RESPA, if the borrower asserts an error the bank must follow the error resolution procedures including, this includes for RESPA. Regardless of the reason for the flood insurance policy, it was part of the escrow account, and the servicer is responsible for payments of insurance and other items for which the bank maintains an escrow account. The bank must address immediately the lack of flood policy, even though it was not required by flood insurance regulations. It is the bank’s responsibility to contact the insurance company and reinstate the policy or find a new company. The bank needs to review and remedy the error in payment, for example was there a change in address and the bank wasn’t informed, or was the payment missed internally? The bank must also address any procedural issues that led to the error – for example: Why wasn’t the insurance policy premium paid from escrow? Was it a human error, or software error? Once review has determined the issue, it must be determined whether it was isolated or systemic and corrected accordingly. Consider updating procedures, testing of software, training, etc. The incident should be documented and reported to the Board.

    Reference:  Real Estate Settlement Procedures Act 1024.37.

  • QUESTION: The bank is developing a self-testing program to determine whether all applicants for credit are being treated fairly. Is the bank permitted to collect normally prohibited information to be able to analyze?


    Regulation B carves out a provision for allowing collection of normally prohibited information to be used in self-testing. The information that is collected must be kept separately from the loan files and must not be used to determine creditworthiness.

    In preparing to conduct a self-test that involves the collection of applicants’ personal characteristics, creditors would be expected to develop a written plan that describes, among other things, the specific purpose of the self-test, the methodology to be used, the geographic area covered by the test, the types of credit transactions involved, the identity of the entity that will conduct the test and analyze the data (such as the creditor’s audit department), and the timing of the test, including the expected start date and end date or the expected duration of the test.  The creditor is generally required to retain records regarding a self-test, including   personal-characteristics data and all other written or recorded information about the self-test for 25 months after a test has been completed.

    In addition, the self-test provision requires that creditors take appropriate and timely corrective action when the self-test shows that it is “more likely than not” that a violation of the ECOA or Regulation B has occurred, even though no violation has been formally adjudicated.  12 CFR 202.15(c)(1) (emphasis added).  Creditors should ensure that corrective action is taken on a timely basis and is “reasonably likely to remedy the cause and effect of a likely violation.”

    Reference: Regulation B 12 CFR 1002.5(b)(1); 1002.15. Regulation B final rule issued 2003, page 14. Note: the Federal Reserve version uses 12 CFR 202.

Question of the Week Archive

  • QUESTION: What is the timing on performing an account review under the Garnishment of Federal Benefit Payments rule?

  • QUESTION: Is a bank required to pay interest on a dormant or inactive account?

  • QUESTION: Fraudulent transactions appeared on an account and timely notice was given by the customer. The investigation found the PIN was written down and accessible. The bank wants to make the consumer liable for the entire amount. Is this allowed?

  • QUESTION: The bank has started marketing on social media. The bank wants to market deposit accounts. What must the bank be aware of when marketing on social media?

  • QUESTION: TWhat is the timing on performing an account review under the Garnishment of Federal Benefit Payments rule?

  • QUESTION: If the bank wants to begin community development activities, what is a community development financial institution and how can it help?

  • QUESTION: What are the risks of the delivering information or disclosures electronically?

  • QUESTION: The bank’s marketing department wants to attract savings deposits. They would like to hold a raffle, where the customers who open a savings account is entered to win a prize. Are there any restrictions under the law?

  • QUESTION: What are the requirements to qualify for the partial exemption of data reporting and collection under the Bureau's Interpretive & Procedural HMDA Rule?

  • QUESTION: Can a bank still collect and report all 2015 HMDA Rule Data Points even if it qualifies for the partial exemption?

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