[Federal Register Volume 61, Number 250 (Friday, December 27, 1996)]
[Proposed Rules]
[Pages 68168-68172]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-32305]
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FEDERAL RESERVE SYSTEM
12 CFR Part 203
[Regulation C; Docket No. R-0951]
Home Mortgage Disclosure
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Proposed rule.
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SUMMARY: The Board is publishing for comment proposed revisions to
Regulation C (Home Mortgage Disclosure). The revisions would implement
the amendments to the Home Mortgage Disclosure Act included in the
Economic Growth and Regulatory Paperwork Reduction Act of 1996. Those
amendments increase the exemption threshold for depository institutions
and modify certain
[[Page 68169]]
disclosure requirements. The Board also proposes to extend the
information collection authority under the Paperwork Reduction Act for
another three years, and to make technical amendments to the
transmittal sheet accompanying the loan/application register.
DATES: Comments must be received on or before February 25, 1997.
ADDRESSES: Comments should refer to Docket No. R-0951, and may be
mailed to William W. Wiles, Secretary, Board of Governors of the
Federal Reserve System, 20th Street and Constitution Avenue, N.W.,
Washington, D.C. 20551. Comments also may be delivered to Room B-2222
of the Eccles Building between 8:45 a.m. and 5:15 p.m. weekdays, or to
the guard station in the Eccles Building courtyard on 20th Street, N.W.
(between Constitution Avenue and C Street) at any time. Comments
received will be available for inspection in Room MP-500 of the Martin
Building between 9:00 a.m. and 5:00 p.m. weekdays, except as provided
in 12 CFR 261.8 of the Board's rules regarding availability of
information.
FOR FURTHER INFORMATION CONTACT: Jane Jensen Gell or Manley Williams,
Staff Attorneys, Division of Consumer and Community Affairs, Board of
Governors of the Federal Reserve System, at (202) 452-3667 or (202)
452-2412; for the hearing impaired only, Dorothea Thompson,
Telecommunications Device for the Deaf, at (202) 452-3544.
SUPPLEMENTARY INFORMATION:
I. Background
On September 30, the President signed into law the Economic Growth
and Regulatory Paperwork Reduction Act of 1996 (the 1996 Act) (Pub. L.
104-208, 110 Stat. 3009) . The 1996 Act, in part, amends the Home
Mortgage Disclosure Act of 1975 (HMDA) (12 U.S.C. 2801 et seq.). HMDA
requires most mortgage lenders located in metropolitan areas to collect
data about their housing-related lending activity. Annually, lenders
must file reports with their federal supervisory agencies and make
disclosures available to the public. The Board's Regulation C (12 CFR
Part 203) implements HMDA.
II. Proposed Revisions
A. Increasing the Exemption Based on Asset Size
Currently, depository institutions with assets of $10 million or
less are exempt from HMDA. The 1996 Act increases this exemption for
depository institutions by adjusting the $10 million figure by the
change since 1975 in the Consumer Price Index for Urban Wage Earners
and Clerical Workers (CPIW)--rounded to the nearest million. The Board
proposes to revise Sec. 203.3(a)(1)(ii) of Regulation C to implement
this amendment to section 309 of HMDA (12 U.S.C. 2808).
The Bureau of Labor Statistics calculates the CPIW monthly and
publishes the data with a lag of a few weeks. The seasonally adjusted
figures are available with a longer lag. Accordingly, the Board
proposes to use the ``not seasonally-adjusted'' figure. The 1996 Act
calls for an initial adjustment based on the percentage by which the
CPIW for 1996 exceeds the CPIW for 1975. To ensure that the public is
informed of the new threshold promptly, the Board intends to publish a
notice with the adjusted threshold as soon as the December 1996 data
become available in early January. Based on the increase in the CPIW
from December 1975 to October 1996, the adjusted figure would be $27.9
million, rounded to an exemption threshold of $28 million. Thus,
institutions with assets of $28 million or less would be exempt from
data collection in 1997.
Institutions covered during 1996 but exempt subsequently because of
the new threshold (for example, institutions with assets of $17
million) are required to collect data for all of 1996, and to submit
those data by March 1, 1997. Such institutions will not be subject to
the data collection requirements for 1997.
