[Federal Register Volume 61, Number 184 (Friday, September 20, 1996)]
[Proposed Rules]
[Pages 49420-49425]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-24083]
========================================================================
Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
========================================================================
Federal Register / Vol. 61, No. 184 / Friday, September 20, 1996 /
Proposed Rules
[[Page 49420]]
FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 338
RIN 3064-AB72
Fair Housing
AGENCY: Federal Deposit Insurance Corporation.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The FDIC is proposing to amend its fair housing regulation by
clarifying certain nondiscriminatory advertising requirements with
regard to placement and display of the Equal Housing Lender poster. The
FDIC also proposes to offer insured state nonmember banks the option of
displaying the Equal Housing Opportunity poster required by regulations
of the U.S. Department of Housing and Urban Development and/or using
the advertising slogan ``Equal Opportunity Lender.'' The agency further
proposes to remove its fair housing recordkeeping requirements that
serve as a substitute monitoring program permitted by the Federal
Reserve Board's Regulation B, which implements the Equal Credit
Opportunity Act, and its requirement that insured state nonmember banks
maintain and report a home loan application register in accordance with
Regulation C, which implements the Home Mortgage Disclosure Act.
Instead, the FDIC will simply cross-reference Regulations B and C and
require recordation and reporting of loan denial reasons.
This action is being taken in accordance with section 303 of the
Riegle Community Development and Regulatory Improvement Act of 1994,
which requires the federal bank and thrift regulatory agencies to
review and streamline their regulations and policies in order to
improve efficiency, reduce unnecessary costs, eliminate unwarranted
constraints on credit availability, and remove inconsistencies and
outmoded and duplicative requirements. The intended effect of these
amendments is to reduce burden on insured state nonmember banks and to
conform the FDIC's fair housing regulation with those of the other
federal bank and thrift regulatory agencies.
DATES: Comments must be received on or before November 19, 1996.
ADDRESSES: Written comments should be addressed to the Office of the
Executive Secretary, FDIC, 550 17th Street, NW., Washington, DC 20429.
Comments also may be hand delivered to Room 402, 1776 F Street, NW.,
Washington, DC between 8:30 a.m. and 5:00 p.m. on business days, or
sent by facsimile transmission (202-898-3838) or by Internet
(comments@fdic.gov). Comments received will be available for public
inspection and photocopying at the FDIC Public Information Center, Room
100, 801 17th Street, NW., Washington, DC between 9 a.m. and 4:30 p.m.
on business days.
FOR FURTHER INFORMATION CONTACT: Michael R. Evans, Fair Lending
Analyst, Fair Lending Section, Division of Compliance and Consumer
Affairs, (202) 942-3091; or Lori J. Sommerfeld, Attorney, Regulation
and Legislation Section, Legal Division, (202) 898-8515; Federal
Deposit Insurance Corporation, 550 17th Street, NW., Washington, DC
20429.
SUPPLEMENTARY INFORMATION:
I. Background
The FDIC's fair housing regulation, 12 CFR part 338, contains two
parts: nondiscriminatory advertising requirements (subpart A) and
recordkeeping requirements (subpart B). Subpart A prohibits insured
state nonmember banks from discriminating in home loan advertising and
sets forth the text of the Equal Housing Lender poster that must be
displayed on bank premises. The intent of subpart A is to prevent
discrimination in connection with any residential real estate-related
transaction on the basis of race, color, sex, religion, national
origin, familial status or handicap. The regulation specifies that this
requirement may be satisfied by including in written and visual
advertisements a copy of the logotype with the Equal Housing Lender
legend contained in the Equal Housing Lender poster or, in oral
advertisements, by including a statement that the bank is an ``Equal
Housing Lender.'' The advertising requirements enforce section 805 of
Title VIII of the Civil Rights Act of 1968 (the Fair Housing Act), as
amended by the Fair Housing Amendments Act of 1988 (Pub. L. 100-430,
102 Stat. 1636).
The purpose of subpart B (recordkeeping requirements) is two-fold.
