[Federal Register Volume 63, Number 189 (Wednesday, September 30, 1998)]
[Rules and Regulations]
[Pages 52140-52146]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-26155]
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FEDERAL RESERVE SYSTEM
12 CFR Part 203
[Regulation C; Docket No. R-0999]
Home Mortgage Disclosure
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Final rule.
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SUMMARY: The Board is publishing a final rule to amend Regulation C,
which implements the Home Mortgage Disclosure Act. The amendments:
modify the Loan Application Register to prepare for Year 2000 data
systems conversion; delete the requirement to enter the reporting
institution's parent company on the Transmittal Sheet; and make certain
other technical changes to the regulation and reporting forms.
EFFECTIVE DATE: September 24, 1998. The amendments apply to data
collected for calendar year 1998, to be reported by March 1, 1999.
FOR FURTHER INFORMATION CONTACT: Pamela Morris Blumenthal, Staff
Attorney, or John C. Wood, Senior Attorney, Division of Consumer and
Community Affairs, Board of Governors of the Federal Reserve System,
Washington, DC 20551, at (202) 452-2412 or (202) 452-3667; for users of
Telecommunications Device for the Deaf (TDD) only, contact Diane
Jenkins at (202) 452-3544.
SUPPLEMENTARY INFORMATION:
I. Background
The Board's Regulation C (12 CFR part 203) implements the Home
Mortgage Disclosure Act (HMDA) (12 U.S.C. 2801-2810). The regulation
requires most mortgage lenders located in metropolitan statistical
areas (MSAs) to report annually to federal supervisory agencies, and
disclose to the public, information about their home mortgage and home
improvement lending activity. The supervisory agencies include the
Board, the Office of the Comptroller of the Currency, the Office of
Thrift Supervision, the Federal Deposit Insurance Corporation, the
National Credit Union Administration, and the Department of Housing and
Urban Development.
In February 1998, the Board proposed to amend Regulation C to
modify the HMDA Loan Application Register (HMDA-LAR) to prepare for
Year 2000 data systems conversion, delete parent company information on
the Transmittal Sheet (TS), and make certain other technical changes
(63 FR 9453, February 25, 1998). The Board received 16 comments on the
proposal. The majority of the commenters favored adoption of the
proposal; several commenters suggested changes or clarifications on
certain points, as discussed below.
II. Discussion of Final Rule
A. Year 2000 Changes
Among items reported on the HMDA-LAR, institutions are required to
enter the date of application and the date action was taken. Currently,
these dates are to be entered using two digits for the year, in the
form MM/DD/YY. As part of the interagency program related to the Year
2000--Century Date Change, the agencies responsible for HMDA compliance
have modified software--to avoid the confusion of a date in the 21st
century with a date in the 20th century--by adding two digits to
represent the century. For example, January 15, 2000, will be reflected
as 01/15/2000 rather than 01/15/00. To carry out this program with
regard to HMDA reporting, the HMDA-LAR form and the instructions
(Appendix A to Regulation C) have been revised to require the date of
application and date of action taken to be entered using four digits
for the year.
A few commenters noted that the 1998 data collection has been under
way since the beginning of the year using the two-digit format. They
stated that making the change to a four-digit year could be burdensome.
One institution said that it was in the process of acquiring several
other institutions which were collecting data using a two-digit year;
these institutions all used different software and different data
processing vendors. The commenter believed that it would be difficult
for them to convert the HMDA data to a four-digit year for 1998 data.
The Board believes that, for the vast majority of HMDA reporting
institutions, use of a four-digit year in reporting 1998 data will not
present a problem. The personal computer data entry software available
from the supervisory agencies for 1998 data collection already reflects
the four-digit year (as well as the deletion of parent company
information on the TS, discussed below). The Board believes that
private sector software vendors (and institutions that have developed
their own software) have modified their HMDA data entry software in a
similar manner, or are in the process of doing so.
The Board therefore is adopting the amendments making the Year 2000
program change to the HMDA-LAR form and instructions. The Board
recognizes that there could be isolated instances in which an
institution may experience difficulty in converting its data base to
reflect the four-digit identification for the calendar year 1998. In
such cases, the institution should consult with its supervisory agency
for further guidance as soon as possible but no later than December 31,
1998. Earlier consultation will enable the agency to work with the
institution to resolve the technical difficulties, and
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avoid the last-minute need to resubmit the data in a conforming format.
