The Consumer Financial Protection Bureau (CFPB) has finalized its updates to Section 1071. The Dodd-Frank Wall Street Reform and Consumer Protection Act section focuses on data collection requirements when lending to small businesses. With the CFPB section 1071 implementation on the horizon, financial institutions must gear up to understand and implement these changes.
Important Changes from the Proposed Rule (Section 1071)
The CFPB's notice of proposed rulemaking (NPRM) for CFPB section 1071 introduces significant changes. One of the primary alterations is the addition of a new subpart to the Equality Credit Opportunity Act (Regulation B). This subpart aims to implement the requirements of Section 1071.
The proposed changes target "covered financial institutions" involved in small business lending. For adherence to CFPB section 1071, these institutions must collect and report data on their loan applications. This move by the Consumer Financial Protection Bureau is groundbreaking as the NPRM will pave the way for creating the first comprehensive database of small business credit applications in the U.S. Such a database will empower regulators to pinpoint and address any fair lending concerns related to small businesses.
Adopt Technology to Streamline Fair Lending Risk and Compliance Journey
Financial institutions must be proactive in considering the CFPB section 1071 updates. The time to act is now, especially for those unfamiliar with CFPB 1071 requirements. The NPRM has outlined a comprehensive list of over 20 specific data points. Financial institutions must collect and report these points related to their small business lending processes. These data points range from unique identifiers for the covered application, such as date and application method, to demographic details of the applicant's principal owners.
Adopting advanced technology solutions like Fair Lending Risk and Compliance Solutions can make a difference in managing these changes effectively. Such platforms can empower financial institutions to seamlessly identify, assess, and act on new and existing fair lending risks and controls.
Financial institutions must be prepared as the Consumer Financial Protection Bureau finalizes the CFPB section 1071 updates. By understanding the proposed changes and leveraging advanced technological solutions, they can ensure compliance and promote fair lending practices.
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