Whether you can collect government monitoring information (GMI) depends on whether the loan is considered a “home purchase loan,” “home improvement loan,” or a “refinancing.”

• Regulation B prohibits banks from collecting information about race, color, religion, national origin, or sex unless they are required to collect information required by regulations such as Regulation C (the HMDA rules). 12 CFR 1002.5(b).

• Regulation C requires banks to collect GMI about applications for home purchase loans, home improvement loans, and refinancings. However, this data collection requirement does not apply to applications for “[t]emporary financing (such as bridge or construction loans).” 12 CFR 1003.4(a); (d)(3).

Therefore, if a consumer is applying for a “temporary” loan, you would not be required to collect any GMI, and you would violate Regulation B if you asked about the applicant’s race, color, religion, national origin, or sex.

The Regulation C commentary fleshes out the distinction between temporary financing and home purchase loans. For example, a “combined construction/permanent loan” would be considered a “home purchase loan” for which you must collect GMI. But an application for a construction-only loan that is not made in combination with an application for a permanent loan would not be considered a home purchase loan.

 Comment 5, Official Staff Commentary, 12 CFR 203.2(h): 

5. Construction and permanent financing. A home purchase loan includes both a combined construction/permanent loan and the permanent financing that replaces a construction-only loan. It does not include a construction-only loan, which is considered “temporary financing” under Regulation C and is not reported.