Asking for Monitoring Information

Asking customers for their race and gender has always been the most delicate and most difficult stage of taking an application. It is less invasive and less sensitive to ask customers about their debts than to ask about their race. No one likes asking these questions.

Generally, discussing how to ask for monitoring information is the most difficult aspect of lender training. No one likes it, no one likes asking these questions, and everyone has an experience that illustrates why customers don't like it either. Often training deteriorates into a heated discussion that quickly ignores Regulation B and HMDA and succeeds only in disagreement with just about everything. This part of the material is the trainer's nightmare.

It is more important now than ever before to help lenders understand how to handle this touchy subject. It is also critical that lenders realize that they can't dodge this bullet either. Consumer groups are watching and they are likely to do testing on this process.

Consumer advocates think that loan officers will actively discourage applicants from providing this information. Not having the information means that consumer groups cannot analyze what lenders are doing. As the amount of information drops, consumer groups may use this fact to allege bad faith on the part of lenders. That's the last thing we need.

We need to make good faith efforts to collect monitoring information, but we need to do this without upsetting or annoying the applicant. This is where things can get delicate. When an interview is face-to-face, the applicant can look at the loan officer and judge whether the loan officer means what the form says - that the information won't be used to discriminate.

Over the telephone, things are much more difficult. How the lender presents the question and explains the purpose is very important. It can affect not only the consumer's decision whether to give the information, it can also affect what the consumer thinks of the loan officer and the institution.

Training should cover more than the fact that monitoring data should be collected. Training should also deal with how it is collected.

ACTION TRAINING
Training Points

Respect your customer. Always make the customer feel that he or she is in charge and that your role is to help them get the loan they want.
When it comes to asking about monitoring information, understand how the customer feels and what he or she hears as you explain and ask for information.
Don't be negative about anything. If you communicate that this is simply another stupid government regulation, you also communicate that you don't particularly believe in a lot of other things - such as compliance and fairness.
Open with a simple statement that lets the customer know they are in charge. The choice is theirs and their choice will not affect their application.
Explain that the information has a use and that the use is to protect the customer. This creates the implication that providing the information is helpful.
Practice using the script, below.
Thank the customer, no matter what the customer decides.

Sample Script
"I need to ask you several questions about your race, ethnicity and gender. You may choose whether or not to answer these questions. Whether you answer will not affect your application for a loan with us.

Before you decide whether to answer these questions, let me explain why we ask them.

We do not use this information in any way when we process and underwrite your application. We make all lending decisions based on your credit qualifications only. It is our policy to treat all customers fairly without regard to race, ethnicity, or gender. We are required to ask these questions by the federal government.

The federal bank examiners who review our [bank, institution, credit union] use this information to make sure that we treat all customers fairly. If you provide the information, it helps the examiners do their job and it helps us prove that we are a fair lender.

Would you like to answer these questions or do you choose not to?

Thank you."

Copyright © 2002 Compliance Action. Originally appeared in Compliance Action, Vol. 7, No. 10, 8/02