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federal reserve

Ba n k

DALLAS, TEXAS

of

D allas

75222

Circular No. 81-41
February 24, 1981

PROPOSED AMENDMENT TO REGULATION C

TO ALL MEMBER BANKS
AND OTHERS CONCERNED IN THE
ELEVENTH FEDERAL RESERVE DISTRICT:
The Board of Governors of the Federal Reserve System is requesting
comments on a revised proposal of its Regulation C, which implements the Home
Mortgage Disclosure Act. The Board wishes particularly to receive comments on
the following proposed revisions:
--Perm it institutions that have been exempt (on grounds of size,
location or provisions of State law, as provided in the Act) but which lose their
exemption, to begin compiling data for the year following the year in which the
exemption is lost (rather than for the year preceding the loss).
--Require disclosures of conventional loans and of FHA, FmHa
(Farmers Home Administration) and VA loans, but not (as previously required) the
sum of the conventional and other types of loans.
--Perm it branches of institutions to cease making disclosures of loans
in the SMSA in which the home office is located (avoiding duplicate disclosures
in the home office SMSA).
—Permit, but not require, branch office disclosures to omit all data
relating to loans in SMSAs other than that in which the branch office is located.
--Perm it institutions to omit the presently required annual notice to
the public concerning the availability of mortgage loan data (a requirement that
is not called for in the Act).
Enclosed is a copy of the Board's press release dated February 3,
1981, and a copy of material submitted for publication in the Federal Register.
Interested persons are invited to submit comments to the Secretary, Board of
Governors of the Federal Reserve System, Washington, D. C. 20551, to be
received no later than April 15, 1981. When submitting comments, please refer
to Docket No. R-0350.

Banks and others are encouraged to use the following incoming W A TS numbers in contacting this Bank:
1-800-442-7140 (intrastate) and 1-800-527-9200 (interstate). For calls placed locally, please use 651 plus the
extension referred to above.

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

- 2 -

Any questions concerning the proposed amendment should be directed
to the Consumer Affairs Section of our Bank Supervision and Regulations
Department, Ext. 6169.
Sincerely yours,
William H. Wallace
First Vice President
Enclosure

FEDERAL RESERVE press release
For immediate release

February 3, 1981

The Federal Reserve Board today requested public comment, through
April 15, on a revision and simplification of its Regulation C, which implements
the Home Mortgage Disclosure Act.
HMDA requires financial institutions located in standard
metropolitan statistical areas (SMSAs) to disclose publicly the location of their
residential mortgage loans.
The Board's proposal followed action by the Congress in October 1980
amending the Act, and extending its life by five years.
Act require (1)

compilation and disclosure of mortgage loan data on a calendar

(rather than fiscal) year basis;
county

The amendments to the

(2)

itemization of data by census tract and

(rather than by census tract and ZIP Code);

(3)

the use of a standard

disclosure format to be prescribed by the Federal Reserve;
central data repositories in each SMSA, and (5)

(4)

a system of

aggregation of mortgage loan

data to cover all institutions in each SMSA.
The Board in November amended Regulation C to implement the changeover
to calendar year compilation of the data required by the Act.

The Board's

proposed further revisions of Regulation C implement the other changes in the Act.
At the same time, the Board proposes revisions —

in keeping with the Board's

Regulatory Improvement Project for review and simplification of all of its
regulations —

to simplify Regulation C, focus disclosure requirements on those

that are most useful and that can be provided at reasonable cost, and make the
regulation more concise.

The proposed regulation is nearly a third shorter than

the existing regulation.
(OVER)

-2 The principal proposed revisions of Regulation C would:
— Permit institutions that have been exempt (on grounds of size,
location or provisions of State law, as provided in the Act) but which lose
their exemption, to begin compiling data for the year following the year in
which the exemption is Lost (rather than for the year preceding the loss).
--Require disclosures of conventional loans and of FHA, FtaHA (Fanners
Home Administration) and VA loans, but not (as previously required) the sum of
the conventional and other types of loans.

— Permit branches of institutions to cease making disclosures of
loans in the SMSA in which the home office is located (avoiding duplicate
disclosures in the home office SMSA).
— Permit, but not require, branch office disclosures to canit all data
relating to loans in SMSAs other than that in which the branch office is located.
— Permit institutions to omit the presently required annual notice
to the public concerning the availability of mortgage loan data (a requirement
that is not called for in the Act).
The Board wishes particularly to receive comment on these proposed
revisions of the regulation.
Attached is an explanation of the proposed revision of Regulation C
and a copy of the standard loan disclosure statement proposed by the Board for
the use of lending institutions.

The full official notice of the Board’s

proposal, which includes a proposal relating to

data aggregation (being

published on behalf of the Federal Financial Institutions Examination Council),
may be obtained from the Board's Division of Consumer and Community Affairs,
(202-452-2412), or from any Federal Reserve Bank or Branch Bank.

Attachments

11780

Federal Register / Vol. 46, No. 27 / Tuesday, February 10,1981 / Proposed Rules

FEDERAL RESERVE SYSTEM
12 CFR Part 203
[Regulation C; Docket No. R-0350]

Home Mortgage Disclosure; Revision
of Regulation C and Aggregation
Tables
Board of Governors of the
Federal Reserve System.
a c t i o n : Proposed rule.
AGENCY:

SUMMARY: The Board's Regulation C
implements the Home Mortgage
Disclosure Act (HMDA) and requires
depository institutions with offices in
standard metropolitan statistical areas
(SMSAs) to disclose data about their
home mortgage and home improvement
loans each year. The Board is publishing
for comment a revised version of
Regulation C to implement certain
amendments to the act that are
contained in the Housing and
Community Development Act of 1980
(Pub. L. 96-399). The statutory
amendments require compilation and
disclosure of loan data by calendar
year, in place of fiscal year; itemization
of data by census tract and county,
rather than by census tract and ZIP
code; the use of a standard disclosure
format as prescribed by the Federal
Reserve Board; and a system of central
data repositories in each SMSA.
The amendment to the act requiring a
changeover to calendar year
compilation of data was implemented by
an amendment to Regulation C
published by the Board on December 8,
1980 (45 FR 80813). The proposal that
follows implements the remaining
changes. It includes an extensive
regulatory analysis, to comply both with
the expanded rulemaking procedures set
forth in the Board's policy statement of
January 19,1979 ( 44 FR 3957) and with
the requirements of the Regulatory
Flexibility Act (Pub. L. 96-354).
The amended act also requires the
Federal Financial Institutions
Examination Council (FFIEC) to
produce, for each SMSA, aggregate
residential loan data by census tract for
all depository institutions covered by
HMDA or similar state regulations. The
Board’s proposal contains a section
(which it is publishing on behalf of the
FFIEC) relating to the aggregation of the
HMDA data; the package includes a
proposed format for the basic
aggregation tables that will be produced
for each SMSA (with various groupings
of the loan data by age of housing stock,
income level, and racial characteristics).
d a t e : Comments must be received on or
before April 15,1981.

ADDRESS: Comments may be mailed to
the Secretary, Board of Governors of the
Federal Reserve System, Washington,
D.C. 20551, or delivered to Room B-2223,
20th & Constitution Avenue, N.W.,
Washington, D.C. between 8:45 a.m. and
5:15 p.m. Comments may be inspected at
Room B-1122 between 8:45 a.m. and 5:15
p.m. All material submitted should refer
to Docket No. R-0350.
FOR FURTHER INFORMATION CONTACT:

Regarding the regulation, contact: John
C. Wood, Senior Attorney (202-452­
2412), Claudia Yarus, Staff Attorney
(202-452-3667), Jesse Filkins, Staff
Attorney (202-452-3867), or Lyn
Goldfaden, Staff Attorney (202-452­
3867), Division of Consumer and
Community Affairs, Board of Governors
of the Federal Reserve System,
Washington, D.C. 20551. Regarding the
HMDA-1 disclosure form, contact: Tim
Burniston, Review Examiner, Division of
Consumer and Community Affairs,
Board of Governors of the Federal
Reserve System, Washington, D.C. 20551
(202-452-3946). Regarding the Board's
regulatory analysis or the FFIEC’s
proposed aggregation tables, contact:
Glenn Canner, Economist, Division of
Research and Statistics, Board of
Governors of the Federal Reserve
System, Washington, D.C. 20551 (202­
452-2503).
SUPPLEMENTARY INFORMATION: (1)

General. Regulation C implements the
Home Mortgage Disclosure Act
(HMDA), 12 U.S.C. 2801 e t seq., and
requires depository institutions that
have offices in SMSAs and that have
more than $10 million in assets to make
annual disclosure of their mortgage
lending activity. On October 8,1980,
provisions of the Housing and
Community Development Act extended
HMDA for a five-year period and made
certain changes in its requirements. The
1980 amendments to HMDA require (1)
that depository institutions change their
data compilation and disclosure from a
fiscal to a calendar year basis,
beginning with 1980 data; (2) that
disclosures be made by census tract and
county, rather than by census tract and
ZIP code; (3) that the Federal Reserve
Board prescribe a standard format for
disclosures; (4) that disclosure
statements be made available at central
data repositories; and (5) that aggregate
data tables, covering all institutions in
each SMSA, be prepared and made
available by the Federal Financial
Institutions Examination Council
(FFIEC).
On December 8,1980, the Board
published an amendment to Regulation
C to implement calendar year
disclosures for 1980. This means that a

covered institution which previously
complied data on a non-calendar year
basis must conert its data compilation
and disclosure from a fiscal to a
calendar year basis beginning with 1980
data. In addition, such an institution will
need to prepare a partial-year disclosure
statement for that portion of 1979, if any,
which w as not covered by the
institution's last fiscal year statement.
For example, an institution that
compiled and disclosed data for its
1979-80 fiscal year will need to
redisclose the 1980 loan data in a 1980
calendar year statement. However, it
need make no new disclosure of its 1979
loan data. If, on the other hand, the
institution’s last fiscal year statement
w as for 1978-79 loan data, then the
institution must provide a partial-year
statement for 1979 (for that portion of
1979 not covered by the 1978-79 fiscal
year report) in addition to the statement
for calendar year 1980.
The Board is now publishing a
proposed revision of Regulation C to
implement the remaining statutory
changes. The Board has taken this
opportunity to redraft the regulation in a
simplified, more concise form—in
keeping with the objectives of its
Regulatory Improvement Project—and
believes that the regulation ultimately
adopted will be easier to use. The
proposed regulation is approximately 30
percent shorter than the current version.
Because of the statutory requirement
regarding aggregation of data,
institutions will be subject to certain
reporting requirements with respect to
data for 1980 and subsequent years.
Reporting procedures are being worked
out among the Board, the Federal
Reserve Banks, the FFIEC, and the other
financial institution regulatory
agencies—the Comptroller of the
Currency, the Federal Home Loan Bank
Board, the Federal Deposit Insurance
Corporation, and the National Credit
Union Administration. It is envisioned
that the reporting requirement will
involve a depository institution’s
submitting two copies of its disclosure
statement to its HMDA supervisory
agency. One copy will be transmitted by
the agency to the central repository that
will be established in each SMSA, and
the other copy will be sent to the
Federal Reserve Board, which will
aggregate the data on behalf of the
FFIEC. It is anticipated that specific
instructions on procedures for reporting
1980 data will be sent by each
supervisory agency to the institutions
under its jurisdiction by the end of
February.
As required by the act, the Board will
prescribe, with the final adoption of a