First, it requires certain insured state nonmember banks to request and
retain information regarding the race, national origin, sex, marital
status and age of applicants for a home purchase loan. The purpose of
collecting and retaining this information is to monitor an
institution's compliance with the Equal Credit Opportunity Act of 1974
(ECOA) (15 U.S.C. 1691-91f). Subpart B also serves as a substitute
monitoring program permitted by Regulation B of the Federal Reserve
System. See 12 CFR 202.13(d). However, the data collection and
retention requirements of subpart B go beyond the requirements of
Regulation B. For example, insured state nonmember banks that have no
office located in a primary metropolitan statistical area (PMSA) or a
metropolitan statistical area (MSA), or that have total assets of $10
million or less, are also required to request and retain information on
the location (street address, city, state, and zip code) of the
property to be purchased. Further, insured state nonmember banks that
have an office located in a PMSA or an MSA and that have total assets
exceeding $10 million are required to request and retain essentially
all of the information listed on the model Residential Loan Application
Form contained in appendix B of Regulation B (see 12 CFR part 202,
appendix B). This includes such data as employment history of the
applicant, number of dependents, assets and liabilities, detailed
characteristics of the subject property, and the loan request. Appendix
B specifies that institutions may delete any information requested on
the model form provided that appropriate notices concerning optional
use of titles and disclosure of certain income information and
limitations concerning marital status requests are provided. Thus, the
other information on the model form is not required by Regulation B.
Second, subpart B notifies insured state nonmember banks of their
duty to maintain and report a register of home loan applications, and
to update the register on a timely basis, in accordance
[[Page 49421]]
with the Federal Reserve Board's Regulation C (12 CFR part 203), which
implements the Home Mortgage Disclosure Act (HMDA). Institutions are
subject to HMDA and Regulation C if their assets exceed $10 million and
they have offices located in a PMSA or MSA. Information collected under
the provisions of this subpart must include the type of loan requested,
the purpose of the loan, whether the loan was approved or denied
(including an option for collecting denial reasons for disapproved
loans), and information on the purchaser, if the loan was sold. This
information is consistent with Regulation C.
Subpart B, however, goes beyond the data reporting requirements of
Regulation C. Regulation C requires the collection and reporting of
race, sex and income of applicants for home loans only for institutions
with assets of $30 million or more that have offices located in a PMSA
or MSA. Additionally, Regulation C specifies that the loan register
must be current within 30 calendar days after the end of each calendar
quarter in which final action is taken. Subpart B extends the
collection and reporting of the race, sex, and income of applicants for
home loans to institution with assets between $10 million and $30
million and requires that an institution enter all required data onto
the register within 30 calendar days after final disposition of the
loan application.
On September 23, 1994, Congress passed the Riegle Community
Development and Regulatory Improvement Act (Pub. L. 103-325, 108 Stat.
2160) (CDRIA). Section 303 of CDRIA requires the federal bank and
thrift regulatory agencies to: (1) review and streamline their
regulations and written policies in order to improve efficiency, reduce
unnecessary cost, eliminate unwarranted constraints on credit
availability and remove inconsistencies and outmoded and duplicative
requirements; (2) work jointly with other federal banking regulators to
make uniform all regulations and guidelines implementing common
statutory or supervisory policies; and (3) submit a joint progress
report to Congress, due two years from the date the legislation was
enacted.
In response to the mandate of section 303 of CDRIA, the FDIC began
a systematic review of its regulations and written policies. On
December 6, 1995, the FDIC solicited public comment to assist the
agency in identifying ways in which its regulations and written
policies could be streamlined and made consistent with those of the
other federal bank and thrift regulatory agencies. See 60 FR 62345. As
a result of the agency's internal review and public comments received,
the FDIC has determined that it is appropriate to revise 12 CFR part
338 to clarify or eliminate certain provisions in order to reduce
burden on insured state nonmember banks and to make the FDIC's fair
housing regulation consistent with those of the other federal bank and
thrift regulators.