The MM/DD/CCYY format applies to paper submissions only. For
institutions submitting data in electronic form, the proper format (as
already stated in the 1998 HMDA File Specifications) is CCYYMMDD.
The paper version of the HMDA-LAR model form in Appendix A shows
sample transactions that reflect dates from 1992, as do the
instructions. To update these examples and instructions, as well as to
remind reporting institutions of the change to a four-character year,
the amendments replace ``92'' with ``1999'' in the examples and
instructions.
B. Deletion of Parent Company Information
The Transmittal Sheet (TS) that accompanies the HMDA-LAR currently
calls for the name and address of the parent company of the institution
submitting HMDA data. The Board proposed to amend the TS by deleting
this requirement, given that in most cases the information is available
from the bank structure information already collected by the agencies.
Several commenters suggested that the parent company information is
useful in analyzing lending patterns of an entire organization such as
a bank holding company and all of its bank and non-bank subsidiaries.
Commenters were concerned that the parent company information might not
be readily accessible to the public. Information about an institution's
parent, subsidiary, and affiliate companies is available through the
FFIEC's Web site (at www.ffiec.gov/nic/default.htm), and generally is
more accurate and complete than the information from the TS. Users of
this Web site can search for institutions by name or location, and,
starting with a specific institution, can ascertain the institution's
parent, subsidiaries, and affiliates, if any.
The Board believes that the availability of information from the
FFIEC Web site makes the continuation of the requirement for parent
company information on the TS unnecessary. Accordingly, the Board is
deleting the requirement to enter parent company information on the TS.
C. Reassignment of Functions of Farmers Home Administration
One of the items of information reported on the HMDA-LAR about a
loan or application is the type of loan. Similarly, for loans sold, the
lender reports the type of purchaser of the loan. The code sheet lists
the Farmers Home Administration (FmHA) as one of the categories (as an
insurer or purchaser of loans).
Reorganization within the Department of Agriculture has resulted in
the functions of the FmHA being reassigned to two new units, the Farm
Service Agency and the Rural Housing Service. For ``type of loan,'' the
Board has replaced the references to the Farmers Home Administration or
FmHA (in the code sheet for the HMDA-LAR form and in the instructions
regarding type of loan) with a reference to ``Farm Service Agency or
Rural Housing Service'' (or ``FSA/RHS''). With regard to ``type of
purchaser,'' the successor agencies to FmHA do not purchase loans. A
secondary market entity that does purchase loans, the Federal
Agricultural Mortgage Corporation, is not currently included in the
list. Accordingly, the Board has revised the references to FmHA, as a
purchaser of loans, to refer instead to the Federal Agricultural
Mortgage Corporation or FAMC.
These changes are effective for the collection and reporting of
1998 data. However, to the extent that forms and software used for
reporting purposes do not reflect the changes, institutions should use
the existing codes for FmHA to refer to loans guaranteed by FSA or RHS,
or to loans that have been sold to FAMC, as applicable.
D. Paperwork Reduction Act Requirements
Regulations issued by the Office of Management and Budget (OMB) to
implement the Paperwork Reduction Act (5 CFR Part 1320) contemplate
that regulations imposing data collection requirements include control
numbers assigned by OMB. Currently, Regulation C, the instructions for
the HMDA-LAR and TS, and the TS form itself contain an OMB control
number (7100-0247) assigned to the Board in connection with HMDA
reporting requirements. The Board is now adopting a technical amendment
to the regulation, the instructions, and the TS form--adding the
control numbers assigned to the Office of the Comptroller of the
Currency (1557-0159), the Federal Deposit Insurance Corporation (3064-
0046), and the Office of Thrift Supervision (1550-0021). The National
Credit Union Administration and the Department of Housing and Urban
Development are in the process of obtaining OMB control numbers; these
numbers will be added at a later time. The amendment also includes a
number of other minor technical changes in the instructions and the TS
form, such as deletion of references to the OMB control number
expiration dates on the TS form.