Federal Register / Vol. 46, No. 27 / Tuesday, February 10, 1981 / Proposed Rules
revised Regulation C, a mandatory
disclosure format to be used by
depository institutions for reporting 1981
loan data. A proposed form, included as
Appendix A, is being published for
comment at this time.
Institutions are reminded that while a
standard form is not required for the
disclosure of 1980 data, in order to
facilitate the Board’s aggregation of 1980
data they should use a format similar to
HMDA-1. (It is the Board’s
understanding that most institutions
already do so.)
(2) Proposed revision. In revising
Regulation C, the Board has attempted
to weigh the compliance costs to
institutions against the benefits to the
public of each regulatory requirement. In
a number of instances where the act
allows exercise of discretion, the Board
proposes to delete or reduce current
regulatory requirements accordingly.
Other requirements have been modified
to ensure that data will be compiled and
reported on a uniform basis so as to
facilitate aggregation of data.
Some of the principal changes to the
regulation that appear in the proposal
are as follows. First, an institution that
has exempt status and that subsequently
loses its exemption must begin to
compile and report data only for the
calendar year follow ing the loss of
exemption (rather than for the preceding
year, as in the present regulation).
Second, the "total residential mortgage
loans" category (that is, the sum of the
FHA/FmHA/VA loan category and the
conventional loan category) would no
longer be required. Third, geographic
breakdowns would be given in terms of
census tracts or counties; ZIP codes
could no longer be used. Fourth,
disclosure would no longer be required
at a branch office in the SMSA where
the institution’s home office is located.
Fifth, disclosures at other branch offices
would only be required to give data
about loans on property in the SMSA
where the branch is located. (The home
office disclosure and disclosures at
central data repositories would,
however, contain complete data for all
SMSAs in which the institution has
offices.) Finally, the publicizing of loan
data availability (for example, by
posting a notice in lobbies or by
publication in a newspaper) would no
longer be required.
These proposed changes are
discussed in greater detail below, along
with other changes contained in the
proposed revision. The discussion
follows the order of sections of the
proposed regulation.

§ 203.1 A uthority, purpose, and scope.
Section 203.1 of the proposal
corresponds to § 203.1(a) of the existing
regulation. Current § 203.1(b), dealing
with administrative enforcement, has
been incorporated into proposed § 203.6.
Paragraph (a) of the proposal
establishes the authority for the
regulation. Paragraph (b] defines the
purpose of the regulation; the new
material is drawn from the statement of
purpose in the act.
Proposed paragraph (c] summarizes
which institutions are covered by the
regulation and generally describes their
disclosure and reporting responsibilities.
Proposed paragraph (d) references the
contemplated system of central data
repositories and of data aggregation;
this information is related to some of the
regulatory requirements. The Board
believes that including it here may help
explain some of the regulatory
requirements and make the regulation
easier to use.
§ 203.2 Definitions.
Section 203.2 contains, in alphabetical
order, the definitions that apply to the
entire regulation. Several of the defined
terms in the current regulation have
been deleted or incorporated into other
definitions.
Act. This definition cites the original
and the amended statute.
Branch office. A specific exclusion
has been added to this definition for
automated teller machines and other
electronic terminals. Although such
machines may require approval as
branches, they are not offices for
purposes of this regulation.
Administrative offices, data processing
offices, and loan production offices are
not covered because they are not
approved as branches.
D epository institution. This definition
has been revised. First, a reference to
federally related mortgage loans has
been added. A second change is the
incorporation of Board Interpretation
§ 203.001, concerning the treatment of
majority-owned subsidiaries (both
depository and non-depository) of an
institution.
"Federally related mortgage loan” is
defined in a footnote (it appears as a
separately defined term in the existing
regulation) and is substantially similar
to the definition in the Real Estate
Settlement Procedures Act. An
institution qualifies as a depository
institution for Regulation C purposes if
(1) it makes first-lien mortgage loans on
l-to-4 family dwellings in the United
States or Puerto Rico, and (2) it is
federally insured or regulated, or
originates loans that are insured or

11781

guaranteed by HUD, VA, or another
federal agency, or that are intended to
be sold to FNMA, GNMA, or FHLMC.
Federal H ousing A uthority (FHA),
Farmers Home A dm inistration (FmHA),
or Veterans A dm inistration (V A ) loans.
There are no substantive changes in this
definition.
H om e im provem ent loan. This
definition has been changed in several
ways. The current requirement that a
secured home improvement loan be
secured by collateral other than a first
lien on residential real property has
been eliminated. Under the proposal,
first-lien loans would be reported as
home improvement loans if they
otherwise meet the home improvement
loan definition. The Board believes that
this classification is more meaningful
than their classification as “residential
mortgage loans” under the existing
regulation. However, comment is
solicited on whether this change would
make data compilation more difficult or
the disclosures less useful.
Language has been added to include
refinanced loans in the definition. This
means that a refinancing for home
improvement purposes would be
reported as a home improvement loan
whether the original loan was for home
improvement, purchase of a dwelling, or
some other purpose. An exclusion for
certain types of refinanced loans is
contained in proposed § 203.4(c)(3).
Like the existing definition, the
proposal requires both that the purpose
of the loan be for home improvement
and that the loan be recorded as a home
improvement loan on the institution's
books. (The recording requirement is
satisfied even if the institution uses
some other term—such as
“modernization loans"—to identify
loans that fall within the definition of
home improvement loans.) With regard
to the stated purpose of a loan, the word
"application” replaces the word
“transaction." The Board believes that
“application” more precisely defines the
time at which the intent of the borrower
is expressed.
Existing Regulation C provided a
special transition rule, applicable only
to the first disclosure year, that allowed
use of a state law definition of home
improvement loans. The Board believes
it is not necessary to include a special
rule of.this sort in the revised regulation.
However, comment is solicited on
whether any problems currently exist in
this area.
Home purchase loan. This definition
corresponds to the existing definition of
residential mortgage loan. It has been
substantially rewritten and restructured;
the first sentence states w hat is included
and the second what is excluded.

11782

Federal Register / Vol. 46, No. 27 / Tuesday, February 10, 1981 / Proposed Rules

There are. six revisions worthy of
note. First, the definition initially
establishes that only loans for the
purchase of residential dwellings fall
within this category. As noted above,
first-lien loans for repair or remodeling
purposes would now be included in the
definition of home improvement loans.
Second, a parenthetical phrase
incorporates current § 203.2(i), defining
residential real property. Third, the
current requirement that a home
purchase loan be secured by a first lien
has been eliminated; any secured home
purchase loan, regardless of the type of
lien, would be covered by the definition.
Fourth, the exclusion in existing
§ 203.2(h)(iii), of loans for business or
consumer purposes unrelated to the
purchase or improvement of residential
real property, has been deleted. The
Board believes that an express
exclusion is unnecessary because of the
change in the definition limiting it to
loans for the purchase of residential
property.
Fifth,the temporary-financing
exclusion—for short-term lending where
a source of permanent financing will
later be required—has been further
clarified. In the case of construction
loans, only temporary financing is
excluded from coverage. A reference to
bridge loans makes clear that the
exclusion applies to loans for the
purchase of a new home pending receipt
of proceeds from the sale of a prior
residence. W hether or not there is a firm
take-out commitment for permanent
financing, the Board considers these
temporary loans to be other than
mortgage loans, and believes their
inclusion as home purchase loans would
distort the data, contrary to the
purposes of the act
Sixth, the reference to refinanced
loans has been changed. The current
definition includes only first-lien
refinancings. The proposed definition
would include all refinancings for home
purchase purposes, other than those
expressly excluded under proposed
§203.4(c)(3).
The Board solicits comment on the
extent to which any of these proposed
changes would increase institutions'
costs, create difficulties in data
compilation, or diminish the utility of the
disclosures.
State. The definition is unchanged
from the Current regulation.
§ 203.3 Exemptions.
This section establishes the categories
of depository institutions that would be
exempt from the requirements of
Regulation C. The categories are
essentially the same as in the existing
regulation.

Paragraph (a)(1) exempts any
depository institution with assets of $10
million or less. The only change from the
current regulation is the substitution of
December 31 for “the last day of its last
full fiscal year” as the date for
determining the institution’s asset size.
Paragraph (a)(2) provides an
exemption for any depository institution
that does not have a home or branch
office in an SMSA. The substitution of
the U.S. Department of Commerce for
the Office of Management and Budget
reflects the fact that the Department of
Commerce, rather than OMB, now
defines SMSAs.
The exemption set forth in paragraph
(b) corresponds to existing § 203.3(a)(3).
It is available to state-chartered
depository institutions that are subject
to state laws containing requirements
substantially similar to Regulation C
and making adequate provision for
enforcement. The procedures for
applying to the Board for exempt status
are set forth in proposed § 203.30
(Supplement I).
The amended act requires that loan
data for all depository institutions,
including those which receive an
exemption from the federal law, be
aggregated and that disclosure
statements be made available at the
central repository in each SMSA. To
implement these requirements,
§ 203.3(b) limits the state law exemption
by providing that exempt institutions
shall submit the data required by their
state law to their state supervisory
agencies, which in turn will forward the
data to the appropriate central
repositories and, for aggregation, to the
Federal Reserve.
Existing § 203.3(b) requires that an
institution losing its exemption begin
compliance by compiling and disclosing
data for the year preceding the year in
which the exemption w as lost. Proposed
paragraph (c) would change this rule. An
institution would instead report
beginning with the data for the first
calender year after the exemption is
lost. For example, if on April 1,1982, an
institution opens a home or branch
office in an SMSA, and thereby loses its
exemption, it would have to compile and
report its 1983 data. This report would
have to be available by March 31,1984,
in accordance with § 203.5 (a) and (d).
Similarly, if on December 31,1982, an
institution’s assets exceed $10 million
for the first time, the institution would
be required to compile its 1983 data and
report it by March 31,1984. The Board
believes that the high cost of compiling
data for a period already ended justifies
the proposed change.
Because of the revision regarding loss
of exemption, existing Board

Interpretation § 203.002 would no longer
be applicable. If the rule is adopted as
proposed, this interpretation will be
rescinded.
There is no express provision on
when an exemption, once applicable,
takes effect. The intent, however, is that
an exemption would become effective
immediately. Therefore, the institution
would not report its data for that year or
for subsequent years, so long as it
remains exempt.
§ 203.4 Compilation o f loan data.
Section 203.4 sets forth the rules for
the compilation of loan data and
describes w hat data are included. This
section has been restructered and
significantly rewritten, and contains
some substantive changes. Current
§ 203.4(a)(2) (i) and (ii) and (a)(4)(ii)
have been deleted as obsolete, since
they are transition rules related to the
original implementation of the
regulation.
Paragraph (a) of the proposal
describes the mortgage loan data to be
compiled. It requires data compilation
on a calender year basis, rather than
fiscal year, to implement a statutory
change. The existing regulation already
reflects this change in § 203.4(d)(1),
which w as published by the Board on
December 8,1980 (45 FR 80813).
The proposal (like the existing
regulation) requires that loan data be
shown in terms of the number of loans
and the total dollar amount of loans.
The definition of “total dollar amount,”
set forth in existing § 203.4(a)(3),
appears as footnote 2 in the proposal.
Paragraph (b) of the proposal,
concerning format and itemization of
data, incorporates portions of existing
§ 203.4 (a) and (c) and contains a
number of changes. It requires that data
be compiled separately for originations
and purchases (as does the present
regulation), and requires the use of a
standard format for disclosures. (The
proposed form appears as Appendix A.)
Note that this would be a required form,
unlike Form HMDA-1 in existing
Regulation C. The use of a standard
reporting format is necessary to
facilitate the aggregation of data
m andated by the amended act.
Paragraph (b)(1) describes the
required geographic itemization of data.
As in the existing regulation, the general
rule is that data must be broken down
by the SMSA within which the property
that secures the loan (or that is to be
improved) is located; within each SMSA
the data is to be further itemized by the
census tract in which the property is
located.
There are exceptions to census tract
reporting; these differ to some extent