II. The Proposed Rule
A. General
The FDIC is proposing to revise its fair housing regulation, 12 CFR
part 338, by clarifying certain nondiscriminatory advertising
requirements with regard to placement and display of the Equal Housing
Lender poster. The FDIC also proposes to offer insured state nonmember
banks the option of displaying the Equal Housing Opportunity poster
required by the U. S. Department of Housing and Urban Development (HUD)
and/or using the slogan ``Equal Opportunity Lender.'' The agency
further proposes to remove its fair housing recordkeeping requirements
that serve as a substitute monitoring program permitted by the Federal
Reserve Board's Regulation B, which implements ECOA. Finally, the
agency proposes to remove its requirement that insured state nonmember
banks maintain a home loan application register consistent with that
required to be maintained by the Federal Reserve Board's Regulation C,
which implements HMDA, and a requirement that those institutions report
race, sex and income of applicants. Instead, the FDIC will simply
cross-reference Regulations B and C and require recordation and
reporting of loan denial reasons.
B. Subpart A--Nondiscriminatory Advertising
The FDIC proposes to revise subpart A to clarify certain
nondiscriminatory advertising requirements that currently reference
HUD's regulations, to allow the FDIC's Equal Housing Lender poster or
HUD's Equal Housing Opportunity poster to be displayed by insured state
nonmember institutions, as well as to allow the option of using either
the slogan ``Equal Housing Lender'' or ``Equal Opportunity Lender'' in
oral advertisements, and to clarify the display of the Equal Housing
Lender poster.
As a result of HUD's regulatory review in accordance with President
Clinton's March 4, 1995, executive memorandum directing all federal
agencies to simplify their regulations, HUD recently removed part 109
(Fair Housing Advertising) from its regulations (24 CFR part 109) and
intends to relegate the information contained in the former part 109 to
other non-codified guidance. See 61 FR 14378 (April 1, 1996).
Accordingly, the FDIC is proposing to revise Sec. 338.1 to eliminate a
reference to part 109. Section 338.1 is also proposed to be revised to
reflect the proposed changes to Secs. 338.3 and 338.4 discussed below.
The FDIC proposes to add a new section to Sec. 338.3 advising all
insured state nonmember banks to refer to HUD for further guidance
concerning fair housing advertising beyond that set forth in
Sec. 338.3. No changes are proposed for Sec. 338.2, Definitions.
The FDIC proposes to revise the nondiscriminatory advertising
requirements set forth in Sec. 338.3. Currently, insured state
nonmember banks are required to include in all written and visual
advertisements a copy of the Equal Housing Lender logotype and legend
contained in the Equal Housing Lender poster prescribed in Sec. 338.4,
or, with respect to oral advertisements, a statement that the bank is
an ``Equal Housing Lender.'' Under the proposed revision to Sec. 338.3,
insured state nonmember banks will have the option of using a copy of
the Equal Housing Opportunity logotype and legend contained in the
Equal Housing Opportunity poster as prescribed in Sec. 110.25(a) of
HUD's rules and regulations (24 CFR 110.25(a)) in written and visual
advertisements. With respect to oral advertisements, insured state
nonmember banks will also have the option of using the slogan ``Equal
Opportunity Lender'' in lieu of the slogan ``Equal Housing Lender.''
The optional use of either poster or slogan is designed to provide
flexibility for institutions that offer a broader array of loan
products than mortgage loans (e.g., auto, consumer, and credit card
extensions of credit). Comments from a trade organization, which were
received in response to the FDIC's December 6, 1995, solicitation of
comments, also suggest that the use of ``Equal Opportunity Lender'' is
more understandable within the banking industry.
The FDIC considered eliminating its Equal Housing Lender poster.
