Photocopy Of A Photo ID, Reg B, And "Discrimination in Lending"

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Question:

I understand that it is not a violation of ECOA to require an ID and photocopy it at loan closing. However, also I understood that taking a photocopy of a picture ID for a loan file is considered "collecting monitoring information" which according to Section 202.13 of Reg B is allowed only for credit secured by a dwelling. Aren't we setting ourselves up for "discrimination in lending" by keeping pictures of those we approve and decline in loan files?

Answer:

Answer by Andy Zavoina:

Regulatory agencies vary on this issue. I have heard the FDIC is a real stickler that this is gathering government monitoring information. The OCC is not so particular.

Because some states prohibit the photocopying or electronic imaging of drivers licenses in combination with the regulatory criticisms you noted, a best practice may be to check the ID, but to not copy it for your file.

The CIP rules which are still pending originally required photocopies IDs. It remains to be seen if that requirement will remain in the final rule. If it does, the regulator's interpretation that this is an improper gathering of GMI will have to be reversed and state issues resolved.

Answer:

Answer by Lucy Griffin:

Andy's answer says it all, but I have to step in and disagree with your first statement. It is a violation of Reg B to make a copy of a photo ID if the loan is one that is not subject to monitoring requirements. For example, making a copy of a driver's license for an auto loan would violate Regulation B.

That being said, everything including Regulation B could change with the final rules on Customer Identification. Stay tuned on that issue.

First published on BankersOnline.com 2/3/03