Federal Register / Vol. 46, No. 27 / Tuesday, February 10, 1981 / Proposed Rules
from the existing regulation. First, loans
relating to property in any county
having a population of 30,000 or less
must be itemized by county rather than
by census tract. (The term “county”
includes similar state political
subdivisions such as parishes.] This
exception implements an amendment to
the act.
Second, loans on property located in
an area that has not been census tracted
(even if in a county with a population
over 30,000) also must be itemized by
county. The second exception, made
necessary by the fact that some areas
have not been assigned census tract
numbers, corresponds to the current
provision in Regulation C permitting
compilation on the basis of ZIP codes
for untracted areas. The Board believes
that compilation of data for untracted
areas by county rather than by ZIP code
will result in simpler compilation
procedures and in more understandable
mortgage loan disclosures. If the ZIP
code provision were carried over from
the existing regulation, the resulting
disclosures might well contain three
different types of geographic
breakdowns—census tracts, counties,
and ZIP codes.
The rule set forth in proposed
paragraph (b)(l)(ii) is unchanged from
present Regulation C. For loans on
property located outside a n y SMSA in
which the institution has a home or
branch office, the data need not be
broken down but may simply be
reported as a lump sum figure covering
all such loans. This category includes
both loans on property outside any
SMSA and loans on property in an
SMSA where the institution has no
home or branch office.
Paragraph (b)(2) requires that, for
each geographic category (census tract,
county, SMSA total, and outside-SMSA),
loan data must be further itemized by
type of loan. The loan categories are
substantively unchanged from those in
the existing regulation except that the
“all residential mortgage loans"
category, described in existing
$ 203.4(a)(l)(iii), has been deleted. Since
that category represents the sum of the
preceding two home purchases
categories (FHA/FmHA/VA loans and
conventional mortgage loans), it does
not provide new or different
information, and hence is unnecessary.
In addition, deletion of this category will
simplify the required aggregation of
data.
Paragraph (b)(2)(v) generally requires
an institution to present, as an
addenduim item, data about loans made
to non-occupant borrowers. The second
sentence of this paragraph expressly

excludes loan data in the outside-SMSA
category from this requirement.
Footnote 3 to paragraph (b)(2)(v)
incorporates part of existing § 203.4(c).
The footnote permits an institution to
assume, unless its records on a
particular loan contain information to
the contrary, that a purchased loan was
made to an occupant borrower. The
phrase in existing paragraph (c) limiting
this presumption to loans on l-to-4
family dwellings is believed to be
unnecessary, since paragraph (b)(2)(v)
applies only to such loans. The portion
of existing paragraph (c) relating to
loans originated prior to June 28,1976,
has been deleted as obsolete.
Paragraph (c) lists certain mortgage
loan data that are to be excluded from
data compilation; it corresponds to
existing § 203.4(a)(4)(i). Paragraphs (c)
(1) and (3), regarding loans on which the
institution acts in a fiduciary capacity
and certain refinancings that involve no
increase in the outstanding principal
balance, are carried over without
change from the existing regulation.
Paragraph (c)(2) specifically excludes
loans on unimproved land, and
corresponds to a limitation to improved
real property contained in the existing
definition of residential real property. A
specific exclusion is necessary because
the proposed definition of “home
purchase loan” (which incorporates the
existing residential real property
definition] contains no such limitation.
Paragraph (d), defining geographic
units for compilation purposes, parallels
$ 203.4(b) of the existing regulation. The
U.S. Department of Commerce is now
responsible for defining SMSA
boundaries and the reference to the
Office of Management and Budget has
been changed accordingly.
The proposed regulation provides that
for compilation purposes, SMSA
boundaries are those in effect on
January 1 of the year to which the data
relate, reflecting the statutory change
from fiscal to calendar year compilation.
Thus, even if a county becomes part of
an SMSA during a reporting year, all
loans made in the county are to be
reported fo r that yea r as being outside
the SMSA.
Paragraph (d)(2) requires that 1980
census tract maps be used for
compilation purposes. Because tract
maps for the 1980 census are not yet
available, however, footnote 4 provides
that the 1970 census tract m aps shall be
used until the complete 1980 series is
available.
Footnote 4 also requires that, for any
previously untracted area, an institution
use the census tract update available on
January 1 of the year in which the loan
w as made. This requirement applies

11783

only with respect to areas that became
tracted for the first time after the 1970
census. A reas that were tracted for the
1970 census are to be reported using
1970 census tracts, not any later
updates. This rule is necessary to permit
preparation of aggregate data tables
using demographic data obtained in the
census. The same rule will apply to the
1980 census tracts when institutions
begin using 1980 census tracts.
Section 203.4(b)(3) of the existing
regulation, dealing with applicable ZIP
codes, has been deleted as unnecessary.
Section 203.4(b)(4) of the existing
regulation permitted a depository
institution to use maps, directories, or
computer programs that contained more
recent definitions of SMSA areas than
those in effect on the first day of the
reporting year. This option was
available if the depository institution
met certain other reporting
specifications and disclosed that an
updated SMSA definition w as used.
Because of the need for uniformity in
aggregation, the Board has eliminated
this option from the proposed regulation.
As noted above, the proposed regulation
instead requires that depository
institutions all use the SMSA definition
in effect on January 1 of the calendar
year to which the disclosure statement
relates, so that all the reports for a given
SMSA will be consistent with each
other.
A depository institution may still use
directories or computer programs
instead of maps to tabulate loans by
SMSA, census tract, or county, provided
the correct SMSA and census tract
definitions have been incorporated into
the directory or program.
S 203.5 D isclosure a nd reporting
requirem ents.
The title of $ 203.5 has been changed
to reflect that, under the amended act,
depository institutions are required not
only to disclose mortgage loan data at
certain offices, but also to report the
data for purposes of availability at
central data repositories and for multiinstitutional data aggregation.
Paragraph (a) deals with timing and
retention requirements for disclosures,
and reflects the change in basis for
compilation from fiscal year to calendar
year. It sets March 31 as the due date for
the annual disclosure statements, thus
retaining the 90-day interval currently
provided by the regulation.
Paragraphs (a)(l)(i) and (2) of the
existing regulation contain special rules
dealing with the first-year disclosures
under Regulation C. TTiey are obsolete,
and have been deleted. Paragraph
(a)(l)(iii) of the existing regulation
provides a special rule on the due date

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Federal Register / Vol. 46, No. 27 / Tuesday, February 10, 1981 / Proposed Rules

for disclosures when an institution loses
an exemption. It is no longer needed
under*the proposal, since any institution
that loses its exemption would compile
data beginning with the following
calendar year.
The proposal describes the retention
period as five years from the disclosure
due date. The retention period applies
only to the disclosure statements at the
depository institutions. The act and
regulation do not set a retention period
for data on file at the central data
repositories.
Paragraph (b), concerning the offices
at which disclosure statements are to be
made available, has been revised
substantially. Proposed paragraph (b)(2)
would no longer require that a
disclosure statement be made available
at a branch office that is in the sam e
SMSA as the home office. The Board
believes that this requirement is not
mandated by the statute, and is
unnecessary, given the new provision
for central data repositories.
Proposed paragraph (b)(1), concerning
the disclosures at the home office,
requires availability of the entire
statement, as does existing Regulation
C. However, paragraph (b)(2) would
permit a branch office disclosure
statement to omit all the data relating to
property located outside its SMSA. The
proposal thus differs from the rule in
existing § 203.5(b)(l)(ii), which requires
at a branch office either (1) the entire
disclosure statement or (2) a statement
showing complete itemization by census
tract or ZIP code for the SMSA where
that branch office is located, total
figures by SMSA for other SMSAs in
which the institution has offices, and a
total figure for all loans outside such
SMSAs.
The Board believes that the proposed
rule is easier to understand and might
make preparation of disclosures easier
for institutions, without diminishing the
utility of the data disclosure. It would
cut down to some extent the length of
the disclosure statements at branch
offices. Information concerning
mortgage loans outside a particular
SMSA will be available both at the
institution's home office and at the
central data repository for any SMSA in
which the institution has offices.
Under the proposal, institutions would
continue to have the option to make the
entire disclosure statement available at
branch offices, or to provide more than
the minimum disclosures required.
Paragraph (b)(3) is substantively
unchanged from existing § 203.5(b)(4). It
requires an institution to respond
promptly to requests for information
about the offices where its disclosure
statements are available.

“Existing S 203.5(b)(2) has been
deleted. That paragraph sets forth
special requirements for public
availability of disclosures of depository
institutions with offices inaccessible to
the general public (such as some credit
unions). The intent of the act, in part, is
to provide consumers with information
to aid them in deciding where to deposit
their funds. The Board believes that
when an institution does not accept
deposits from the general public, it is
less essential to make its statements
available in a public place. In addition,
the disclosure statements of these
institutions will now be available to the
general public at the central data
repositories. (These institutions are
subject, of course, to the general
requirements on location of disclosure
statements at home and branch offices.)
Existing § 203.5(b)(3), which requires a
depository institution to notify its
depositors a t least once each year of the
availability of its mortgage loan data,
has also been deleted. The notification
is not required by the act and the Board
believes it is not necessary in light of the
establishment of the central data
repositories. It is contemplated that the
availability of mortgage loan data at the
central data repositories, and their
location, will be publicized.
Paragraph (c), concerning
photocopying and hours of availability,
incorporates minor language changes for
clarification but is substantively
unchanged from the current regulation.
Paragraph (d) has no counterpart in
the current regulation. It provides that a
depository institution must send two
copies of its entire disclosure statement
to the appropriate regional office of its
supervisory agency (as listed in
appendix B).This transmittal to the
supervisory agency would be the first
step in the process by which disclosure
statements will become available at
central data repositories and data will
be aggregated to cover all reporting
institutions in each SMSA.
§ 203,6 A dm inistrative enforcem ent and
sanctions fo r violations.
Aside from minor editorial changes,
these provisions mirror their
counterparts in §§ 203.1(b) and 203.6 of
the existing regulation. Paragraph (a),
which sets forth the agencies
responsible for enforcing the act and
Regulation C, has been placed in this
section to make its structure consistent
with other recent Board regulations.
Paragraph (b) corresponds to existing
S 203.6. It notes that depository
institutions found to be in violation are
subject to administrative sanctions as
set forth in S 305 of the act. It also
provides relief for an unintentional error

in compilation as long as the depository
institution maintains procedures
reasonably adapted to avoid any such
error.
§ 203.30 Procedures fo r an exem ption
application pursuant to § 203.3(b) o f
Regulation C (Supplem ent I).
The act and § 203.3(b) of the
regulation provide an exemption for
state-chartered institutions in cases
where the Board determines that the
state law contains requirements
substantially similar to those imposed
by Regulation C, with adequate
provision for enforcement. This
supplement describes the procedures for
seeking a Board determination. The
changes made to paragraphs (a),(b), and
(c) simplify and shorten the text. The
few substantive changes to the
supplement will be discussed below.
Paragraph (d) corresponds to a
portion of paragraph (d) of the current
supplement, and is unchanged except for
editorial revisions and the insertion of a
parenthetical reference to the fact that,
under proposed § 203.3(B), an exempt
institution is required to send the staterequired mortgage loan data to its state
supervisory agency.
Paragraph (e) corresponds to existing
paragraphs (d)(2) and (e). A new
provision clarifies that the Board may
require a reapplication for an exemption
because of amendments to the act or
regulation. Depending upon the
circumstances, the Board may require a
complete reapplication, or may simply
require updating of information in the
areas affected by the amendments. (The
Board is currently considering which of
these actions would be appropriate with
regard to the presently exempt states in
view of the recent amendments to the
act and these proposed amendments to
the regulation.)
The remainder of proposed paragraph
(e) is substantively unchanged, except
for the addition of paragraph (e)(5) to
address situations when certain of the
revocation procedures would be
inappropriate.
A ppendix A —Form HM DA-1 (revised)
and instructions.
The proposed standard reporting and
disclosure form is similar to the
guideline form that appears as an
appendix to existing Regulation C. Some
of the column headings have been
revised to reflect changes in terminology
in the regulation itself, and the existing
“total residential mortgage loans”
column has been deleted becaused of a
proposed change in the regulatory
requirement.
The instructions have been changed to
reflect changes in the regulatory