However, eliminating the FDIC's poster requirement would result in all
insured state nonmember banks having to replace existing FDIC posters
and display instead the Equal Housing Opportunity poster prescribed by
HUD. Pursuant to Sec. 110.10(c) of HUD's regulations (24 CFR
110.10(c)), lenders that engage in residential real estate-
[[Page 49422]]
related transactions must post and maintain a fair housing poster at
all of their places of business which participate in covered
activities. Failure to display a fair housing poster is deemed prima
facie evidence of a discriminatory housing practice under Sec. 110.30
of HUD's regulations (24 CFR 110.30). To eliminate the FDIC's poster
would place an undue burden on those institutions that currently
display the FDIC poster since they would be required to replace those
posters with the HUD poster. Consequently, the FDIC believes that the
most prudent and least burdensome course of action is to offer insured
state nonmember banks the option of displaying either fair housing
poster. However, the FDIC seeks comments on this issue.
The proposed rule would also clarify display of the poster.
Currently, Sec. 338.4 requires the poster to be conspicuously
displayed, ``* * * in any public lobby and area within the bank where
deposits are received or where such loans are made in a manner clearly
visible to the general public entering such areas.'' This has created
some confusion regarding whether multiple posters must be displayed and
whether the posters should be displayed only in the lobby or public
area in the vicinity of where loans are made or also in the individual
office of the loan officer. In order to create consistency and
eliminate confusion among insured state nonmember banks, the proposed
revision to Sec. 338.4 will allow either poster, as discussed above, to
be displayed in a single central location within the bank where
deposits are received or where such home loans are made. Regardless of
which poster a bank chooses to display, the poster must be displayed in
a manner clearly visible to the general public entering the area,
either where deposits are received or where home loans are made, where
the poster is displayed.
C. Subpart B--Recordkeeping Requirements
The FDIC is proposing to revise subpart B to reduce data collection
and reporting burden on insured state nonmember banks and to make the
FDIC's recordkeeping and reporting requirements consistent with those
of the other federal bank and thrift regulatory agencies. Specifically,
the proposed revision will eliminate all recordkeeping and reporting
requirements that exceed the recordkeeping and reporting requirements
of Regulations B and C. However, the proposal will require that insured
state nonmember banks and other lenders that are required to report
HMDA data to the FDIC pursuant to Regulation C also report reasons for
denial of home loan applications. This data is currently optional under
Regulation C.
Section 338.6 currently contains five definitions relevant to
subpart B: ``application'', ``bank'', ``dwelling'', ``home improvement
loan'', and ``home purchase loan''. The FDIC proposes to revise
Sec. 338.6 by eliminating the definitions for application, dwelling,
home improvement loan, and home purchase loan. These definitions have
created some confusion within the industry since Regulations B and C
contain similar, but not always identical, definitions. For example,
the term dwelling as defined in Sec. 338.6 includes, but is not limited
to, an individual condominium, cooperative unit, or mobile or
manufactured home. However, the term dwelling as defined in Regulation
B further limits the term to a structure containing one to four units.
Another example is the definition of home improvement loan. Section
338.6 states, in part, that the borrower must state that the loan is to
be used ``for the purpose of repairing, rehabilitating, or remodeling a
dwelling'', while Regulation C requires the borrower to use the loan
for ``the purpose, in whole or in part, of repairing, rehabilitating,
remodeling or improving a dwelling or the real property on which it is
located.'' A statement by the borrower is not a determining factor
under Regulation C. Eliminating the definitions in part 338 will
automatically subject insured state nonmember banks to the relevant
definitions in Regulations B and C and create consistency.
The FDIC also proposes to revise Sec. 338.6 to include a definition
for controlled entity, a term that is found in Sec. 338.9. Although
part 338 contained a definition for ``controlled entity'' when the
regulation was first promulgated in 1978, the definition was
inadvertently dropped when part 338 was last amended in 1991. That
definition, which is ``a corporation, partnership, association, or
other business entity with respect to which a bank possesses, directly
or indirectly, the power to direct or cause the direction of management
and policies, whether through the ownership of voting securities, by
contract, or otherwise,'' is being reinstated.
