I. INTRODUCTION
The Fair Housing Act was enacted as a part of the Civil Rights Act of 1968 (Title VIII, 42 U.S.C. 3601 et seq.). The purpose of the Fair Housing Act, as it applies to banks, is to prohibit discrimination in the financing of housing and in advertising related to housing. The Fair Housing Act makes it illegal for a bank to deny a loan for purchasing, constructing, improving, repairing, or maintaining a dwelling, or discriminate in the extension or terms of a loan or appraising property “on the basis of race, color, national origin, religion, sex, handicap, or familial status” (having children under the age of 18). Note and compare coverage: Under the Equal Credit Opportunity Act, implemented by Regulation B, it is unlawful for a bank to discriminate in any credit transaction on the basis of race, color, national origin, religion, sex, marital status, or age, because income is from public assistance, or because a right was exercised under the Consumer Credit Protection Act.
II. WHO REGULATES THE FAIR HOUSING ACT?
III. MONITORING INFORMATION (REGULATION B – ALL BANKS)
Regulation B monitoring information is required for banks that receive credit applications from persons primarily for the purchase or refinancing of a dwelling occupied or to be occupied by the applicant as a principal residence and the loan will be secured by the dwelling.
Substitute monitoring program. A monitoring program required by an agency charged with administrative enforcement under § 704 of the Fair Housing Act may be substituted for the requirements contained in this regulation. To this end, the OCC (12 C.F.R. § 27.3) and the FDIC (12 C.F.R. § 338.7) recordkeeping regulations are substitute monitoring programs that fulfill Regulation B monitoring information collection requirements.
A. Definitions
The following are key definitions used in the regulation:
B. Information Collected and Disclosure to Applicants -- § 202.13
Information to be requested. A creditor that receives a credit application primarily for the purchase or refinancing of a dwelling occupied or to be occupied by the applicant as a principal residence, where the extension of credit will be secured by the dwelling, must request as part of the application the following information regarding the applicant(s):
Obtaining information. Questions regarding race or national origin, sex, marital status, and age may be listed, at the creditor’s option, on the application form or on a separate form that refers to the application. This means that the application or separate form covered by this regulation must be in writing. The applicant(s) must be asked but not required to supply the requested information. If the applicant(s) chooses not to provide the information or any part of it, that fact is to be noted on the form. The creditor then also notes on the form, to the extent possible, the race or national origin and sex of the applicant(s) on the basis of visual observation or surname.
Disclosure to applicant(s). The creditor must inform the applicant(s) that the information regarding race or national origin, sex, marital status, and age is being requested by the federal government for the purpose of monitoring compliance with federal statutes that prohibit creditors from discriminating against applicants on those bases. The creditor must also inform the applicant(s) that if the applicant(s) chooses not to provide the information, the creditor is required to note the race or national origin and sex on the basis of visual observation or surname.
The official staff commentary further explains § 202.13 requirements as follows:
Comment 13(b)-1: Forms for collection data. A creditor may collect the information specified in section 202.13(a) either on an application form or on a separate form referring to the application.
Comment 13(b)-2: Written applications. The regulation requires written applications for the types of credit covered by § 202.13. A creditor can satisfy this requirement by recording in writing or by means of computer the information that the applicant provides orally and that the creditor normally considers in a credit decision.
Comment 13(b)-3: Telephone, mail applications. If an applicant does not apply in person for the credit requested, a creditor does not have to complete the monitoring information. For example:
If it is not evident on the face of the application that it was received by mail or telephone, the creditor should indicate on the form or other application record how the application was received.
Comment 13(b)-4: Applications through loan shopping services. When a creditor accepts an application through an unaffiliated loan shopping service, it does not have to request the monitoring information.
Comment 13(b)-5: Inadvertent notation. If a creditor inadvertently obtains the monitoring information in a dwelling related transaction not covered by § 202.13, the creditor may process and retain the application without violating the regulation. See also commentary to Reg. B, § 202.5(e).
In regard to disclosure to applicant(s), the official staff commentary states:
Comment 13(c)-1: Procedures for providing disclosures. The disclosures to an applicant regarding the monitoring information may be provided in writing. Appendix B contains a sample disclosure. A creditor may devise its own disclosure so long as it is substantially similar. The creditor need not orally request the applicant to provide the monitoring information if it is requested in writing. See also, Commentary to Reg. B,§ 202.5(e) and Introduction and Commentary to Appendix of the regulation.