Federal Register / Vol. 46, No. 27 / Tuesday, February 10, 1981 / Proposed Rules
requirements, and are more detailed
than the existing instructions. The
purpose of this change is to make the
form easier to use.
A ppendix B—Federal enforcem ent
agencies.
Proposed Appendix B lists the federal
enforcement agencies for each type of
depository institution covered by the
regulation. There is no substantive
change from the correspondihg list in the
present regulation.
(3) Regulatory analysis. The
regulatory analysis that follows is
published pursuant to the Board’s policy
statement of January 19,1979 (44 FR
3957), concerning expanded rulemaking
procedures. It also satisfies the
requirement for an initial regulatory
flexibility analysis under the Regulatory
Flexibility Act, 5 U.S.C. 603.
The Home Mortgage Disclosure Act
amendments of 1980 extend with
amendments and a five-year sunset
provision the Home Mortgage Disclosure
Act of 1975 (HMDA). HMDa was
motivated by congressional concern that
* * * some depository institutions have
sometimes contributed to the decline of
certain geographic areas by their failure
pursuant to their chartering responsibilities to
provide adequate home financing to qualified
applicants on reasonable terms and
conditions.1
The purpose of HMDA w as
* * * to provide the citizens and public
officials of the United States with sufficient
information to enable them to determine
whether depository institutions are filling
their obligations to serve the housing needs
of the communities and neighborhoods in
which they are located and to assist public
officials in their determination of the
distribution of public sector investments in a
manner designed to improve the private
investment environment.3
The 1980 HMDA amendments to the
1975 act impose substantial additional
costs. However, these additional costs
largely fall upon either the financial
institution regulatory agencies or other
federal agencies. The key amendments
include: (1) mandatory disclosure of
HMDA data on a calendar year basis;
(2)establishment by the Federal Reserve
Board of a uniform disclosure format; (3)
disclosure by census tract for standard
metropolitan statistical area (SMSA)
counties with populations that exceed
30,000, and disclosure by county name
for SMSA counties with 30,000 or fewer
residents; (4) establishment of a central
repository in each SMSA for HMDA
disclosure statements; (5) aggregation of
HMDA data for all covered institutions
1 Home Mortgage Disclosure Act, Pub. L. 94-200.
12 U.S.C. 2801-2809. Sec. 302.
’ Ibid., Sec. 302.

within each SMSA, and the production
of a variety of tables showing the
relationship between the geographic
distribution of disclosed loans and
census tract income level, racial
composition, location, and age of
housing stock.
O verview o f the HMDA am endm ents
The 1980 amendments, as
implemented by revised Regulation C,
require depository institutions with
offices located within SMSAs annually
to compile and disclose to the public the
geographic location of the number and
dollar value of the residential loans they
either originate or purchase during each
calendar year. This residential loan data
must be disclosed by census tract
number for counties within SMSAs that
have populations exceeding 30,000.
Residential loans extended on
properties within SMSA counties that do
not exceed 30,000 residents must be
disclosed by county name. The home
mortgage disclosure data that are
compiled are to be made available to the
public and the appropriate supervisory
agency by the reporting institution
within 90 days of the end of the relevant
calendar year. Each institution reporting
under the provisions of the act is
required to maintain the disclosure
statement in at least one office in each
SMSA in which it does business.
Benefits, accuracy and costs. A basic
input in the regulatory analysis of
revised Regulation C is a review of the
Federal Home Loan Bank Board/Federal
Deposit Insurance Corporation (FHLBB/
FDIC) study commissioned to evaluate
the 1975 Home Mortgage Disclosure
Act.3Although the FHLBB/FDIC study
focused on the 1975 Home Mortgage
Disclosure Act and was carried out in
1977, the study remains highly relevant
to an evaluation of the benefits,
accuracy, and costs of the 1980 act
because very few fundamental
provisions of the original law have been
amended. The following section reviews
the basic findings of the FHLBB/FDIC
study. The economic impact of the
central repository system and HMDA
aggregation are also reviewed.
The benefits of HMDA are not
quantifiable in dollar terms.
However,the FHLBB/FDIC study
identified a number of uses that have
been made of the disclosure
information. First, HMDA has been
useful to the financial institution
regulatory agencies in fulfilling their
statutory responsibilities under the
5"Analysis of the Home Mortgage Disclosure Act
data from three Standard Metropolitan Statistical
A reas/' JRB Associates, McLean, Virginia,
November 1979.

11785

Community Reinvestment Act (CRA)
and civil rights laws. In this context,
HMDA data have been used to identify
possible discriminatory lending
practices related to the geographic
location of the dwelling. The disclosure
data have also been employed to alert
regulators to possible discriminatory
lending practices based upon the
applicant’s race, color, or national
origin. Second, HMDA data have been
used by local public officials to help
determine target areas for public
investment. Third, community and
public interest groups have made use of
HMDA data in evaluating depository
institutions’ CRA records and have
based most CRA protests of depository
institution applications on lending
patterns developed from the data.
Despite their usefulness for CRA protest
purposes, relatively few community
groups have sought to obtain the
information.4Moreover, the reporting
institutions have received virtually no
benefits from HMDA.
In summary, HMDA data have been
primarily useful to the regulatory
agencies in carrying out their
responsibilities under the anti­
discrimination regulations and have
been of some value to community
groups and local public officials.
Although community groups have made
limited use of HMDA data to date, it is
possible that they will increase their
utilization of the disclosure information
in the future.
Accuracy of the disclosure statements
is critical to their utility. The FHLBB/
FDIC study found that a significant
percentage of the depository institution
disclosure statements were too
inaccurate to be used for their intended
purpose. Based on a survey of a sample
of lending institutions from three
SMSAs, the study found that; (1) those
institutions that failed to use an address
coding guide to identify property census
tract numbers achieved a poor level of
geocoding accuracy; (2) 25 of 43
institutions sampled (58 percent) made
aggregation errors in more than 50
percent of the census tract lines; (3) 29 of
43 institutions in the sample (67 percent)
had aggregation errors that were so
severe that their statements were
considered too inaccurate to be used for
their intended purpose.
A number of recommendations were
offered in the FHLBB/FDIC study to
rectify the accuracy problem. One
recommendation, adopted as an
amendment to the 1975 act, directs the
4 A United States League of Savings Associations
survey of 2,800 savings and loans found that 71
percent of the respondents had not received a single
request for their 1977 fiscal year disclosure
statements. American Banker, August 28,1978.

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Federal Register / Vol. 46, No. 27 / Tuesday, February 10, 1981 / Proposed Rules

Federal Reserve Board to prescribe a
standard format for disclosures required
under HMDA.s The standard format
should eliminate some errors with very
little additional cost to the institutions.
However, the predominant source of
disclosure errors—aggregation
inaccuracy—is not addressed in the
regulation. The study recommended that
examination procedures be implemented
to assess and improve the accuracy of
the geocoding and aggregation of
disclosure data. Moreover, the study
suggested that additional examination
time be established for accuracy
reviews of the disclosure statements. It
w as estimated that implementation of
this recommendation would cost
approximately 20 additional man-years
(at least $300,000 in the first year) of
examination time per year.
The FHLBB/FDIC study assessed the
annual costs of HMDA compliance. Cost
estimates were calculated on both a per
loan and aggregate basis. The study
found that nationwide HMDA cost the
8,138 reporting institutions
approximately $5.8 million in 1977.
Based on these estimates, reporting
institutions incurred an average cost of
$713 to compile and disclose their
HMDA data in 1977. The 44 depository
institutions in the study incurred an
average cost per loan of $1.42. A cross
section analysis of these lenders
revealed that: the 13 institutions with
automated residential loan Hies and
more than 1,000 loans in their disclosure
statements bore an average per-loan
cost of $1.36; the 13 institutions with
between 200 and 1,000 loans in their
HMDA statements incurred an average
cost of $1.68 per loan; and, the 11
lenders with fewer than 200 loans
incurred an average cost of $3.67 per
loan.
In general, the costs of HMDA
compliance fall disproportionately on
those lenders that are marginally in the
residential real estate market.
Commercial banks incur a greater
average cost per loan than other types of
covered lenders because banks typically
extend fewer residential loans than
other types of covered lenders.
According to the FHLBB/FDIC study,
institutions that disclose fewer than 200
loans per year incur an average cost per
loan that is 2.7 times as great as the
average cost per loan of lenders
reporting over 1,000 loans per year.
Moreover, those institutions least active
in residential finance are likely to be the
smaller depository institutions. As a
5 Section 203.4(b) of the regulation specifies the
reporting format the Board is proposing to adopt.
The prescribed form in revised Regulation C is
substantially similar to the form currently employed
by the vast majority of covered institutions.

result, the costs of HMDA compliance
are borne disproportionately by the
smaller depository institutions.
E stablishm ent o f central repositories.
The 1980 amendments to HMDA direct
the Federal Financial Institutions
Examination Council (FFIEC) in
consultation with the Secretary of the
Department of Housing and Urban
Development (HUD) to establish a
central repository for HMDA data for
each SMSA. The central data repository
will receive and m aintain all HMDA
statements of the covered institutions
with offices located in its SMSA. The
statements on file at the central
repository will be made available to the
public for inspection and copying.
The principal benefit of the central
repository system is that users of HMDA
data will be able to obtain all of the
various institutions’ disclosure
statements at one location. The current
system requires users to contact the
institutions on an individual basis to
obtain the disclosure data.
The reporting requirements of the
central repository system are
implemented by § 203.5(d) of the
regulation. The reporting institution will
incur a slight increase in costs under this
section of the regulation. Incremental
costs will be those incurred to make two
additional copies of the HMDA
statement and handling and postage
costs to mail the statements to the
appropriate supervisory agency.
Assuming the typical HMDA statement
contains approximately 20 pages, it is
estimated that it will cost the average
institution approximately $8.00 annually
to copy and forward the statem ents to
the appropriate supervisory agency.
Based on 8,138 reporting institutions, the
aggregate annual cost to the covered
institutions will be approximately
$65,100.
Other costs that arise from the
establishment of the central repository
system will be borne by the central
repository and the regulatory agencies.
These costs consist of some handling,
training, storage and public information
costs. Although the costs to the central
repository system are not likely to be
excessive, the benefits are also likely to
be small. The system does not provide
any new information and is solely a
convenience for users. Given the limited
number of users, it is difficult to justify
even the relatively small additional
expense of establishing and maintaining
this system.
Aggregation o f HMDA data. The 1980
amendments direct the FFIEC to compile
annually for each SMSA aggregate data
by census tract for all depository
institutions that are required to disclose
data under the act. In addition, the