Under the current provisions of Sec. 338.7, all insured state
nonmember banks are required to collect data on the race or national
origin, sex, age, and marital status of applicants for a home purchase
loan in order to monitor an institution's compliance with the ECOA.
However, the data collection and retention requirements of Sec. 338.7
go beyond the requirements of Regulation B. For example, institutions
that have no office located in a PMSA or MSA, or which have total
assets of $10 million or less, are also required to request and retain
information on the location (street address, city, state, and zip code)
of the property to be purchased. Further, insured state nonmember banks
that have an office located in a PMSA or MSA and that have total assets
exceeding $10 million are required to request and retain essentially
all of the information listed on the model Residential Loan Application
Form contained in Appendix B of Regulation B (See 12 CFR part 202,
appendix B). This includes such data as employment history of the
applicant, number of dependents, assets and liabilities, detailed
characteristics of the subject property, and the loan request. Appendix
B of Regulation B provides that creditors may delete any of the
information requested provided the appropriate notices concerning the
optional use of courtesy titles, disclosure of certain income, and
limitations concerning marital status are included.
Comments received from the community bankers in response to the
FDIC's December 6, 1995, general solicitation of comments indicate that
the most difficult problems with the documentation come from the
additional data required by the current provisions of Sec. 338.7. The
proposed revisions to Sec. 338.7 would require all insured state
nonmember banks to collect only the fair housing data (age, sex,
marital status and race or national origin) that is already required by
Regulation B. The mandatory collection of the additional data currently
required by Sec. 338.7 is considered unnecessary as collection of
these, or similar data, is standard industry practice. Under the
proposal, the burden of collecting the required additional information
will be eliminated. The FDIC considered the complete removal of
Sec. 338.7 because, absent a specific requirement by the FDIC in part
338, all insured state nonmember banks would still be required by
Regulation B to collect information about the applicant's race and
other personal characteristics in applications for certain dwelling-
related loans even without this section. However, the FDIC has opted in
this proposal to provide a cross-reference to put insured state
nonmember banks on notice of the need to comply with the Regulation B
requirements. The FDIC
[[Page 49423]]
solicits comments on the necessity and usefulness of this cross-
reference.
Section 338.8 currently requires insured state nonmember banks with
assets exceeding $10 million that have offices located in a PMSA or an
MSA to collect data regarding applications for, and originations and
purchases of, home purchase loans and home improvement loans for each
calendar year. Section 338.8 also requires insured state nonmember
banks to update the HMDA home loan application register within 30 days
of final action on each application. Further, Sec. 338.8 requires that
all institutions subject to Regulation C report data on the sex, race
or national origin, and income of applicants. Such data are optional
under Regulation C for institutions with assets between $10 million and
$30 million.
The FDIC proposes to revise Sec. 338.8 to require institutions to
comply only with the provisions of the Federal Reserve Board's
Regulation C. For calendar year 1995, the FDIC had 3,052 institutions
report data pursuant to Sec. 338.8. This revision would eliminate the
requirement for reporting data on the sex, race or national origin, and
income of applicants for approximately 500 institutions that have
assets between $10 million and $30 million.
The FDIC is also proposing to revise Sec. 338.8 to require those
institutions that are subject to Regulation C to collect and report the
reasons for denial of each loan application. The reporting of denial
reasons is currently optional under Regulation C. By requiring this
data to be mandatory, Sec. 338.8 would impact all of the 3,052
institutions that currently report HMDA data to the FDIC. However, a
review of the 1995 HMDA data indicates that, while these data are
optional, 2,171 of the FDIC's 3,052 reporting institutions opted to
report denial reasons on at least some of their applications for 1995.