IV. NATIONAL BANKS - FAIR HOUSING
A. Advertising
OCC Banking Circular No. 13 (8/8/80) provides that any national bank directly or indirectly engaging in any form of advertising real estate lending services must prominently and appropriately indicate that the bank makes real estate loans without regard to race, color, religion, sex, or national origin. Written ads must include a facsimile of the prescribed logo and other types of ads must include a statement of nondiscrimination, e.g. “an equal housing lender.”
B. Poster Requirements
OCC Banking Circular No. 13 (8/8/80) also provides that any national bank engaged in making loans for purchase, construction, improvement, repair or maintenance of a dwelling must display an equal housing lender poster in the bank lobby where deposits are received or home loans are made.
C. Fair Housing Home Loan Data System
1. General
12 C.F.R. Part 27 is the regulation establishing recordkeeping requirements and a data collection system to monitor national bank compliance with the Fair Housing Act. A national bank subject to the Home Mortgage Disclosure Act (HMDA) as implemented by FRB Regulation C need not also maintain home mortgage loan information under the Fair Housing Home Loan Data System (FHHLDS). HMDA reporting is required for national banks with total assets exceeding $10 million that originate mortgage loans and have a main office or branch located in a metropolitan statistical area (MSA). Note: The MSA’s for Nebraska are the following counties -- Lancaster, Seward, Hall, Hamilton, Hoard, Merrick, Cass, Douglas, Washington, Sarpy, Saunders, Dakota and Dixon in Nebraska and Woodbury, Plymouth, Harrison, Mills and Pottawattamie in Iowa. FHHLDS recordkeeping applies to national banks with 50 or more home loan applications annually.
National banks subject to the FHHLDS but not HMDA (Regulation C) have an option to maintain home loan information under either the FHHLDS monthly “Home Loan Activity Reports” or the HMDA loan/application register (HMDA-LAR). This option does not authorize a non-HMDA-covered bank to collect monitoring information for home improvement loans. All national banks are required to update the information within 30 calendar days after the end of each calendar quarter.
COMPLIANCE NOTE: Compliance with (1) monthly home loan activity information; (2) monitoring information; (3) information required on completed applications for home loan; and (4) additional information in loan files, will constitute compliance with most Regulation B monitoring requirements.
2. Definitions: 12 C.F.R. § 27.2
3. Monthly Home Loan Activity Report: 12 C.F.R. § 27.3(a)
Each national bank which receives 50 or more home loan applications a year as measured by the previous calendar year and not subject to HMDA (Regulation C) must record and maintain for each “decision center” the following information on home loan activity:
This information must be updated monthly with 10 working days after the close of the month in a format consistent with the bank’s recordkeeping procedures.
A bank currently exempted from HMDA will be covered by this law beginning the month following any quarter in which average monthly volume of home loan applications exceeds four applications per month. A bank may discontinue keeping this information beginning the month following two consecutive quarters in which its average monthly volume of home loan applications drops to four or fewer applications per month. A bank which is otherwise exempted may be required upon notification received from the OCC, to record and maintain such information where there is cause to believe that the bank is not in compliance with the fair housing laws based on prior examinations and/or has substantive consumer complaints, among other factors.
4. Information Required on Home Loan Applications: 12 C.F.R. § 27.3(b)(1)
A bank must try to obtain all of the information listed below, as part of completed applications for home loans:
5. Disclosures to Applicant (and Co-applicant, if any): 12 C.F.R. § 27.3(b)(2)
In collecting the information on race/national origin and sex, the bank must advise an applicant, either orally or in writing, that:
NOTE: Banks which use the Federal Home Loan Mortgage Corporation/ Federal National Mortgagee Association (FHLMC/FNMA) insert form (“Information for Government Monitoring Purposes”) requesting this information will be in compliance with this part of the regulation. See, FHLMC Form 65/FNMA 1003.
If the applicant (and co-applicant, if any) does not voluntarily provide the information on sex and race/national origin that the bank is required to record and maintain, the bank must request the applicant to note that fact (by initials or otherwise) on the application and provide the information based on visual observation or surname. If the applicant neither voluntarily provides the information nor initials or otherwise notes that fact, the bank must initial or otherwise note that fact on the application and provide the information based on visual observation or surname.