The 1996 Act provides that the exemption is to be adjusted annually
to reflect future changes in the CPIW. The Board could make the
adjustment using December data or, if it wanted to announce the new
threshold by year-end, using November data. To make the year-to-year
adjustments consistent with the initial adjustment, the Board proposes
to base the adjustments on December data and publish the results in the
Federal Register as soon as those data become available in January. If
the adjustment uses December data the threshold might be higher, but
some institutions that are actually exempt might have to collect the
data in the early weeks of the year because of the uncertainty as to
the threshold. For example, one year the threshold could be $29 million
based on November data and $30 million based on December data. An
institution with assets of $28.5 million as of that December 31 might
want the Board to use the November data and publish the threshold in
December so it could cease data collection beginning January 1. An
institution with assets of $29.5 million might want the Board to use
the December data so that it would qualify for exemption, even though
the institution would have collected data for the first few weeks of
January before the new threshold was published. The Board requests
comment on whether earlier notice based on November data is preferable
to a potentially higher exemption threshold using December data.
Conforming amendments relative to the asset exemption would be made
in several sections of Appendix A--Form and Instructions for Completion
of HMDA Loan/Application Register, and in Sec. 203.3 of Supplement I--
Staff Commentary.
Section 309 of HMDA (12 U.S.C. 2808), as amended in 1991, requires
the Board, in consultation with the Secretary of the Department of
Housing and Urban Development, to establish an exemption for
nondepository institutions comparable to the exemption for depository
institutions. The 1996 Act amends section 309 by adding a parenthetical
stating that the comparable exemption shall be ``determined without
regard to the adjustment made by subsection (b) [the CPIW
adjustments].'' Currently, a nondepository institution with offices in
an MSA is exempt from HMDA if it had assets of $10 million or less as
of the preceding December 31 and originated fewer than 100 home-
purchase loans in the preceding calendar year. In 1996, depository
institutions with assets of $28 million or less, on average, reported
about 50 HMDA loan/application register entries apiece. Accordingly,
the Board, in consultation with the Secretary, has determined that no
change to the existing coverage of nondepository institutions is
appropriate at this time.
B. Elimination of the Branch Disclosure Requirement
Currently, HMDA provides that within ten business days of receiving
the disclosure statement from the Federal Financial Institutions
Examination Council (FFIEC), an institution must make a copy of the
statement available to the public for inspection and copying in at
least one branch office in each additional MSA where the institution
has offices. The institution must also make the disclosure statement
available at its home office. Regulation C added the requirement that
an institution must post a general notice concerning the availability
of HMDA data at the institution's home office and at each physical
branch in an MSA.
The 1996 Act amends section 304 of HMDA (12 U.S.C. 2803) to specify
that
[[Page 68170]]
an institution need not make the information available at branch
offices if the institution posts a notice and makes the information
available upon a written request sent to the home office. The proposal
amends Sec. 203.5(b) concerning the public disclosure of an
institution's mortgage loan disclosure statement accordingly.
For an institution choosing to make the HMDA data available upon
written request, the 1996 Act requires a notice stating that the
information is available from the home office upon written request.
Currently, Sec. 203.5(e) requires an institution to post--at the home
office and at each branch office--a general notice about the
availability of its HMDA data. Upon request, the institution must
promptly provide the location where the data is available, and at its
option may include the location in the notice. The Board believes the
current provisions provide adequate notice and that requiring more
detailed notices would not produce sufficient additional benefit to the
public to justify the burden of preparing the new notices.
A literal reading of the 1996 Act could suggest that a request for
HMDA data must be sent to the home office. The Board believes that
specifying the home office as the location where requests are sent
would not improve the public availability of this information.
Accordingly, the revised Sec. 203.5(e) would allow an institution to
specify whatever address it wishes. The institution could either
provide the address promptly upon request, or include the address in
its notice.
Technical amendments to paragraphs (b) and (c) of Sec. 203.5
clarify that an institution may continue to provide the data on an MSA-
by-MSA basis. For example, if a person requests the disclosure
statement for a particular branch location, the institution may provide
just the statement for the MSA in which that branch is located.
Conforming amendments would be made in several sections in Appendix
A--Form and Instructions for Completion of HMDA Loan/Application
Register.
C. Disclosure Formats
Currently, Appendix A to Regulation C provides that an institution
may make the public disclosures available in paper or automated form (a
computer diskette, for example). The 1996 Act amends section 304 of
HMDA (12 U.S.C. 2803) to provide that an institution may not make the
information available in automated form (in place of paper) unless the
person requesting the information agrees to receiving the data in that
format. Appendix A, Section III.F. would be revised accordingly.