FFIEC is directed to produce tables for
each SMSA that aggregate covered
institutions’ lending patterns for various
categories of census tracts grouped
according to location, age of housing
stock, income level and racial
characteristics. According to the act, the
Federal Reserve Board is required to
provide the resources necessary to
perform the aggregation. Tables
generated from the aggregation process
are to be made available to the public
by December 31 of the year following
the calendar year on which the data are
based.
Aggregation of HMDA data will
involve substantial costs. The FDIC/
FHLBB HMDA study estimated
aggregation costs to be approximately
$1 million annually with a possible
variation in actual costs of anywhere
from —30 percent to 50 percent of that
estimate. Since the estimate was based
on a 1977 survey, it is likely that the
actual dollar costs will be
approximately 30 percent higher due to
the effects of general inflation.
Aggregation will impose minor
burdens on the reporting institutions.
The only aggregation costs imposed on
the covered institutions will be those
that arise from sending two additional
copies of their disclosure statements to
the appropriate supervisory agency. In
addition, some institutions will bear
costs that arise from having to correct
incomplete or inaccurate statements
that are uncovered in the editing
process.
Although the costs of aggregation are
quantifiable, the benefits cannot be
measured in dollar terms. Two principal
benefits were cited to support
aggregation. First, it was argued that the
utility of using and evaluating individual
institutions' HMDA statements will be
enhanced if comparisons can be made to
aggregate SMSA lending patterns.
Second, aggregate lending patterns can
be used by public officials to aid in the
determination of target areas for public
investment.
Although the benefits of aggregation
are not quantifiable, it seems unlikely
that the first suggested use will actually
provide significant benefits. Experience
with enforcement of the CRA and anti­
discrimination laws suggests that
aggregation will not materially aid
regulators in their enforcement
responsibilities. Home loan information
currently is proposed on an individual
institution basis and that is the form in
which it is principally used. W hen
comparing one institution's record with
others, comparisons must be between
institutions of similar types and sizes to
be meaningful. Having an overall view
of SMSA lending patterns will not be

Federal Register / Vol. 46, No. 27 / Tuesday, February 10, 1981 / Proposed Rules
particularly helpful in evaluating the
CRA or civil rights records of individual
lenders. Aggregate HMDA lending
patterns may be a useful tool for public
officials efforts to target public
investment. However, there is simply no
w ay to determine if the substantial costs
of aggregation are outweighed by the
benefits some public officials will
receive from the availability of the
aggregated data. Moreover, if individual
states or localities find aggregate
lending information valuable for
planning purposes, they probably can
compile the information more quickly
and perhaps in a more useful format
than can be done in Washington.
Economic im pact analysis o f revised
Regulation C
Section 203.2 of the regulation
provides definitions (for example, of the
types of depository institutions that are
covered by the regulation and of the
types of residential loans that must be
disclosed). The definitions of home
improvement loan and home purchase
loan in § 203.2 have been revised in the
proposed regulation to reflect more
accurately the actual purpose for which
the loan w as made. In the original
regulation, the home improvement loan
category did not include first-lien loans
that were for the purpose of improving
an existing residential structure. In
addition, the original regulation did not
categorize a loan, whose purpose was to
purchase residential property, as a home
purchase loan unless the loan was
secured by a first lien. The revised
definitions may impose some minor
additional costs on the institution in
terms of retraining staff personnel.
However, the new definitions are
intuitively appealing and will provide
more accurate information about the
residential credit activity of covered
lenders.
Section 203.3 of the revised regulation
includes the same exemption standards
as existed under previous Regulation C.
These standards provide a blanket
exemption for any depository institution
that does not have an office in a
designated SMSA area. In addition, any
depository institution, regardless of
location, is exempt if it has year-end
assets of less than $10 million.
The exemption standards in S 203.3 of
the revised regulation are identical to
those mandated by the statute. These
exemption standards appear to reflect
several congressional perceptions. The
exemption for non-SMSA located
institutions reflects the perception that
disinvestment by depository institutions
is largely an urban problem. The $10
million asset examination standard was
adopted primarily in recognition of the

fact that HMDA disclosure requirements
impose a disproportionate burden on
small depository institutions.
As noted, the FHLBB/FDIC study of
HMDA found that the costs of
compliance fall disproportionately on
those lenders marginally active in the
home loan market. The FHLBB/FDIC
study found that the costs of
compliance, on a per loan basis, were
approximately two times as high for
institutions reporting fewer than 200
loans per year than they were for
institutions extending between 200 and
1,000 loans per year. The study also
found that institutions disclosing fewer
than 200 loans per year incur an average
cost per loan that is approximately three
times higher than the average cost per
loan of lenders reporting over 1,000 per
year.
While the $10 million asset exemption
does reduce the number of small
depository institutions in SMSAs that
must comply with HMDA, it results in as
inequitable treatment of the different
types of institutions covered by the act.6
The current exemption standards fail to
recognize the specialization that exists
in the residential loan market between
commercial banks and thrift institutions.
A comparison between the typical
commercial bank and thrift institution,
of any similar asset size, will reveal a
large disparity in the percentage of
lendable funds devoted to home loans.
As a result, the $10 million asset
exemption standard allows many thrift
institutions that are relatively active
residential lenders to be exempt from
disclosure requirements and hence
public review of their lending activity.
At the same time, this exemption
standard requires many commercial
banks with assets in excess of $10
million, but many fewer home loans
than the smaller exempt thrift
institutions, to compile and disclose
their home loan activity. Since the
reporting costs per loan rise as the
number of loans disclosed declines, it
follows that smaller-sized commercial
banks bear a disproportionate share of
the total cost of HMDA reporting.
An alternative exemption standard
that is more equitable than the asset
size exemption standard would base
exemption upon the size of an
institution’s home purchase and home
improvement loan portfolio and the
number of loans made by the lender in a
8The $10 million asset standard exempts
approximately 826 (14 percent) of the SMSA based
commercial banks and 100 [7 percent) of the savings
and loan associations with offices in designated
SMSA areas.

11787

calendar year.7This two-part test is
better adapted than an asset-size
standard to measuring whether an
institution is sufficiently active in the
home loan market to justify the costs of
reporting.
An exemption standard that requires
a lender to report if it has a home loan
portfolio of more than $10 million or
extends 200 or more home loans in a
calendar year is a cost-effective
standard to establish. This specific
alternative exemption standard reflects
the cost findings of the FHLBB/FDIC
study. The Board considered
incorporating a portfolio exemption in
this propoosal, in light of its goal to
reduce regulatory burdens and of its
responsibilities under the new
Regulatory Flexibility Act (Pub. L. 96354).8Such an exemption standard
would substantially reduce the number
of institutions required to report under
the act.9 However, the impact on the
proportion of residential loans disclosed
would be less substantial since the
excluded institutions are the least active
home lenders.
The alternative exemption standard
would reduce the number of commercial
banks required to file disclosure
statements by approximately 69 percent
(from 5,160 reporting banks to
approximately 1,612 covered
commercial banks).10 Although the
exemption standard would result in a
substantial reduction in the number of
reporting commercial banks, it would
continue to require the major bank
lenders in the residential loan market to
file disclosure statements. Under this
exemption standard, at least 88 percent
of the dollar value of all home purchase
and home improvement loans held by
commercial banks headquartered in
SMSAs would be held by banks subject
to reporting requirements.
1A similar exemption standard was proposed by
the Federal Reserve Board in hearings before
Congress on the HMDA amendments in May 19B0.
*The cutoff of 200 loans is based upon the finding
of the FHLBB/FDIC study that per-loan reporting
costs escalate sharply when fewer than 200 loans
are to be reported. This portion of the exemption
standard would be necessary to ensure that
institutions extending a significant number of home
loans in a given calendar year cannot avoid
reporting requirements by selling these loans in the
secondary market, thereby keeping their year-end
home loan portfolio below $10 million.
9Estimates of the number of covered institutions
that would be required to report under this
exemption standard are based on December 1979
call report data.
10The 1,612 estimate represents the minimum
number of commercial banks that would be required
to report. At least some banks that originate and
sell their residential loans on a regular basis would
be excluded under the portfolio exemption but
would be required to report because they extend
more than 200 home purchase and home
improvement loans in a calendar year.

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Federal Register / Vol. 46, No. 27 / Tuesday, February 10, 1981 / Proposed Rules

The exemption standard outlined
above would require approximately
2,255 savings and loan associations and
296 mutual savings banks to file
disclosure statements. This would
reduce the number of savings and loan
associations and mutual savings banks
that are required to report about 3
percent. These 2,551 thrift institutions
held over 99 percent of the dollar value
of all home purchase plus home
improvement loans held by savings and
loan associations and mutual savings
banks headquartered in SMSAs at yearend 1979. Overall, the alternative
exemption standard would reduce the
total number of reporting institutions by
approximately 47 percent. Despite the
sharp drop in the number of reporting
institutions, at least 97 percent of the
dollar value of home purchase and home
improvement loans held by all
commercial banks, savings and loan
associations, and mutual savings banks
with offices in SMSAs would be
disclosed.
The exemption standard outlined
above would significantly reduce the
number of small institutions that must
comply with HMDA. Moreover, the
exemption standard would not result in
a significant reduction in benefits. In
most cases consumer compliance
examiners would be able to judge an
exempt lender's CRA and civil rights
compliance by reviewing a sample of
residential loans from the institution
loan files. The additional examination
burden that results from the alternative
exemption standards would offset some
of the savings that arise from the
reduction in compliance costs.
The Board ultimately decided not to
propose a portfolio exemption because
of the fact that the Senate had
considered, and rejected, a similar
proposed amendment.
Section 203.3(b) allows statechartered institutions, subject to state
regulations substantially similar to
revised Regulation C, to be exempt from
compliance with the federal regulation.
This section requires institutions exempt
from federal regulation to file two copies
of the disclosure statements (prepared
under the provisions of their state law)
with the appropriate state supervisory
agency. This minor additional burden is
necessary because exempt-state
institutions must be included in the
HMDA aggregation process.
Section 203.3(c) allows institutions
that lose their exempt status under
§ 203.3 (a) or (b) of the regulation to
report beginning with data for the first
existing calendar year after the year in
which their exemption was lost. The
existing regulation required institutions
that lost their exemption to file

disclosure statements not only for the
year in which they lost their exemption,
but also for the prior year. The revised
regulation will reduce compliance
burdens on average by about $1,426 for
each institution that loses its exempt
status.1 This figure represents a
1
conservative estimate because it is more
costly for institutions to compile data
from a prior year than it is to compile
the information on a continuous basis.
This provision should not result in a
significant loss in consumer benefits.
Moreover, the data from the year prior
to the year in which the exemption was
lost will not be available in time to be
included in the SMSA aggregation
process.
The 1980 HMDA amendments require
covered institutions to compile and
report their HMDA data on a calendar
year basis. Section 203.4(a) of the
regulation implements this provision of
the act. The goal of this regulation is to
establish a uniform reporting period so
that data from all covered institutions in
an SMSA may be compared over an
equivalent time period. The original
Regulation C allowed institutions to
report on a fiscal year basis. As a result,
it w as difficult to aggregate and
compare different institutions’ lending
records. The switch to a calendar year
reporting period was first implemented
by an amendment to Regulation C
adopted in November I960.12As a result,
the revised regulation does not
technically change the reporting period
from that which is m andated in the
current regulation.13
The 1980 HMDA amendments
authorize the Federal Reserve Board to
1 $1,426 represents the 1977 costa of compiling
1
home moratgage disclosure statements for two
years for the average institution covered by the act.
1 45 FR 80613, December 8,1980.
2
13The regulatory amendment imposes a one-time
cost on those institutions disclosing data on other
than a calendar year basis. This one-time cost haB
two components. First, there is the cost associated
with changing operating methods to conform with a
calendar reporting requirement. These costs involve
additional training of institution personnel
responsible for preparing the disclosure reports and
some minor computer programming adjustments to
reflect the calendar year reporting data
requirements. These costs are not expected to be
significant. Second is the cost associated with
preparaing a separate disclosure statement
containing data for any period prior to calendar
year 1980 which is not covered by the lsat full year
report prior to the 1980 calendar year report. In
addition, those institutions reporting on a fiscal year
basis which have disclosed their 1980 fiscal year
reports will have to duplicate that portion of their
fiscal 1080 reports that falls in calendar year 1980.
The FHLBBV/FDIC study found that 85 percent of
the covered institutions in their survey currently
report oh a calendar year basis. Therefore, it is
unlikely that this regulation will impose any burden
on the bulk of the reporting institutions. However,
the regulation will impose an additional burden on
those institutions not previously reporting on a
calendar year basis.