E. Clarification Regarding Coverage of Nondepository Lending
Institutions
The Board has adopted a technical amendment to clarify the coverage
of nondepository institutions. The definition of ``financial
institution'' under Regulation C includes nondepository lending
institutions that, in the preceding calendar year, originated home
purchase loans or refinancings of home purchase loans in an amount of
10 percent or more of the institution's total loan origination volume,
measured in dollars. The definition is stated in section 203.2(e)(2)
and in paragraph I.D. of Appendix A to the regulation. Even if a
nondepository institution meets the definition of ``financial
institution,'' however, it is covered by Regulation C only if the
institution either had assets over $10 million or originated 100 or
more home purchase loans, including refinancings of home purchase
loans, during the preceding calendar year. The instructions (see
paragraph I.C. of Appendix A) refer expressly to refinancings, but
section 203.3(a)(2)(ii) does not. Some institutions have suggested to
the Board that including a reference to refinancings in section 203.3
would be useful.
The Board's notice at the time the 100-loan test was added to
Regulation C made clear that refinancings of home purchase loans are
included in calculating whether the coverage threshold was reached.
(See 57 FR 56963, December 2, 1992.) Accordingly, the Board is adding a
reference to refinancings of home purchase loans to section
203.3(a)(2)(ii), to conform to paragraph I.C. of Appendix A.
F. Adjustment in Exemption Threshold for Depository Institutions
The Board adjusts the exemption threshold for depository
institutions annually based on the annual percentage change in the
Consumer Price Index. In December 1997, the Board adjusted the
exemption threshold for depository institutions for 1998 data
collection to $29 million (from $28 million) (62 FR 66259, December 18,
1997). The change was incorporated in the Regulation C staff
commentary. Thus, depository institutions with assets of $29 million or
less as of December 31, 1997, are exempt from data collection in 1998.
The Board is amending the regulation and the instructions for the HMDA-
LAR to indicate that future adjustments will be included in the staff
commentary.
[[Page 52142]]
III. Regulatory Flexibility Analysis
In accordance with section 3(a) of the Regulatory Flexibility Act
(5 U.S.C. 604), the Board has reviewed the final amendments to
Regulation C. Two of the three requirements of a final regulatory
flexibility analysis under this section are (1) a succinct statement of
the need for and the objectives of the rule and (2) a summary of the
issues raised by the public comments, the agency's assessment of the
issues, and a statement of the changes made in the final rule in
response to the comments. These two areas are discussed above. The
third requirement of the analysis is a description of significant
alternatives to the rule that would minimize the rule's economic impact
on small entities and reasons why the alternatives were rejected.
The final amendments will apply to mortgage lending institutions
that exceed certain size thresholds (for depository institutions, $29
million in assets; for nondepository institutions, $10 million in
assets or the origination of 100 or more home purchase loans or
refinancings in the preceding year). In addition, the amendments
represent relatively small changes to the existing regulation; in some
cases, the amendments clarify rights and duties of covered institutions
or reduce economic burden. Accordingly, the amendments should not have
a negative economic impact on small institutions, and, therefore, there
were no significant alternatives that would have minimized the economic
impact on those institutions.
IV. Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
3506; 5 CFR 1320, Appendix A.1), the Board reviewed the final rule
under the authority delegated to the Board by the Office of Management
and Budget. The Federal Reserve may not conduct or sponsor, and an
organization is not required to respond to, this information collection
unless it displays a currently valid OMB control number. The OMB
control number for the Board is 7100-0247.
The collection of information that is revised by this rulemaking is
found in 12 CFR 203.1, 203.3, and Appendix A to Part 203. This
information collection is mandatory (12 U.S.C. 2801 et seq.) under the
Home Mortgage Disclosure Act (HMDA). HMDA requires institutions to
collect and report data about home purchase and home improvement loans.
The purposes of HMDA are threefold. The first is to provide the public
and government officials with information that will help determine
whether financial institutions are serving the housing needs of the
communities in which they are located. The second purpose is to help
public officials promote investments in neighborhoods where investment
is needed. Finally, the data collected assist in identifying possible
discriminatory lending patterns. The respondents/record keepers are all
types of financial institutions and other mortgage-lending institutions
that meet the coverage tests. Small businesses with assets of $29
million or less, as of December 31, 1997, are not required to report
1998 data. Records must be retained for five years.
No comments specifically addressing the burden estimate were
received.
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. The amendments will make several technical changes in the
reporting requirements and also clarify existing requirements of
Regulation C; these changes should have no effect on reporting burden,
and in some cases may reduce burden. The Board received HMDA-LARs
covering 1997 data from 513 state member banks and 81 mortgage banking
subsidiaries. Therefore, the total hour burden for institutions the
Federal Reserve supervises is 116,586. There is estimated to be no
annual cost burden, associated capital, or start up costs.