D. Revisions to the HMDA Loan/Application Register
The Board proposes to make three minor revisions to the HMDA loan/
application register. To comply with the requirements of the Paperwork
Reduction Act of 1995 (44 U.S.C. ch. 3506; 5 CFR 1320 Appendix A.1),
the following text would be added: ``An agency may not conduct or
sponsor, and an organization is not required to respond to, a
collection of information unless it displays a currently valid OMB
control number. The OMB control number for the HMDA-LAR is 7100-0247.''
In addition, to facilitate prompt communication with a respondent, a
blank for the respondent's facsimile number would be added to the
transmittal sheet. To reduce burden, the Board proposes to modify the
transmittal sheet so that a respondent will no longer have to enter the
name and address of its supervisory agency.
III. Form of Comment Letters
Comment letters should refer to Docket No. R-0951. The Board
requests that, when possible, comments be prepared using a standard
courier typeface with a type size of 10 or 12 characters per inch. This
will enable the Board to convert the text into machine-readable form
through electronic scanning, and will facilitate automated retrieval of
comments for review. Comments may also be submitted on computer
diskettes, using either the 3.5'' or 5.25'' size, in any IBM-compatible
DOS-based format. Comments on computer diskettes must be accompanied by
a paper version.
IV. Regulatory Flexibility Analysis
In accordance with section 3(a) of the Regulatory Flexibility Act
(5 U.S.C. 603), the Board's Office of the Secretary has reviewed the
proposed amendments to Regulation C. Overall, the amendments are
expected to reduce the burden on small entities. The proposed
regulatory revisions implement the 1996 Act which, in part, increases
the exemption threshold for depository institutions. The 1996 Act also
creates an alternative means for making branch disclosures available. A
final regulatory flexibility analysis will be prepared after
consideration of comments received during the comment period.
V. Paperwork Reduction Act
A. Paperwork Burden
The proposed revisions to the information collection requirements
are found in 12 CFR 203.3, 203.5 and Appendix A to Part 203 and
implement the data collection and reporting requirements established by
the Home Mortgage Disclosure Act. The respondents are mortgage lenders
in metropolitan statistical areas. Under the act, each respondent must
make its loan/application register available to the public for three
years; and must provide for five years the disclosure statement that
the FFIEC prepares from the data submitted by the respondent. Local
public officials use the data to help identify target areas for
residential redevelopment and rehabilitations. Members of the public
use the data to help evaluate the extent to which mortgage lenders are
serving local community and housing needs.
The amendments that the Board has proposed for public comment would
decrease the number of respondents and ease compliance with the public
disclosure requirements of the regulation. Small businesses are
directly affected by the proposed amendments: many would no longer be
required to collect, report, or disclose the information.
Regulation C applies to all types of financial institutions and
other mortgage-lending institutions that meet the coverage tests. Under
the Paperwork Reduction Act, however, the Board accounts for the
paperwork burden associated with Regulation C only for state member
banks, their subsidiaries, subsidiaries of bank holding companies, and
other entities regulated by the Federal Reserve. Any estimates of
paperwork burden for other respondents are provided by the federal
agency or agencies that supervise them.
The Board estimates that the amendments' impact on the burden per
response is negligible. The estimated burden per response varies from
10 to 10,000 hours, depending on individual circumstances, with
estimated averages of 202 hours for state member banks and 160 hours
for mortgage banking subsidiaries.
It is estimated that of the 565 state member banks that are
currently covered because they exceed the $10 million asset threshold,
39 will be exempt as a result of the higher threshold. The 93 mortgage
banking subsidiaries reporting HMDA data to the Federal Reserve are and
would remain covered. The total amount of annual burden is estimated to
decrease from 129,168 hours to 121,368 (a change of approximately 6
percent) as a consequence of the higher exemption threshold. The Board
estimates that there would be no capital or start up cost associated
with these amendments,
[[Page 68171]]
and that there is no annual cost burden beyond the estimated burden
hours.
B. OMB Control Number
Under the Paperwork Reduction Act, an agency may not conduct or
sponsor, and an organization is not required to respond to, a
collection of information unless it displays a currently valid OMB
control number. The OMB control number applicable to the HMDA-LAR data
collection is 7100-0247.