prescribe a standard format for
disclosures of HMDA data. Currently,
the vast majority of covered institutions
use a reporting form that is quite similar
to the one set forth in Regulation C.
However, minor variations do exist
across institutions. While such
variations in format are not significant
in a small sample study, they present
costly impediments to a cost-effective
aggregation of HMDA data on an SMSA
basis. Variations in format raise the cost
of using the disclosure data
substantially, perhaps doubling the
costs associated with aggregating the
data. Prescription of a standard format
will impose some minor one-time costs
on the reporting institutions. These one­
time costs arise from the need to alter
the institution’s existing format. In some
cases this will impose minor computer
programming changes; in all cases it will
involve some additional personnel
training.
The reporting format prescribed in the
revised regulation deletes one column—
total residential mortgage loans on 1-to4 family dwellings—from the HMDA
form in old Regulation C. This column is
not required under the act and is simply
the summation of columns two and
three. Deletion of this column should
reduce both the number of errors in the
institutions’ reports, and on net reduce
the costs of compliance since the new
form will require fewer manual or
computer computations and reduced
paper work. Moreover, deletion of this
column should result in a significant
savings in the aggregation process since
it will reduce by one-seventh the
amount of material that must be
aggregated. Based on the FHLBB/FDIC
study of HMDA aggregation costs,
deletion of one column should result in
an annual cost savings of about
$46,000. 1
4
Section 203.3(b) of the regulation
requires exempt-state institutions to
follow the basic reporting format.
Aggregation requirements necessitate
the establishment of a uniform reporting
format because the exempt-state
institutions must be incorporated into
the aggregation process. This
requirement will impose additional costs
on some of these institutions. However,
most of the exempt-state institutions
already compile HMDA data in a format
similar to that prescribed in the
regulation.
Section 203.4 of revised Regulation C
requires covered lenders to compile the
geographic disclosure of loan
originations and purchases on separate
14 This estimate was derived by calculating oneseventh of the statement related and tract line
related costs of aggregation.

Federal Register / Vol. 46, No. 27 / Tuesday, February 10, 1981 / Proposed Rules
report forms. The previous regulation
also required separate disclosure reports
for originations and purchases.
Another 1980 amendment to the act
requires lenders to geocode all covered
loans extended within SMSAs on a
census tract basis unless the loan
involves a property located in an SMSA
county whose population does not
exceed 30,000. Section 203.4(b) of the
revised regulation allows covered loans
extended in the less populous counties
to be geocoded by county name. Based
upon 1970 census data, approximately
19 percent of the counties located in
SMSAs have populations that do not
exceed 30,000.
This amendment makes two
modifications in the statute. First, it
allows lenders extending credit in
SMSA counties with small populations
(30,000 or less) to geocode these loans
by county name. The previous regulation
required lenders to geocode these loans
by either census tract or ZIP code. The
modification in geocoding requirements
for loans extended in these less
populous areas will reduce the costs of
HMDA compliance as well as improve
the accuracy of the reports with no
associated loss in the usefulness of the
data, The amendment will not reduce
the usefulness of the data because, in
general, loans in such rural areas are
already aggregated for CRA or civil
rights analysis.
The second modification resulting
from this amendment to the act requires
lenders to geocode loans by census tract
in SMSA counties whose populations
exceed 30,000. Complete compliance
with this amendment is impossible
because there are untracted SMSA
counties with populations that exceed
30,000. As a result, the revised
regulation allows lenders extending
credit in such untracted areas to report
the data by county name. Disclosure by
county name in these large untracted
counties should marginally reduce the
costs of compliance and improve the
accuracy of the disclosure reports.
According to § 203.4(d) of the revised
regulation, depository institutions must
use the 1970 Census o f Population and
Housing: Census Tracts, Final Reports,
PHC(l) Series prepared by the Bureau of
Census, U.S. Department of Commerce
to determine whether property is in a
particular census tract, until the 1980
census material becomes available. The
1970 census tract maps for each SMSA
are currently available for purchase at a
nominal fee from the Bureau of the
Census, Washington, D.C.15 When the
15 The 1970 PHC(l) Series reports containing the
census tract maps were priced in the $.45 to $12.75
range in 1976. Street address coding guides are also

1980 census material becomes available,
the Federal Reserve System will inform
lenders that they should begin using this
data. At that time the depository
institutions will bear additional
compliance costs associated with
purchasing new geocoding material.
These costs will be nominal for an
institution. The switch to the 1980
census material is necessary in order for
the Federal Reserve to complete the
data aggregation required under the act.
Section 203.5 of the regulation
precribes the date and manner by which
institutions must make their disclosure
statements available. Section 203.5(b)
requires that depository institutions
make their disclosure statements
available at their home office and at one
branch in each SMSA in which they
have an office, other than the SMSA in
which the home office is located. This
provision reduces the compliance
burden because under the old regulation
a lender had to make the statements
available at both the home office and at
one branch in every SMSA. The revised
regulation provides for a more liberal
disclosure requirement, because each
lender’s statement will now be available
at the central repository as well as the
institution’s home office.
Section 203.5(b) of the revised
regulation provides for a more liberal
branch office disclosure requirement
than existing Regulation C. Under the
existing regulation, an institution may
either make the entire institution-wide
disclosure statement available at one
branch in each SMSA, or the institution
may omit detailed geographic
breakdowns for loans on property in
other SMSAs at the local branch office.
In the latter case the institution’s
disclosure statement would include a
complete geographic breakdown for
loans in the local SMSA, a total figure
for each other SMSA in which the
institution has offices, and an aggregate
figure for loans on property located
outside SMSAs in which the institution
has an office. The revised regulation
would permit branch office disclosures
to omit all data relating to SMSA other
than the SMSA in which the particular
branch office is located.
This suggested rule change would
result in some reduction in data
compilation and reproduction costs for
those institutions with branch offices in
more than one SMSA. The rule change
will not reduce the consumer benefits
since the entire disclosure statement
available from the Bureau of the Census. These
guides facilitate the intemization of loans by census
tracl. The 1980 guides are currently available from
the Bureau of the Census. They range in price from
$.78 to $70.27 for an SMSA with an average price of
$6.54 per SMSA.

11789

will be available at the institution’s
home office and at the central repository
in each SMSA.
The revised regulation no longer
requires covered institutions to annually
notify depositors of the availability of
HDMA data. A notification provision
was not required by the act but was
included in the original Regulation C.
The Board believes that such
notification is largely ineffective and
unnecessary. Moreover, the fact that
disclosure data for all institutions in an
SMSA will be available at a central
repository and that this data availability
will presumably be publicized makes
annual notification even less necessary.
Eliminating this requirement will reduce
annual compliance costs slightly.
Section 205.3(d) requires lenders to
forward two copies of their disclosure
statement each year to their appropriate
supervisory agency. This additional
burden arises from the requirement in
the act that an aggregation of HMDA
data be prepared each year. The
aggregate cost to all covered lenders of
this additional reporting requirement is
estimated to be about $65,000
annually.16
(4)
Pursuant to the authority granted
in 12 U.S.C. 2804(a), the Board hereby
proposes to revise 12 CFR Part 203, to
read as follows:
PART 203—HOME MORTGAGE
DISCLOSURE
Regulations
Sec.

203.1 Authority, purpose, and scope.
203.2 Definitions.
203.3 Exemptions.
203.4 Compilation of loan data.
203.5 Disclosure and reporting
requirements.
203.6 Administrative enforcement and
sanctions for violations.
Supplement
203.30 Procedures for an exemption
application pursuant to § 203.3(b) of
Regulation C (Supplement I).
Appendix A—Instructions for Completion of
Form HMDA-1 (Revised): "Loan
Disclosure Statement".
Appendix B—Federal Enforcement Agencies.
Authority: Home Mortgage Disclosure Act
of 1975, as amended, Title III, Pub. L. 94-200,
89 Stat. 1125, et seq. (12 U.S.C. 2801-2811].

Regulations
§ 203.1

Authority, purpose and scope.

(a)
Authority. This regulation is issued
by the Board of Governors of the
Federal Reserve System pursuant to the
16 This estimate is based on 8,138 reporting
institutions incurring an average cost o f $8.00 to
copy and forward two copies of their disclosure
statement to the appropriate supervisory agency.

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Federal Register / Vol. 46, No. 27 / Tuesday, February 10, 1981 / Proposed Rules

Home Mortgage Disclosure Act of 1975,
as amended (Title 12, Sections 2801
through 2811 of the United States Code).
(b) Purpose. The purpose of this
regulation is to provide the public with
loan data to determine whether
depository institutions are serving the
housing needs of the communities and
neighborhoods in which they are
located. The purpose is also to assist
public officials in distributing public
sector investments so as to attract
private investment to neighborhoods
where it is needed. This regulation is not
intended to, nor shall it be construed to,
encourage unsound lending practices or
the allocation of credit.
(c) Scope. This regulation applies to
depository institutions that make
federally related mortgage loans. It
requires a covered depository institution
to disclose loan data at its offices
located in standard metropolitan
statistical areas and to report the data
to its appropriate supervisory agency.
(d) Central data repositories. The act
requires that the loan data be made
available at central data repositories
located within each standard
metropolitan statistical area. It also
requires that mortgage loan data,
covering all institutions in each
standard metropolitan statistical area
and showing lending patterns by
geographical location, age of housing
stock, income level, and racial
characteristics, be aggregated. A listing
of central data repositories can be
obtained from the Department of
Housing and Urban Development,
Washington, D.C. 20410, or from any of
the agencies listed in Appendix B.
§203.2

Definitions.

