THE SECRETARY OF HOUSING AND URBAN DEVELOPMENT
WASHINGTON, D. C. 20410

November 17, 1976

Honorable William Proxmire
Chairman, Committee on Banking
Housing and Urban Affairs
Washington, D. C. 20510

Dear Mr. Chairman:

In response to your letter of October 27, 1976, inviting the Department of Housing and Urban Development to participate in hearings before the Banking Committee on the subject of Equal Opportunity lending practices, I understand that our staffs have agreed that testimony by the Department would be more appropriate after the new Administration takes office, rather than during this transition period.

I am pleased, however, to advise you of the views I expressed on related issues during my appearance before the Subcommittee on Civil and Constitutional Rights of the House Judiciary Committee on September 30, 1976.

As I stated at that time, the Department has moved on a number of fronts to assure that lenders involved in our programs provide equal opportunity to all our citizens. In addition to seeking broader general enforcement powers under Title VIII by authorizing the Secretary of HUD to bring civil actions directly, we have supported efforts to assure the availability of adequate records of lender practices for use in investigating and resolving complaints of discrimination. Such records would be of great value in investigating the practices of a lender who is the subject of a discrimination complaint.

As you know, the Equal Credit Opportunity Act (ECOA), as amended this year, broadly prohibits discrimination on numerous grounds, including race, religion, sex, and national origin in credit transactions, and therefore substantially overlaps the prohibitions of Title VIII.

Issuance of regulations under the ECOA is the responsibility of the Federal Reserve Board. In an effort to avoid imposing separate, duplicative requirements on lenders under Title VIII and the ECOA, we have met with representatives of the Federal Reserve Board on a number of occasions to develop a single, mutually satisfactory record-keeping requirement.

On July 15, 1976, the Board issued proposed ECOA regulations which included a requirement that lenders record sex and race data as well as other information with respect to all applications for mortgage credit for the purpose of purchasing a one-to-four family residence. In August, the Department submitted formal comments on the proposed regulations, in particular endorsing the recordkeeping requirements. Because we believe that the Board's proposal is a constructive one, we advised the Board that if it retained the proposed requirements in its final rule, the Department would not proceed to impose its own requirements in this area. For your further information, I am enclosing a copy of our letter to the Board on this matter.

I am hopeful that the Federal Reserve Board will adopt its record-keeping proposal. The information these records will provide, together with the more effective Title VIII enforcement powers we have proposed, should contribute to improved civil rights compliance on the part of not only FHA insured lenders, but the entire mortgage lending

community as well.

Sincerely yours,

Wies

Carla A. Hills

J

We would like to provide you with the comments of the Department
of Housing and Urban Development (HUD) on the revision of Regula-
tion B proposed by the Board of Governors of the Federal Reserve
System (Board) to implement the 1976 amendments to the Equal Credit
Opportunity Act (ECQA), as published in the Federal Register on
July 20, 1976 (41 F.R. 29870-2988).

We understand that the Board intends to publish revised Regulation
B a second time for public comment, taking into account written
comments and hearings held on August 12 and 13, 1976, and also
intends to publish revised Regulation B in final form prior to the
end of the calendar year with the revised Regulation effective
March 23, 1977, the effective date of the 1976 amendments to the
ECOA. We will focus our comments on revised Regulation B as
published for public comment on areas of common concern to both the
Board and HUD because the ECOA, as amended, and Title VIII of the
Civil Rights Act of 1968, as amended (42 USC 3601-3619), both
prohibit discrimination in the financing of housing. We do not
address questions concerning the ECOA, as amended, that are not
related to Title VIII.

Title VIII of the Civil Rights Act of 1968, the Fair Housing Act,
states that it is the policy of the United States to provide, within
constitutional limitations, for fair housing throughout the nation.
The authority and responsibility for administering the Act are vested
in the Secretary of HUD. In addition, the Act directs the Secretary
of HUD and other Federal Executive Departments and Agencies to
administer their programs and activities relating to housing and
urban development in a manner that affirmatively furthers the purposes
of Title VIII.

2

The Fair Housing Act specifically prohibits discrimination in the financing of housing. While HUD has under active consideration, the publication of substantive and procedural regulations implementing Section 805, subject regulations will not be published, provided the Board adopts, in a revised Regulation B, Section 202.13 as previously published.

The 1976 amendments to the ECOA prohibit, effective March 23, 1977, discrimination in the financing of housing as well as other credit transactions. The Board is responsible for issuing substantive rules under Section 703(a) of the ECOA, as amended, and has specific authority to grant exemptions to certain classes of transactions under Section 703(a) and 705 (g), as amended, and to provide rules, regulations, and interpretations upon which creditors can rely in good faith, Section 703 (e), as amended. Other Federal Executive Departments and Agencies designated in the ECQA have authority (Section 704 (d)) to issue procedural rules for securing compliance with the provisions of the ECOA.

It would be highly desirable from the point of view of creditors subject to the ECOA, as amended, and Title VIII, as well as persons who have been or may be discriminated against in the financing of housing, and Federal Executive Departments and Agencies which have authority or responsibility under the ECOA and Title VIII, if substantive and procedural rules were consistent and coordinated to the greatest extent feasible under both Acts.

In line with these general comments, we have the following recommendations for additions or changes to the revised Regulation B as published on July 20, 1976:

(1) The Preamble to Regulation B should note that Federal'

Executive Departments and Agencies, as well as creditors,
have responsibilities and duties with respect to non-
discrimination in the financing of housing under both
the ECOA, as amended, and Title VIII. It should state
that while the Board has the exclusive authority to issue
substantive rules and regulations and to grant exemptions
and provide interpretations under the ECOA, and while HUD
has authority and responsibility for administering
Title VIII, Federal Executive Departments and Agencies,
creditors, and protected persons should be able to rely on
a single set of substantive rules relating to nondiscrimina-
tion in the financing of housing with respect to the common

3

(2) The Preamble to the Regulation should state that record
keeping by real estate creditors is essential for, at
least the following reasons:

(a) To provide for the establishment of effective compliance
programs and procedures by Federal Executive Departments
and Agencies in discharging their statutory responsibi-
lities;

(b) To assure the availability of records and data of
real estate creditors in administrative actions; and,

(c) To preserve relevant evidence in any court actions.
(3) The Preamble to the Regulation, or proposed supplement I,
could indicate the Board's intent to consult and closely
coordinate with HUD on any interpretations where such
exemptions or interpretations relate to real estate
creditors subject to Title VIII. Further, it could
indicate that the Board and HUD will pursue the development
of a procedure where HUD would approve or disapprove pro-
posed rules proposed by the Board and the publication of
such rules in the Federal Register would so indicate.

We believe that revised Regulation B, as proposed, represents a sound
approach to mutual problem areas, both under the ECOA and Title VIII.
Sincerely,

J

James H. Blair

Assistant Secretary

Copies to:

Robert Bloom, Acting Comptroller of the Currency
Robert E. Barnett, FDIC

Richard Platt, Jr., FHLBB

Philip Jackson, FRB

Stanley Pottinger, Dept., of Justice

80-991 - 77 - 36