C. Confidentiality
The Board has previously determined that the HMDA loan/application
register is required by law (12 U.S.C. 2801-2810; 12 CFR Part 203) and
completion of the register, submission to the appropriate federal
supervisory agency, and disclosure to the public on request are
mandatory. The data, as modified according to Appendix A of the
regulation (paragraph III.E.), are made publicly available and are not
considered confidential. Information that might identify individual
borrowers or applicants is given confidential treatment under exemption
6 of the Freedom of Information Act (5 U.S.C. 552(b)(6)).
D. Extension of Authority
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
3506; 5 CFR 1320 Appendix A.1), the Board has reviewed Regulation C
under the authority delegated to the Board by the Office of Management
and Budget. The Board proposes to extend the authority to collect the
HMDA loan/application register for three years through March 31, 2000.
E. Comments
In keeping with OMB regulations, comments are invited on: (a)
Whether the proposed collection of information is necessary for the
proper performance of the Federal Reserve's functions; including
whether the information has practical utility; (b) the accuracy of the
Federal Reserve's estimate of the burden of the proposed information
collection, including the cost of compliance; (c) ways to enhance the
quality, utility, and clarity of the information to be collected; and
(d) ways to minimize the burden of information collection on
respondents, including through the use of automated collection
techniques or other forms of information technology. Comments on the
collection of information may be sent to the Office of Management and
Budget, Paperwork Reduction Project (7100-0247), Washington, D.C.
20503, with copies to Mary M. McLaughlin, Chief, Financial Reports
Section, Division of Research and Statistics, Mail Stop 97, Board of
Governors of the Federal Reserve System, Washington, D.C. 20551.
List of Subjects in 12 CFR Part 203
Banks, banking, Consumer protection, Federal Reserve System,
Mortgages, Reporting and recordkeeping requirements.
Text of Proposed Revisions
Certain conventions have been used to highlight the proposed
revisions to the regulation. New language is shown inside bold-faced
arrows, while language that would be deleted is set off with bold-faced
brackets.
For the reasons set forth in the preamble, the Board proposes to
amend 12 CFR part 203 as follows:
PART 203--HOME MORTGAGE DISCLOSURE (REGULATION C)
1. The authority citation for part 203 continues to read as
follows:
Authority: 12 U.S.C. 2801-2810.
2. Section 203.3 would be amended by revising paragraph (a)(1)(ii)
to read as follows:
Sec. 203.3 Exempt institutions.
(a) Exemption based on location, asset size, or number of home
purchase loans. (1) * * *
(ii) The institution's total assets were [$10 million or less]
at or below the asset threshold established by the Board.
For 1997 data collection, the asset threshold is $28 million as of
December 31, 1996. For subsequent years, the Board will adjust the
threshold based on the year-to-year change in the Consumer Price Index
for Urban Wage Earners and Clerical Workers, not seasonally adjusted,
as of the month of December, with rounding to the nearest million. The
Board will publish the adjusted asset figure in January.
* * * * *
3. Section 203.5 would be amended as follows:
a. Under paragraph (b), the first sentence would be designated as
paragraph (b)(1), sentences two and three of the newly designated
paragraph (b)(1) would be removed, and a new paragraph (b)(2) would be
added;
b. Under paragraph (c), the last sentence would be revised; and
c. Under paragraph (e), the last two sentences would be revised.
The revisions and additions would read as follows:
Sec. 203.5 Disclosure and reporting.
* * * * *
(b) Public disclosure of statement. (1) A
financial institution shall make its mortgage loan disclosure statement
(to be prepared by the Federal Financial Institutions Examination
Council) available to the public at its home office no later than three
business days after receiving it from the Examination Council. [A
financial institution shall also make its disclosure statement
available to the public within ten business days in at least one branch
office in each additional MSA where the institution has offices. The
disclosure statement at a branch office need only contain data relating
to properties in the MSA where the branch office is located.]
(2) In addition, a financial institution shall either:
(i) Make its disclosure statement available to the public within
ten business days of receiving it from the Examination Council in at
least one branch office in each additional MSA where it has offices
(the disclosure statement need only contain data relating to properties
in the MSA where the branch office is located); or
(ii) Mail or deliver a copy of its disclosure statement to any
person requesting it, within 15 calendar days of receiving a written
request (the disclosure statement need only contain data relating to
properties in the MSA for which the request is made).
(c) Public disclosure of loan application register. * * * [The
modified register made available at a branch office need only contain
data relating to properties in the MSA where the branch office is
located.] The modified register need only contain data
relating to the MSA for which the request is made.