For the purposes of this regulation, the
following definitions apply:
A ct means the Home Mortgage
Disclosure Act of 1975 (Title III of Pub.
L. 94-200), as amended in 1980 (Title III
of Pub. L. 96-399), codified in Title 12,
sections 2801 through 2811 of the United
States Code.
Branch office means an office
approved as a branch of the depository
institution by its federal or state
supervisory agency. It excludes free­
standing automated teller machines and
other electronic terminals.
D epository institution means a
commercial bank, savings bank, savings
and loan association, building and loan
association, homestead association
(including a cooperative bank,), or credit
union, that makes federally related
mortgage loans.1A majority-owned non­
1 “Federally related mortgage loan" means any
loan (other than temporary financing such as a
construction loan) that

depository subsidiary is deemed to be
part of its parent depository institution
for the purposes of this regulation. A
majority-owned depository subsidiary
may, at the parent depository
institution’s option, be treated as part of
its parent or as a distinct entity.
Federal Housing A uthority (FHA),
Farmers Home Adm inistration (FmHA),
or Veterans A dm inistration (V A ) loans
means mortgage loans insured under
Title II of the National Housing Act or
under Title V of the Housing Act of 1949
or guaranteed under Chapter 37 of Title
38 of the United States Code.
Home im provem ent loan means any
loan, including a refinancing, (a) whose
proceeds, as stated by the borrower to
the lender at the time of the loan
application, are to be used for repairing,
rehabilitating, or remodeling a
residential dwelling located in a state;
and (b) that is recorded on the
depository institution’s books as a home
improvement loan.
Home purchase loan means any loan,
including a refinancing, secured by and
made for the purpose of purchasing
residential real property located in a
state (including single-family homes,
dwellings for from 2-to-4 families, other
multi-family dwellings, and individual
units of condominiums or cooperatives).
The term does not include temporary
financing (such as a bridge loan or
temporary construction loan) or the
purchase of an interest in a pool of
mortgage loans (such as mortgage
participation certificates issued or
guaranteed by the Federal Home Loan
Mortgage Corporation, the Government
National Mortgage Association, or the
Farmers Home Administration).
State means any state of the United
States of America, the District of
Columbia, and the Commonwealth of
Puerto Rico.
(i) Is secured by a first lien on residential real
property (including individual units of
condominiums and cooperatives) that is designed
principally for the occupancy of from l-to-4 families
and is located in a state; and
(ii)(A) Is made in whole or in part by a depository
institution the deposits or accounts of which are
insured by an agency of the federal government, or
by a depository institution that is regulated by an
agency of the federal government; or
(B) Is made in whole or in part, or is insured,
guaranteed, supplemented, or assisted in any way,
by the Secretary of Housing and Urban
Development or any other officer or agency of the
federal government or under or in connection with a
housing or urban developement program
administered by any such officer or agency; or
(C) Is intended to be sold by the depository
institution that originates the loan to the Federal
National Mortgage Association, the Government
National Mortgage Association, or the Federal
Home Loan Mortgage Corporation, or to a financial
institution from which it iB to be purchased by the
Federal Home Loan Mortgage Corporation.

§ 203.3

Exemptions.

(a) A sset size and location. A
depository institution is exempt from all
requirements of this regulation
(1) If its total assets on December 31
are $10,000,000 or less; or
(2) If it has neither a home office nor a
branch office in a standard metropolitan
statistical area (SMSA) as defined by
the U.S. Department of Commerce.
(b) State law. A state-chartered
depository institution is exempt from the
requirements of this regulation if it is
subject to state laws that contain, as
determined by the Board in accordance
with § 203.30 (Supplement I) of this
regulation: (1) requirements
substantially similar to those imposed
by this regulation, and (2) adequate
provisions for enforcement. For
purposes of data aggregation, however,
an institution exempted under this
paragraph shall submit the data required
by the disclosure laws of its state to its
state supervisory agency.
(c) Loss o f exem ption. A depository
institution that loses its exemption shall
compile loan data beginning with the
calendar year following the year in
which the exemption was lost.
§ 203.4 Compilation of loan data.

(a) Data to be included. A depository
institution shall compile data on the
number and total dollar am ount2 of
home purchase and home improvement
loans that it originates and purchases,
for each calendar year beginning with
calendar year 1981.
(b) Format. The loan data shall be
compiled separately for originations and
purchases, using the form set forth in
Appendix A, and shall be itemized as
follows:
(1) Geographic item ization. The loan
data shall be itemized by standard
metropolitan statistical area (SMSA).
Within each SMSA, the data shall be
further itemized by the census tract in
which the property to be purchased or
improved is located, except that
(i) If the property is located in a
county with a population of 30,000 or
less, or in an area that has not been
assigned census tracts, itemization by
county shall be used instead of
itemization by census tract.
(ii) If the property is located outside
the SMSAs in which the institution has a
home or a branch office, no itemization
2 “Total dollar amount” means (i) the original
principal amount of loans originated by the
depository institution (to the extent of its ownership
interest, when the loan is made jointly or
cooperatively) and (ii) the unpaid principal balance
of loans purchased by the depository institution (to
the extent of its ownership interest in such
purchased loans). For purchased home improvement
loans, the amount to be reported may include
umpaid finance charges.

Federal Register / Vol. 46, No. 27 / Tuesday, February 10. 1981 / Proposed Rules_______11781
(by SMSA, county, or census tract) is
required and the data for such loans
shall instead be listed as an aggregate
sum.
(2) Type-of-loan item ization. The loan
data within each geographic category
described in paragraph (b)(1) of this
section shall be further itemized as
follows:
(i) FHA, FmHA, and VA loans on 1-to4 family dwellings;
(ii) Other home purchase
(conventional) loans on l-to-4 family
dwellings;
(iii) Home improvement loans on 1-to4 family dwellings;
(iv) Total home purchase and home
improvement loans on dwellings for
more than 4 families; and
(v) Total home purchase and home
improvement loans on l-to-4 family
dwellings (from categories (i), (ii), and
(iii) above) made to any borrower who
did not, at the time of the loan
application, intend to use the property
as a principal dwelling.3 This addendum
item is not required for loans on
property in the outside-SMSAs category
described in paragraph (b)(l)(ii) of this
section.
(c) E xcluded data. A depository
institution shall not disclose loan data
for
(1) Loans originated and purchased by
the depository institution acting as
trustee or in some other fiduciary
capacity;
(2) Loans on unimproved land; or
(3) Refinancings that the depository
institution originates, if there is no
increase in the outstanding principal on
the existing loan and if the institution
and the borrower are the same parties
on the existing loan and the refinancing.
(d) SM SAs and census tracts. For
purposes of geographic itemization
(1) A depository institution shall use
the SMSA boundaries defined by the
U.S. Department of Commerce,
Washington, D.C. 20233, as of the first
day of the calendar year for which the
data are compiled.
(2) A depository institution shall use
the census tract numbers and
boundaries on the census tract maps in
the “1980 Census of Population and
Housing: CENSUS TRACTS, Final
Report, PHC(l) Series" prepared by the
Bureau of the Census, U.S. Department
of Commerce, Washington, D.C. 20233.4
9 A depository institution may assume, unless its
records contain information to the contrary, that a
loan that it purchases does not fall within this
category.
4 Until the complete 1980 series is available,
institutions shall use the maps in the 1970 series.
A previously untracted area shall be reported by
the most recent census tract update, if any, existing
on (anuary 1 of the year for which the data are

If a census tract number is duplicated
within an SMSA, then the census tract
shall also be identified by county, city,
or town name.
§ 203.5 Disclosure and reporting
requirements.

(a) Time requirem ents fo r disclosure
statem ents. A depository institution
shall make its loan data disclosure
statements available to the public by
March 31 following the calendar year for
which the data were compiled and shall
continue to make them available for five
years.
(b) O ffices a t which disclosure
statem ents are to be m ade available. (1)
A depository institution shall make a
complete disclosure statement available
at its home office.
(2) A depository institution shall also
make a disclosure statem ent available
in at least one branch office in each
SMSA where it has offices, other than
the SMSA in which the home office is
located. The statement a t a branch
office may omit, at the option of the
institution, all data other than the data
relating to property located in the SMSA
where that branch is located.
(3) Upon request, a depository
institution shall promptly provide
information regarding the office(s) of the
institution where its disclosure
statements are available.
(c) M anner o f m aking disclosure
statem ents available. A depository
insitution shall make its loan data
disclosure statements available to
anyone requesting them for inspection
or copying during the hours the office is
normally open to the public for business.
A depository institution that provides
photocopying facilities may impose a
reasonable charge for this service.
(d) Reporting requirem ents. For
purposes of data aggregation, a
depository institution shall send two
copies of its complete disclosure
statement to the regional office of its
enforcement agency by March 31
following the calendar year for which
the data w ere compiled.
§ 203.6 Administrative enforcement and
sanctions for violations.

(a) A dm inistrative enforcem ent As
set forth more fully in S§ 305(b) and
306(b) of the act, compliance with the
act and this regulation is enforced by
the Comptroller of the Currency, the
Federal Reserve System, the Federal
Deposit Insurance Corporation, the
Federal Home Loan Bank Board, and the
National Credit Union Administration.
(b) Sanctions fo r violations. (1) A
violation of the act or this regulation is
compiled. Updates shall not be used for previously
tracted areas.

subject to administrative sanctions as
provided in § 305(c) of the act.
(2) An error in compiling or disclosing
required data is not considered a
violation of the act or this regulation if
the error was unintentional and resulted
from a bona fid e mistake despite the
maintenance of procedures reasonably
adapted to avoid such an error.
Supplement
§ 203.30 Procedures for an exemption
application pursuant to § 203.3(b) of
Regulation C (Supplement I).

(a) A pplication. Any state,1 statechartered depository institution, or
association of such depository
institutions may apply to the Board
pursuant to this supplement and the
Board's Rules of Procedure (12 CFR 262)
for an exemption from Regulation C
under § 203.3(b). Such an exemption
requires a determination that a statechartered depository institution is
subject to state law requirements 2
substantially similar to those imposed
by Regulation C (12 CFR 203), and that
there is adequate provision for
enforcement of those requirements.
(b) Supporting documents. The
application, which may be made by
letter, shall include
(1) A copy of the full text of the
relevant state law, including provisions
for enforcement;
(2) A statement of reasons why the
state requirements are substantially
similar to those imposed by the act and
Regulation C, including an explanation
why any differences are not significant;
and
(3) An undertaking to inform the
Board within 30 days of the occurrence
of any change in the relevant state law.
(c) Public notice o f filing. The Board
will publish in the Federal Register
notice of the filing of an application that
complies with the above requirements.
A copy of the application will be made
available for examination during
business hours a t the Board and at the
Federal Reserve Bank of each Federal
Reserve District in which the applicant
is situated. The Board will provide a
period of time for interested persons to
submit written comments. For multiple
applications concerning the same state
law, the Board may (1) consolidate the
notice of receipt of all such applications
in one Federal Register notice, and (2)
dispense with publication of notice of
applications subsequently received.
1 "State” includes any subdivision of a state.
2 “State law" includes any regulations which
implement the law, any official interpretations of
the law, and regulations of a state agency or
department that has jurisdiction over a class(es) of
depository institutions.

11792

Federal Register / Vol. 46, No. 27 / Tuesday, February 10, 1981 / Proposed Rules

(d) Grant o f exem ption. If the Board
determines that some or all statechartered depository institutions are
subject to requirements substantially
similar to those imposed by Regulation
C, and that there is adequate provision
for enforcement, the Board will exempt
such institution(s) from the requirements
of Regulation C (except as specified in
5 203.3(b)) by publishing notice of the
exemption in the Federal Register and
furnishing a copy of the notice to the
applicant, to each state authority
responsible for administrative
enforcement of the state law, to the
regulatory authorities specified in
S 305(b) of the act, and to each
participant in the proceeding.
(e) Subsequent am endments;
revocation o f exem ption. (1) The Board
will inform the appropriate state official
of any subsequent amendments to
Regulation C (including published
interpretations of the Board) that might
require amendment of the state law. The
Board may in certain instances require
reapplication for an exemption.
(2) The Board reserves the right to
revoke an exemption if a t any time it
determines that state law does not in
fact impose requirements substantially
similar to those imposed by Regulation
C, or that there is not in fact adequate
provision for enforcement.
(3) The Board will publish notice of its
intent to revoke an exemption in the
Federal Register and will send the
notice to the appropriate state official. A
period of time will be allowed from the
date of publication for interested
persons to submit written comments.
(4) If an exemption is revoked, the
Board will publish notice of the
revocation in the Federal Register and
will send a copy of the notice to the
appropriate state official and to the
regulatory authorities specified in
S 305(b) of the act.
(5) The Board may dispense with the
procedures set forth in this section in
any case in which it finds such
procedures unnecessary.
Appendix A—Instruction* for Completion of
FORM HMDA-1 (revised): “Loan Disclosure
Statement”

General Instructions
1. Dollar amounts should be rounded to the
nearest thousand ($500 and greater is to be
rounded up), and shown in terms of
thousands.
2. If more than one SMSA is involved, the
relevant SMSA should be indicated next to
the tract number or, preferably, separate
pages should be used for each SMSA.
3. SMSA boundaries are those defined by
the U.S. Department of Commerce as of
January 1 of the calendar year to which the
loan data relates.