Requiring the reporting of the denial reasons will make the FDIC's
reporting requirements consistent with the Office of the Thrift
Supervision and the Office of the Comptroller of the Currency, which
also requires the reporting of the denial reasons.
See 12 CFR 528.6 and 12 CFR 27.3(a)(1). While the mandatory
reporting of denial reasons is a new requirement for insured state
nonmember banks, the FDIC believes the burden is offset by the amount
of required data being eliminated under the revised provisions of
Sec. 338.7 and elimination of the reporting requirement of sex, race or
national origin, and income of home loan applicants for institutions
having assets between $10 million and $30 million that are subject to
Regulation C. We further believe that the reporting of denial reasons
are data that are extremely useful in preventing and detecting unlawful
discriminatory lending practices.
By requiring institutions to follow only Regulation C, the proposed
revision will require the loan application register to be updated
within 30 days of the end of each quarter in which final action is
taken. This will also make the FDIC consistent with the regulations of
the Office of Thrift Supervision and the Office of the Comptroller of
the Currency.
The FDIC also proposes to revise Sec. 338.5, which describes the
purpose of subpart B, to reflect the changes to Secs. 338.6, 338.7,
338.8 and 338.9.
Regulatory Flexibility Act
The Board of Directors, in accordance with the Regulatory
Flexibility Act (5 U.S.C. 606(b)), has reviewed and approved this
proposed rule, and in so doing, certifies that this rule will not have
a significant economic impact on a substantial number of small
entities. This proposed rule primarily streamlines part 338 by
clarifying or removing unnecessary provisions. The Board of Directors
invites comment on this matter.
Paperwork Reduction Act
The proposed regulation contains two collections of information
subject to approval by the Office of Management and Budget (OMB) under
the Paperwork Reduction Act of 1980 (44 U.S.C. 3504(h)).
The collection of information requirements in this proposed
regulation are contained in 12 CFR 338.7 and 338.8 and concern
information on certain home loan applications. This information is
required in order to monitor institutions compliance with the Equal
Credit Opportunity Act of 1974 (ECOA) and the Fair Housing Act of 1968,
as amended by the Fair Housing Act of 1988. The respondents/
recordkeepers are for-profit financial institutions, including small
businesses.
The first collection, 12 CFR 338.7, is imposed on insured state
nonmember banks by the Federal Reserve Board's Regulation B (Equal
Credit Opportunity). This recordkeeping requirement, found at
Sec. 338.7, has been approved through October 31, 1998, by the OMB in
accordance with the Paperwork Reduction Act under control number 3064-
0085.
As explained in the preamble, subpart B of part 338 currently
requires insured state nonmember banks to collect information about a
home loan applicant's race and other personal characteristics in order
to comply with Regulation B (specifically, 12 CFR 202.13). Section
338.7 of the FDIC's current regulations serves as a substitute
monitoring program permitted by Regulation B, which implements ECOA.
However, the current requirements go beyond those of Regulation B by
imposing additional data collection requirements upon certain insured
state nonmember banks. Nevertheless, the proposed revisions will not
affect the annual burden per respondent/recordkeeper as the required
data being eliminated are data that are collected, with some variances,
pursuant to standard industry practice. Accordingly, the estimated
305,300 approved annual burden hours, which was based on 6500
respondents, under the current requirements are only reduced because
fewer insured state nonmember banks are in existence now than at the
time of the last burden estimate. Thus, the total annual burden hours
for the current 6500 respondents are estimated to be 279,500 hours or
43 hours per respondent.