* * * * *
(e) Notice of availability. * * * Upon request, it shall promptly
provide the location of the institution's offices where the statement
is available for inspection and the address where a written
request may be sent for a copy of the data. At its option,
an institution may include [the locations] this
information in its notice.
4. Appendix A to Part 203 would be amended as follows:
a. Paragraph I.A. would be amended by redesignating the
introductory text, paragraph 1., and 2. as paragraph 1., paragraph
1.a., and paragraph 1.b., respectively;
b. Newly designated paragraph 1.a. would be revised;
c. A new paragraph 2. would be added; and
d. The undesignated paragraph EXAMPLE, would be designated as
[[Page 68172]]
paragraph 3. and would be revised. The addition and revisions would
read as follows:
Appendix A to Part 203--Form and Instructions For Completion of HMDA
Loan/Application Register
* * * * *
I. Who Must File a Report
A. Depository Institutions.
1. * * *
[1.]a. Had assets of more than [$10
million] the asset threshold for coverage as published by
the Board each year in January, and
[2.]b. * * *
2. For 1997 data collection, the asset threshold is
$28 million in total assets as of December 31, 1996.
3. Example. If on December 31 you had a
home or branch office in an MSA and your assets exceeded [$10
million] the asset threshold, you must
complete a register that lists the home-purchase and home-
improvement loans that you originate or purchase (and also lists
applications that did not result in an origination) beginning
January 1.
* * * * *
5. Paragraph III. of Appendix A to Part 203 would be amended as
follows:
a. Under paragraph D. the fourth sentence would be removed and a
new sentence and new paragraphs 1. and 2. would be added at the end;
b. Under paragraph F. the first paragraph following the heading
would be designated as paragraph 1. and revised, and the second
paragraph would be designated as paragraph 2.; and
c. Under paragraph G. the first paragraph following the heading
would be designated as paragraph 1. and a new heading would be added to
the newly designated paragraph 1., and paragraph 2. would be added
after the Home Mortgage Disclosure Act Notice.
The revisions and additions would read as follows:
* * * * *
III. Submission of HMDA-LAR and Public Release of Data
* * * * *
D. Availability of disclosure statement. * * * [You also must
make the disclosure statement available, within ten business days
after receiving it from the FFIEC, in at least one branch office in
each additional MSA where you have physical offices.] For these
purposes a business day is any calendar day other than a Saturday,
Sunday, or legal public holiday. You also must either:
1. Make your disclosure statement available to the public,
within ten business days of receiving it from the FFIEC, in at least
one branch office in each additional MSA where you have offices (the
disclosure statement need only contain data relating to properties
in the MSA where the branch office is located); or
2. Mail or deliver a copy of your disclosure statement to any
person requesting it, within 15 calendar days of receiving a written
request (the disclosure statement need only contain data relating to
the MSA for which the request is made).
* * * * *
F. Location and format of disclosed data.
1. A financial institution must make a
complete copy of its disclosure statement and modified register
available to the public at its home office. Institutions may make
these data available in [hard copy or] paper form or, if
the person requesting the data agrees, in automated form
(such as by floppy disk or computer tape). [If you have physical
branch offices in other MSAs, you must make available, in at least
one branch office in each of those MSAs, either a complete copy of
the disclosure statement or the portion of it that relates to
properties in that MSA. Similarly, a modified register at a branch
office need only reflect data concerning properties within the MSA
where the branch is located.] A modified register need
only reflect data relating to the MSA for which the request is
made.
2. * * *
G. Posters.
1. Suggested language. * * *
2. Optional information. At your option, you may
include the location where the disclosed data are available for
inspection and the address to be used for making a written
request.
* * * * *
6. Supplement I to Part 203, under Section 203.3--Exempt
Institutions, under 3(a) Exemption based on location, asset size, or
number of home-purchase loans, the second sentence of Paragraph 1.
General would be revised to read as follows:
Supplement I to Part 203--Staff Commentary
* * * * *
Section 203.3--Exempt Institutions
3(a) Exemption based on location, asset size, or number of home-
purchase loans.
1. General. * * * For example, a bank whose assets [drop to $10
million or less] are at or below the threshold
on December 31 of a given year reports data for that full calendar
year, in which it was covered, but does not report data for the
succeeding calendar year. * * *
* * * * *
By order of the Board of Governors of the Federal Reserve
System, December 16, 1996.
William W. Wiles,
Secretary of the Board.
[FR Doc. 96-32305 Filed 12-26-96; 8:45 am]
BILLING CODE 6210-01-P