6. Additional Information Required in the Loan File: 12 C.F.R. § 27.3(c)
In addition to the information required by § 27.3(b), each bank shall maintain the following information in each of its home loan files:
If an appraisal is completed:
a. Appraised value; and
b. Census tract number, where available, for those properties in a Metropolitan Area (MA) in which the bank has a home or branch office (Nebraska MAs are comprised of the following counties Lancaster Seward, Hall, Hamilton, Howard, Merrick, Cass, Douglas, Dakota, Washington, Sarpy, Saunders and Dixon in Nebraska and Woodbury, Harrison, Mills, Plymouth and Pottawattamie in Iowa.
The disposition of the completed applications using the following categories:
a. Withdrawn before terms were offered;
b. Withdrawn after terms were offered;
c. Denied;
d. Terms offered and accepted by applicant(s).
If final terms are offered, whether or not accepted:
a. The loan amount.
b. Whether private mortgage insurance is required, and if so, the terms of the insurance.
c. Whether a deposit balance is required, and if so, the amount.
d. The note (simple) interest rate.
e. The number of months to maturity of the loan offered.
f. Points. The loan origination or discount fee(s) charged to the buyer, computed as a percentage of the loan amount.
Date final terms were offered (Commitment date).
Type of mortgage using the following categories: Standard Fixed Payment; Variable Rate; Graduated Payment; Rollover; Other.
Name or identification of the bank officer (where the application was submitted).
Whenever credit is denied, copy(s) of the Equal Credit Opportunity Act credit notice and statement of credit denial.
Any additional information used by the bank in determining whether or not to extend credit, or in establishing the terms, including, but not limited to, credit card reports, employment verification forms, Federal Income Tax Forms, availability of insurance, and the complete appraisal.
D. Inquiry/Application Log: 12 C.F.R. § 27.4
The Comptroller, among other things, may require a bank to maintain a Fair Housing Inquiry/Application Log (“Log”) https://occ.gov/news-issuances/bulletins/1994/bulletin-1994-36a.pdf, based upon, but not limited to, one or more of the following causes:
E. Home Loan Data Submission Form
Before an examination, the OCC will request your bank’s monthly summary of information. If the OCC determines a statistical analysis is needed before an examination, your bank will be notified. The bank has 30 days to comply by submitting a Home Loan Data Submission form as specified by the OCC. https://occ.gov/news-issuances/bulletins/1994/bulletin-1994-36b.pdf.
F. Record Retention Requirements
Records required to be retained pursuant to this regulation must be kept for 25 months after the bank has notified an applicant of action taken or after the withdrawal of an application, unless such time period is extended by order of the OCC.
V. STATE-CHARTERED MEMBER BANK: FAIR HOUSING
A. Introduction
State-chartered member banks are not subject to specific regulation that requires information collection and data retention. The Federal Reserve Board (FRB) examines and monitors member banks for compliance with the Fair Housing Act as well as with ECOA (Regulation B) and HMDA (Regulation C), when applicable. In addition, FRB examiners review advertising and poster requirements and fair housing activities through use of data and other information required by other laws and regulations.
B. Advertising and Poster Requirements
The FRB has adopted specific requirements (Board order on Fair Housing Advertising and Poster Requirements, 12 C.F.R. Part 202). The definition “dwelling” used in this regulation is: any building, structure (including a mobile home), or portion thereof; that is occupied as, or designed or intended as, a residence by one or more natural persons; and any vacant land that is offered for sale or lease for the construction or location thereon of such building, structure, or portion thereof.
1. Nondiscriminatory Advertising
A state member bank that directly or through third parties engages in any form of advertising of any loan for the purpose of purchasing, constructing, improving, repairing, or maintaining a dwelling or any loan secured by a dwelling shall prominently indicate in such advertisement, in a manner appropriate to the advertising medium and format utilized, that the bank makes such loans without regard to race, color, religion, sex, or national origin, handicap, or familial status (having children under the age of 18).
No advertisement shall contain any words symbols, models, or other forms of communication that express, imply, or suggest a discriminatory preference or policy of exclusion in violation of the provisions of the Fair Housing Act or the Equal Credit Opportunity Act.
2. Equal Housing Lender Poster
We do Business in Accordance with Federal Fair Lending Laws.