The Board has previously determined HMDA data collection and
reporting is required by law; completion of the loan/application
register, submission to the Board, and disclosure to the public on
request are mandatory. The data, as modified according to Appendix A of
the regulation, 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)).
The Board has a continuing interest in the public's opinions of the
Federal Reserve's collections of information. At any time, comments
regarding the burden estimate, or any other aspect of this collection
of information, including suggestions for reducing the burden, may be
sent to: Secretary, Board of Governors of the Federal Reserve System,
20th and C Streets, N.W., Washington, DC 20551; and to the Office of
Management and Budget, Paperwork Reduction Project (7100-0247),
Washington, DC 20503.
List of Subjects in 12 CFR Part 203
Banks, banking, Consumer protection, Federal Reserve System,
Mortgages, Reporting and recordkeeping requirements.
Text of Revisions
Pursuant to the authority granted in section 305(a) of HMDA, 12
U.S.C. 2804(a), and for the reasons set forth in the preamble, the
Board amends 12 CFR Part 203 as set forth below:
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 203.1 is amended by revising the last sentence of
paragraph (a) to read as follows:
Sec. 203.1 Authority, purpose, and scope.
(a) Authority. * * * The information-collection requirements have
been approved by the U.S. Office of Management and Budget under 44
U.S.C. 3501 et seq. and have been assigned OMB Numbers 1557-0159, 3064-
0046, 1550-0021, and 7100-0247 for institutions reporting data to the
Office of the Comptroller of the Currency, the Federal Deposit
Insurance Corporation, the Office of Thrift Supervision, and the
Federal Reserve System, respectively; numbers for the National Credit
Union Administration and the Department of Housing and Urban
Development are pending.
* * * * *
3. Section 203.3 is amended as follows:
a. Paragraphs (a)(1) introductory text and (a)(2) introductory text
are republished;
b. Paragraph (a)(1)(ii) is revised; and
c. Paragraph (a)(2)(ii) is revised.
The revisions read as follows:
Sec. 203.3 Exempt institutions.
(a) Exemption based on location, asset size, or number of home
purchase loans. (1) A bank, savings association, or credit union is
exempt from the requirements of this regulation for a given calendar
year if on the preceding December 31:
(i) * * *
(ii) The institution's total assets were at or below the asset
threshold established by the Board. The asset threshold was adjusted
from $10 million to $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 average of the Consumer Price Index for Urban Wage
Earners and Clerical Workers, not
[[Page 52143]]
seasonally adjusted, for each twelve-month period ending in November,
with rounding to the nearest million. The Board will publish any
adjustment to the asset figure in December in the staff commentary.
(2) A for-profit mortgage lending institution (other than a bank,
savings association, or credit union) is exempt from the requirements
of this regulation for a given calendar year if:
(i) * * *
(ii) The institution's total assets combined with those of any
parent corporation were $10 million or less on the preceding December
31, and the institution originated fewer than 100 home purchase loans
(including refinancings of home purchase loans) in the preceding
calendar year.
* * * * *
4. In Appendix A to part 203 under the heading PAPERWORK REDUCTION
ACT NOTICE, the undesignated paragraph is revised to read as follows:
Appendix A to Part 203--Form and Instructions for Completion of
HMDA Loan/Application Register
Paperwork Reduction Act Notice
This report is required by law (12 U.S.C. 2801-2810 and 12 CFR
part 203). 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
Numbers for this information collection are 1557-0159, 3064-0046,
1550-0021, and 7100-0247 for institutions reporting data to the
Office of the Comptroller of the Currency, the Federal Deposit
Insurance Corporation, the Office of Thrift Supervision, and the
Federal Reserve System, respectively; numbers for the National
Credit Union Administration and the Department of Housing and Urban
Development are pending. Send comments regarding this burden
estimate or any other aspect of this collection of information,
including suggestions for reducing the burden, to the respective
agencies and to the Office of Information and Regulatory Affairs,
Office of Management and Budget, Washington, D.C. 20503.
* * * * *
5. Appendix A to Part 203 is amended as follows:
a. Paragraph I.A.2. is revised;
b. Paragraphs V.A.2. and V.A.3. are revised;
c. In paragraph V.B.3., the introductory text is revised; and
d. Paragraph V.E.1. introductory text is republished and paragraph
V.E.1.4 is revised.