The second collection, found at Sec. 338.8, has been approved
through July 31, 1997, by the OMB in accordance with the requirements
of the Paperwork Reduction Act under control number 3064-0046. The FDIC
is eliminating in this proposal its requirement that insured state
nonmember banks (except those that are exempt from HMDA and Regulation
C) maintain a loan application register identical to that prescribed by
Regulation C. The proposed rule would eliminate the FDIC's separate
recordkeeping and reporting requirements contained in Sec. 338.8 and
rely instead upon Regulation C. However, Regulation C currently makes
reporting of home loan denial reasons optional. The FDIC would require
insured state nonmember banks that are subject to HMDA and Regulation C
to retain and report such data. However, the estimated annual burden
hours, currently 45.36 hours per respondent or 145,833 annual burden
hours, are not affected by the proposed changes since optional data are
included in the estimated annual burden hours. Nevertheless, the
estimated annual burden hours are affected both by a reduction in
respondents (currently 3,052 versus the previous 3,215) and a reduction
in the number of loan entries (currently 1,500,000 versus the previous
1,750,000). The 3052 institutions currently subject to this collection
are expected to use the HMDA loan application register to report data
on 1.5
[[Page 49424]]
million loans and applications annually. It takes five minutes to
complete an entry on one loan. Thus, the total annual burden is 125,000
burden hours or 40.96 hours per respondent.
Comments on the collection of information should be sent to the
Office of Management and Budget, Paperwork Reduction Project,
Washington, DC 20503, with copies of such comments to be sent to Steven
F. Hanft, Office of the Executive Secretary, Room F-453, Federal
Deposit Insurance Corporation, 550 17th Street, NW., Washington, DC
20429.
List of Subjects in 12 CFR Part 338
Advertising, Banks, Banking, Civil rights, Credit, Fair housing,
Mortgages, Reporting and recordkeeping requirements, Signs and symbols.
For the reasons explained in the preamble, the Federal Deposit
Insurance Corporation proposes to amend 12 CFR part 338 as set forth
below.
1. The table of contents for part 338 is revised to read as
follows:
PART 338--FAIR HOUSING
Subpart A--Advertising
Sec.
338.1 Purpose.
338.2 Definitions applicable to subpart A of this part.
338.3 Nondiscriminatory advertising.
338.4 Fair housing poster.
Subpart B--Recordkeeping
338.5 Purpose.
338.6 Definitions applicable to subpart B of this part.
338.7 Recordkeeping requirements.
338.8 Compilation of loan data in register format.
338.9 Mortgage lending of a controlled entity.
2. The authority citation for part 338 continues to read as
follows:
Authority: 12 U.S.C. 1817, 1818, 1819, 1820(b); 12 U.S.C. 2801
et seq.; 15 U.S.C. 1691 et seq.; 42 U.S.C. 3605, 3608; 12 CFR part
202; 12 CFR part 203; 24 CFR part 110.
3. Section 338.1 is revised to read as follows:
Sec. 338.1 Purpose.
The purpose of this subpart A is to prohibit insured state
nonmember banks from engaging in discriminatory advertising with regard
to residential real estate-related transactions. Subpart A also
requires insured state nonmember banks to publicly display either the
Equal Housing Lender poster set forth in Sec. 338.4 or the Equal
Housing Opportunity poster prescribed by part 110 of the rules and
regulations of the United States Department of Housing and Urban
Development (HUD) (24 CFR part 110). This subpart A enforces section
805 of title VIII of the Civil Rights Act of 1968, 42 U.S.C. 3601-19
(Fair Housing Act), as amended by the Fair Housing Amendments Act of
1988.
4. Section 338.3 is amended by revising paragraphs (a)(1) and
(a)(2) and by adding a new paragraph (c) to read as follows:
Sec. 338.3 Nondiscriminatory advertising.
(a) * * *
(1) With respect to written and visual advertisements, this
requirement may be satisfied by including in the advertisement a copy
of the logotype with the Equal Housing Lender legend contained in the
Equal Housing Lender poster prescribed in Sec. 338.4(b) or a copy of
the logotype with the Equal Housing Opportunity legend contained in the
Equal Housing Opportunity poster prescribed in Sec. 110.25(a) of the
United States Department of Housing and Urban Development's rules and
regulations. (24 CFR 110.25(a)).