UNDER THE FEDERAL FAIR HOUSING ACT, IT IS ILLEGAL, ON THE BASIS OF RACE, COLOR, NATIONAL ORIGIN, RELIGION, SEX, HANDICAP OR FAMILIAL STATUS (HAVING CHILDREN UNDER THE AGE OF 18), TO:
IF YOU BELIEVE YOU HAVE BEEN DISCRIMINATED AGAINST, YOU SHOULD SEND A COMPLAINT TO:
Assistant Secretary for Fair Housing and Equal Opportunity, Department of Housing and Urban Development, Washington, D.C. 20410
For processing under the Federal Fair Housing Act and to:
Division of Consumer and Community Affairs, Federal Reserve Board, Washington, D.C. 20551
For processing under Federal Reserve regulations
UNDER THE EQUAL CREDIT OPPORTUNITY ACT, IT IS ILLEGAL TO DISCRIMINATE IN ANY CREDIT TRANSACTION:
IF YOU BELIEVE YOU HAVE BEEN DISCRIMINATED AGAINST, YOU MAY SEND A COMPLAINT TO:
C. Monitoring for Compliance
The FRB uses information from the following sources:
The FRB may order, on a case-by-case basis, specific logs or records to be maintained by bank for enforcement and monitoring purposes.
VI. STATE-CHARTERED NONMEMBER BANKS – FAIR HOUSING
A. Authority: FDIC Regulations, 12 C.F.R. Part 338
Terms used in the advertising part of the regulation are defined in 12 U.S.C. § 338.2:
B. Nondiscriminatory Advertising (§ 338.3)
Any bank which directly or through third parties engages in any form of advertising of loans for the purpose of purchasing, constructing, improving, repairing, or maintaining a dwelling or a loan that is secured by a dwelling must prominently indicate in such advertisement, in a manner appropriate to the advertising medium and format utilized, that the bank makes such loans without regard to race, color, religion, national origin, sex, handicap, or familial status.
With respect to written and visual advertisement, this requirement may be satisfied by including in the advertisement a copy of the logotype with the Equal Housing Lender legend contained in the FDIC’s Equal Housing Lender Poster or a copy of the logotype with the Equal Housing Opportunity legend contained in HUD’s Equal Housing Opportunity poster. With respect to oral advertisement, this requirement may be satisfied by a statement, in the spoken text of the advertisement, that the bank is an “Equal Housing Lender” or an “Equal Opportunity Lender.” When an oral advertisement is used in conjunction with a written or visual advertisement, the use of either of the methods specified above will satisfy the advertising requirements. No advertisement shall contain any words, symbols, models or other forms of communication which express, imply, or suggest a discriminatory preference or policy of exclusion in violation of the provisions of the Fair Housing Act or the Equal Credit Opportunity Act [§ 338.3(b)].
C. Equal Housing Lender Poster (§ 338.4)
Each bank engaged in extending loans for the purpose of purchasing, constructing, improving, repairing, or maintaining a dwelling or any loan secured by a dwelling must conspicuously display either the FDIC’s “Equal Housing Lender” poster or HUD’s “Equal Housing Opportunity” poster in any central location within the bank where deposits are received or where such loans are made in a manner clearly visible to the general public entering such areas. The Equal Housing Lender Poster must be at least 11 by 14 inches in size (a copy of the required poster follows this article).
D. Recordkeeping (§§ 338.5 – 338.9)
Records are to be retained for the purpose of monitoring compliance with ECOA (FRB Regulation B) and may not be used for the purpose of extending or denying credit or fixing terms where prohibited by law. In addition, certain banks must maintain, update and report a register of home loan applications in accordance with HMDA (See, NBA Compliance Handbook, Vol III, Real Estate Section, "HMDA -- Regulation C" article).
Definitions of terms used in the recordkeeping portion of this regulation are found at 12 U.S.C. § 338.5:
Any bank that receives a credit application primarily for the purchase or refinancing of a dwelling occupied or to be occupied by the applicant as a principal residence where the credit extension will be secured by the dwelling must request and retain the monitoring information required by Regulation B (12 C.F.R. Part 202). The required monitoring information is discussed in detail (See Paragraph III) in this article.
In addition, the FDIC regulation states that banks and other lenders required to file a Home Mortgage Disclosure Act loan application register (LAR) with the FDIC must maintain, update and report such LAR pursuant to FRB Regulation C.
Finally, any bank referring applicants to a controlled entity and that purchases any home purchase loans or home improvement loans (as defined in FRB Regulation C) originated by the controlled entity, as a condition to transacting any business with the controlled entity, must require the controlled entity to enter into a written agreement with the bank, providing that the entity must: comply with the FDIC’s Fair Housing Act regulation (12 C.F.R. Part 338) and when applicable, with FRB Regulation C (12 C.F.R. Part 203); open it books and records to FDIC examination; and comply with all FDIC issued orders and instructions regarding the controlled entity’s loan practices.