CFPB recently issued a proposed 1071 rule regarding Small Business Lending Data Collection
Specifically, the section 1071 proposed rule would require covered institutions to collect and report certain data for minority-owned and women-owned small business loan applications. This data will be different than what you currently collect/report for HMDA, CRA, Beneficial Owners, etc. What will that look like for your institution? How will it affect your current procedures and processes? In addition to our Free Resources, you can hear from expert Jarod Moyer in the video below.
While this is only a proposal, it still has an impact on your Compliance Management System (CMS) today.
Listen as Jerod explains the CMS implications, as well as when he expects this will all go into effect.
We have a one-hour webinar, “ Small Business Lending Data Collection”, coming up on September 29 th that cover everything you need to know about the proposed requirements. Understanding what’s potentially required will help you better craft a comment letter if you choose to do so.
This will also be a featured topic at our 2021 Virtual Lending Conference which begins on October 13 th.
Ready to learn more about CMS in general? Check out our six-part webinar series, “ Compliance Management” today!
Video Transcript:
I going to give you what we know right now. Here’s the thing to remember, at this point, it’s just a proposal, but what is important for your teams to understand where that intersects with your CMS right now. There’s some planning to start here. It may be that, eventually, some of you may not have to do this, but I’m going to share with you where the line in the sand is right now. I think there’s some information to be shared with management about what the expectation will be moving forward. What the resources, possibly, will be. Talking to vendors about software and things like that. And really, probably, the biggest one is starting to talk to your departments, your business lines, and to get buy-in. The immediate thing that’s going to happen is you’re going to mention this to a commercial lender, and they’re going to say, “I’m a commercial lender and I don’t have to do compliance.”
Now, I’m stereotyping there purposefully, but you’re going to get some pushback.
The best thing that you can do though, is give them some information up front, and try to allow them to be part of the solution. So that you get to buy in, so that when it does come time to actually have to do this, things go a little smoother than they otherwise would. So I’m going to give you some information here. You’re going to continue to hear more about this. This won’t be the last time this hits the Monthly Connection. We’ve got some training out there. If you’re going to be part of our virtual conference, we’re going to hit it there as well. So here’s some things that we know right now. I want to talk about just the why behind it. I mentioned the Dodd-Frank Act.
This is a fair lending evaluation tool –
Specifically, for small businesses, as well as those that are women owned and minority owned. That’s the focus of this. It’s to get data about those small businesses, as well as those that are specifically women and minority owned. And they’re going to start measuring the fair lending that’s associated with them, how you’re going about that business, the pricing, the underwriting, things like that. Now the timeline on this thing. It hasn’t quite hit the Federal Registry yet. But once it does, we’ll have 90 days, as an industry, to provide feedback. And so, if a comment letter is something that you’d like to write, I encourage you to do that after you learn a little bit more about the rule. There’ll be plenty of them out there. But there are several things that they’re going to want to hear about, and I’ll give you some of those as we walk through this.
What they’re saying is that they’re going to, when this thing goes final, give our industry this 18-month implementation period.
Well, if we backtracked to when they issued the proposal, to when we think the final rule will come out. Since this is something that likely it takes effect on the first of a calendar year, what we’re looking at is, probably, a final rule no later than June of ’22.
So if you think about it, if comments start rolling in the next 90 days, plus a few, and then they start to evaluate those, they should be able to work through most of that before the end of June of 2022. If they get the final rule out by June of 2022, what that then looks like is a January 1, 2024 mandatory compliance date for everyone. And so, that’s where that 18-month approximation comes from, if you were to go and read the rule and the summary that goes along with it.
Published
2021/09/20