(2) With respect to oral advertisements, this requirement may be
satisfied by a statement, in the spoken text of the advertisement, that
the bank is an ``Equal Housing Lender'' or an ``Equal Opportunity
Lender.''
* * * * *
(c) For further guidance, the United States Department of Housing
and Urban Development should be consulted. Contact the Deputy Assistant
Secretary for Enforcement and Investigations, Department of Housing and
Urban Development, 451 Seventh Street, S.W., Washington, D.C. 20410.
5. Section 338.4 is amended by revising the section heading and
paragraph (a) to read as follows:
Sec. 338.4 Fair housing poster.
(a) Each bank engaged in extending loans for the purpose of
purchasing, constructing, improving, repairing, or maintaining a
dwelling or any loan secured by a dwelling shall conspicuously display
either the Equal Housing Lender poster set forth in Sec. 338.4 or the
Equal Housing Opportunity poster prescribed by Sec. 110.25(a) of the
United States Department of Housing and Urban Development's rules and
regulations (24 CFR 110.25(a)), in a central location within the bank
where deposits are received or where such loans are made in a manner
clearly visible to the general public entering the area, where the
poster is displayed.
* * * * *
6. Subpart B is amended by revising the subpart heading to read as
follows:
Subpart B--Recordkeeping
7. Section 338.5 is revised to read as follows:
Sec. 338.5 Purpose.
The purpose of this subpart B is two-fold. First, subpart B
requires all insured state nonmember banks to collect information about
a home loan applicant's race and other personal characteristics in
order to monitor an institution's compliance with the Equal Credit
Opportunity Act of 1974 (15 U.S.C. 1691-91f), as implemented by
Regulation B of the Board of Governors of the Federal Reserve System
(12 CFR part 202). Second, subpart B notifies certain insured state
nonmember banks of their duty to maintain a register of home loan
applications pursuant to Regulation C of the Board of Governors of the
Federal Reserve System (12 CFR part 203), which implements the Home
Mortgage Disclosure Act (12 U.S.C. 2801 et seq.), and to report the
reasons for denial of any home loan application that would be
reportable under Regulation C.
8. Section 338.6 is revised to read as follows:
Sec. 338.6 Definitions applicable to subpart B of this part.
For purposes of subpart B of this part--
(a) Bank means an insured state nonmember bank as defined in
section 3 of the Federal Deposit Insurance Act.
(b) Controlled entity means a corporation, partnership,
association, or other business entity with respect to which a bank
possesses, directly or indirectly, the power to direct or cause the
direction of management and policies, whether through the ownership of
voting securities, by contract, or otherwise.
9. Section 338.7 is revised to read as follows:
Sec. 338.7 Recordkeeping requirements.
All banks that receive an application for credit primarily for the
purchase or refinancing of a dwelling occupied or to be occupied by the
applicant as a principal residence, where the extension of credit will
be secured by the dwelling, shall request and retain the monitoring
information required by Regulation B of the Board of Governors of the
Federal Reserve System (12 CFR part 202).
10. Section 338.8 is revised to read as follows:
Sec. 338.8 Compilation of loan data in register format.
Banks and other lenders required to file a Home Mortgage Disclosure
Act Loan Application Register with the
[[Page 49425]]
Federal Deposit Insurance Corporation in accordance with Regulation C
of the Board of Governors of the Federal Reserve System (12 CFR part
203) must enter the reason for denial, using the codes provided in 12
CFR part 203, with respect to all loan denials.
11. Appendices A and B to Part 338 are removed.
By order of the Board of Directors.
Dated at Washington, D.C., this 10th day of September, 1996.
Federal Deposit Insurance Corporation.
Jerry L. Langley,
Executive Secretary.
[FR Doc. 96-24083 Filed 9-19-96; 8:45 am]
BILLING CODE 6714-01-P