The revisions read as follows:
I. Who Must File a Report
A. Depository Institutions
1. * * *
2. The asset threshold was adjusted from $10 million to $28
million as of December 31, 1996. Any adjustment to the asset
threshold for depository institutions will be published by the Board
in December in the staff commentary.
* * * * *
V. Instructions for Completion of Loan/Application Register
A. Application or Loan Information
1. * * *
2. Date application received. For paper submissions only, enter
the date the loan application was received by your institution by
month, day, and year, using numerals in the form MM/DD/CCYY (for
example, 01/15/1999). For institutions submitting data in electronic
form, the proper format is CCYYMMDD. If your institution normally
records the date shown on the application form, you may use that
date instead. Enter ``NA'' for loans purchased by your institution.
3. Type. Indicate the type of loan or application by entering
the applicable code from the following:
1--Conventional (any loan other than FHA, VA, FSA, or RHS loans)
2--FHA-insured (Federal Housing Administration)
3--VA-guaranteed (Veterans Administration)
4--FSA/RHS-guaranteed (Farm Service Agency or Rural Housing Service)
* * * * *
B. Action Taken
* * * * *
3. Date of action. For paper submissions only, enter the date by
month, day, and year, using numerals in the form MM/DD/CCYY (for
example, 02/22/1999). For institutions submitting data in electronic
form, the proper format is CCYYMMDD.
* * * * *
E. Type of Purchaser
1. Enter the applicable code to indicate whether a loan that
your institution originated or purchased was then sold to a
secondary market entity within the same calendar year:
* * * * *
4--FAMC (Federal Agricultural Mortgage Corporation)
* * * * *
6. In Appendix A, the LOAN/APPLICATION REGISTER Transmittal Sheet
is revised to read as follows:
BILLING CODE 6210-01-P
[[Page 52144]]
[GRAPHIC] [TIFF OMITTED] TR30SE98.022
[[Page 52145]]
7. In Appendix A, the LOAN/APPLICATION REGISTER is revised to read
as follows:
[GRAPHIC] [TIFF OMITTED] TR30SE98.023
BILLING CODE 6210-01-C
[[Page 52146]]
8. In Appendix A, the LOAN/APPLICATION REGISTER CODE SHEET is
revised to read as follows:
Loan/Application Register Code Sheet
Use the following codes to complete the Loan/Application
Register. The instructions to the HMDA-LAR explain the proper use of
each code.
Application or Loan Information
Type:
1--Conventional (any loan other than FHA, VA, FSA, or RHS loans)
2--FHA-insured (Federal Housing Administration)
3--VA-guaranteed (Veterans Administration)
4--FSA/RHS-guaranteed (Farm Service Agency or Rural Housing
Service)
Purpose:
1--Home purchase (one-to-four family)
2--Home improvement (one-to-four family)
3--Refinancing (home purchase or home improvement, one-to-four
family)
4--Multifamily dwelling (home purchase, home improvement, and
refinancings)
Owner-Occupancy:
1--Owner-occupied as a principal dwelling
2--Not owner-occupied
3--Not applicable
Action Taken:
1--Loan originated
2--Application approved but not accepted
3--Application denied by financial institution
4--Application withdrawn by applicant
5--File closed for incompleteness
6--Loan purchased by your institution
Applicant Information
Race or National Origin:
1--American Indian or Alaskan Native
2--Asian or Pacific Islander
3--Black
4--Hispanic
5--White
6--Other
7--Information not provided by applicant in mail or telephone
application
8--Not applicable
Sex:
1--Male
2--Female
3--Information not provided by applicant in mail or telephone
application
4--Not applicable
Type of Purchaser
0--Loan was not originated or was not sold in calendar year covered
by register
1--FNMA (Federal National Mortgage Association)
2--GNMA (Government National Mortgage Association)
3--FHLMC (Federal Home Loan Mortgage Corporation)
4--FAMC (Federal Agricultural Mortgage Corporation)
5--Commercial bank
6--Savings bank or savings association
7--Life insurance company
8--Affiliate institution
9--Other type of purchaser
Reasons for Denial (optional)
1--Debt-to-income ratio
2--Employment history
3--Credit history
4--Collateral
5--Insufficient cash (downpayment, closing costs)
6--Unverifiable information
7--Credit application incomplete
8--Mortgage insurance denied
9--Other
By order of the Board of Governors of the Federal Reserve
System, September 24, 1998.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 98-26155 Filed 9-29-98; 8:45 am]
BILLING CODE 6210-01-P