4. Institutions should continue to use
census tract numbers appearing on the maps
in the Bureau of the Census 1070 PHC(l)
Series until the 1980 Series is completely
available. A previously untracted area is to
be reported by the most recent census tract
update, if any, existing on January 1 of the
calendar year to which the disclosure
statement relates. Updates are not to be used
for previously tracted areas.
5. If the census tract number is duplicated
within an SMSA, the county, city or town
that uniquely identifies the number should be
stated.
6. This statement must be retained and
made available for five years from March 31
following the calendar year for which the
data was compiled.
Specific Instructions
1. Geographic Itemization (first column).
(a) Section 1. Loan data are to be itemized

by SMSA, and further itemized within each
SMSA by:
(i) census tract in which the property is
located, or
(ii) if property is located in a county with a
population of 30,000 or less, or in an area that
has not been assigned census tracts on the
Bureau of Census 1070 PHC(l) Series maps,
then itemization must be by county name (not
census tract).
(b) Section 2. If the property is located
outside the SMSAs in which the institution
has a home or branch office, the data for such
loans should be listed as an aggregate sum;
no geographic itemization is necessary.
2. Type-of-Loan Itemization (remaining
columns): Each geographic category is to be
further itemized by loan type as follows:
(a) FHA. FmHA, and VA loans on l-to-4
family dwellings (second column). This
category includes only loans that are secured
by and made for the purpose of purchasing
residential real property. It does not include,
for example, FHA Title I loans, which are to
be classified in category (c).
(b) Other home purchase loans
("conventional” loans) on l-to-4 family
dwellings (third column).
(c) Home improvement loans on l-to-4
family dwellings (fourth column). This
category is limited to loans recorded on the
institution's books as home improvement
loans.
(d) Total home purchase and home
improvement loans on dwellings for more
than 4 families (fifth column).
(e) Non-occupant loans on l-to-4 family
dwellings (sixth column). This is an
addendum column; it should include total
home purchase and home improvement loans
on l-to-4 family dwellings (from columns 2,3,
and 4) made to any borrower who did not, at
the time of the loan application, intend to use
the property as a principal dwelling. A
depository institution may assume, unless its
records contain information to the contrary,
that a loan it purchases does not fall within
this category.
BILLING CODE S210-01-M

Page 1 of 2
FORM HMDA 1, revised
(Pursuant to Public Laws 94-200 and 96-399)

Loan Disclosure Statement

Federal Enforcement

Agency for this Institution

Name:
Address:

Part A - Originations
Section 1 - Data for Property Located Within SMSAs in Which Institution Has Home or Branch Offices

II
CENSUS TRACT |
(in numerical I
sequence)
or
|
COUNTY NAME
j
1
1
1
1

FHA, FmHA OR VA
LOANS (on l-to-4
family dwellings)

No. of
loans

Principal
amount
(thousands)

OTHER HOME
PURCHASE LOANS
("conventional"
loans) (on l-to-4
family dwellings)

HOME IMPROVEMENT
LOANS (on l-to-4
family dwellings)

Principal
No. of
loans

aoK > unt

(thousands)

No. of
loans

Principal
amount
(thousands)

Addendum Item

TOTAL HOME PURCHASE
AND HOME IMPROVEMENT
LOANS (on dwellings
for more than 4
families)

Noof
loans

|NON-OCCUPANT
ILOANS (on l-to-4
Ifamily dwellings)
1
1
1
1
Principal
Principal
1
amount
|No. of
amount
(thousands) Iloans
(thousands)

Column Totals

Section 2 - Data for All Property Located Outside SMSAs in Which Institution Has Home or Branch Offices

ITT7T7T7T1
I
I
I-------------------------- II I I I I I I I I I /
I / / / / / / II________________I_______________! _ ____________ I_______________ I I / / / / / / / / / /

Federal Register / Vol. 46, No. 2 / Tuesday, February 10,1981 / Proposed Rules_________________________
7

Name of Depository Institution:
SMSA:
Year:

Page 2 of 2
FORM HMDA 1, revised
(Pursuant to Public Laws 94-200 and 96-399)

Loan Disclosure Statement (cont.)

o.
C
D

E-

Part B - Purchases
Section 1 - Data for Property Located Within SMSAs in Which Institution Has Home or Branch Offices

a
<
0
Addendum Item
FHA, FmHA OR VA
LOANS (on l-to-4
family dwellings)

CENSUS TRACT
(in numerical
sequence)
or
COUNTY NAME

No. of
loans

Principal
amount
(thousands)

HOME IMPROVEMENT
LOANS (on l-to-4
family dwellings)

OTHER HOME
PURCHASE LOANS
("convent iona1"
loans) (on l-to-4
family dwellings)

No. of
loans

Principal
amount
(thousands)

No. of
loans

Principal
amount
(thousands)

TOTAL HOME PURCHASE
AND HOME IMPROVEMENT
LOANS (on dwellings
for more than 4
families)

No. of
loans

Principal
amount
(thousands)

NON-OCCUPANT
LOANS (on l-to-4
family dwellings)

<

o

05

Z
o
tv
3
No. of
loans

Principal
amount
(thousands)

2

CD
CD
CL

0
3
*<
CD

a0
3
<3
to
oo
Column Totals
o
Section 2 - Data for All Property Located Outside SMSAs in Which Institution Has Home or Branch Offices

O
GO
CD

I7 T T T T T 7 1 T
I / / / / / /

II

B ILLIN G C O D E 6 2 1 0 - 0 1 -C

T

\\ I I / I I / / / I /
11/ / / / / / / / / /

a*
50
Eaf
co

Federal Register / Vol. 46, No. 27 / Tuesday, February 10, 1981 / Proposed Rules_______11795
Appendix B—Federal Enforcement Agencies
The following list indicates which federal
agency enforces Regulation C for particular
classes of institutions. Any questions
concerning compliance by a particular
institution should be directed to the
appropriate enforcing agency.
National Banks
Comptroller of the Currency, Office of
Customer and Community Programs,
Washington, D.C. 20219.

State Member Banks
Federal Reserve Bank serving the district in
which the state member bank is located.
Nonmember Insured Banks and Mutual
Savings Banks
Federal Deposit Insurance Corporation
Regional Director for the region in which the
bank is located.
Savings Institutions Insured by the FSLIC and
Members of the FHLB System (except for
Savings Banks insured by FDIC)
The Federal Home Loan Bank Board
Supervisory Agent in the district in which the
institution is located.
Credit Unions
Division of Consumer Affairs, National Credit
Union Administration, 1776 G Street, N.W.,
Washington, D.C. 20456.
Other Depository Institutions
Federal Deposit Institution Corporation
Regional Director for the region in which the
institution is located.
(5) FFIEC's proposed aggregation tables.
General. Section 310 of the Home Mortgage
Disclosure Act (HMDA) as amended requires
the Federal Financial Institutions
Examination Council (FFIEC] to compile, for
each standard metropolitan statistical area
(SMSA), aggregate residential loan data by
census tract for all depository institutions
that are required to report under HMDA or
similar state regulations. The FFIEC is also
directed to produce tables for each SMSA
that indicate aggregate residential lending
patterns for various categories of census
tracts grouped according to location, age of
housing stock, income level, and racial
characteristics.
Under HMDA, depository institutions are
required to disclose separately data about
originations and purchases. The FFIEC
proposes to aggregate only the data about
loans originated by lenders (as reported in
the Board’s proposed loan disclosure
statement, Part A—Originations, Section I—
Data for Property Located Within SMSAs in
Which Institution Has Home or Branch
Offices; and equivalent data from exemptstate institutions). The FFIEC is proposing to
aggregate only loan originations since
originations reveal the amount of new funds
loaned in a particular census tract or SMSA.
Aggregated data on purchases could be
misleading, since they could reflect loans

originated in a particular area not only during
the current year, but also during any
preceding year. In addition, aggregation of
purchases could give a false impression of
activity since they often reflect another
lender's originations and, when aggregated,
result in some duplication. Significant cost
savings can be achieved by aggregating only
origination information. The data on
purchases would, of course, be available from
individual depository institutions and at the
central repository.
The originated loan data reported by
covered depository institutions would be
aggregated for each of the 288 SMSAs in the
country. The tables produced would be
available for review by the public at the
central data repositories to be established in
each SMSA. Copies of the tables would be
available from the FFIEC at cost.
The aggregate residential lending patterns
reflected by the tables can be used to
enhance comparisons of an individual
depository institution's residential lending
pattern to the aggregate. The aggregate
residential lending patterns can also be used
by public officials to aid in the determination
of target areas for public investment.
Census information to be used initially in
the aggregation of the loan disclosure
statements (or equivalent exempt-state
reports) will be from the 1970 Census of
Population and Housing. The 1980 Census of
Population and Housing material will be used
when the entire series becomes available.
The FFIEC is publishing for comment a
package of proposed tables that would be
produced for each SMSA. The proposed
tables are presented in five sections, each
addressing a specific aggregation requirement
of the act.
Proposed Tables. Section I presents a
proposed format for the basic aggregation
table to be produced for each SMSA. The
table details for each census tract or county
the aggregated HMDA disclosure information
for all covered depository institutions in a
particular SMSA. In addition, the racial,
income, and age of housing stock
characteristics of each census tract are
included.
Section II presents a proposed format to
satisfy the requirement that aggregate lending
patterns be shown for various groups of
census tracts in an SMSA, categorized by the
income characteristics of their population.
Three broad categories are proposed:
(a) Low income census tracts (those tracts
with median family income less than 80
percent of the SMSA median family income),
(b) Middle income census tracts (those
tracts with median family income between 80
and 120 percent of the SMSA median family
income), and
(c) Upper income census tracts (those
tracts with median family income greater
than 120 percent of the SMSA median family
income).

Section III presents a proposed format to
satisfy the requirement that aggregate lending
patterns be shown for various groups of
census tracts in an SMSA, categorized by the
racial characteristics of their population. The
table proposes that the tracts be grouped
within three broad categories:
(a) Census tracts with less than 15 percent
minority population,
(b) Census tracts with between 15 and 75
percent minority population, and
(c) Census tracts with greater than 75
percent minority population.
Section IV presents a proposed format to
satisfy the requirement that aggregate lending
patterns be shown for various groups of
census tracts in an SMSA, categorized
according to their location. Two broad
categories of data aggregation are proposed:
(a) Central city (those census tracts that
comprise the core city of the SMSA), and
(b) SMSA less central city (those census
tracts and small counties that fall outside the
SMSA core city).
Section V presents a proposed format to
satisfy the requirement that aggregate lending
patterns be shown for various groups of
census tracts in an SMSA, categorized by the
age of the housing stock. Three categories are
proposed:
(a) Census tracts whose median housing
stock age is less than the SMSA median
housing stock age,
(b) Census tracts whose median housing
stock age is equal to the SMSA median
housing stock age, and
(c) Census tracts whose median housing
stock age is greater to the SMSA median
housing stock age, and
Comments. The FFIEC is particularly
requesting comments on the proposed tables
grouping census tracts according to income
characteristics (Section II) and racial
characteristics (Section III) of their
population. In the case of income
characteristics, will the census tract
groupings of low, middle, and upper income
using the SMSA median family income as a
base provide users with sufficient data to
analyze aggregate lending patterns? In the
case of racial characteristics, will the
proposed census tract groupings provide
users with sufficient data to analyze
aggregate lending patterns? Specific
comments relating to these two tables should
include suggestions based on the information
available from the 1970 Census of Population
and Housing.
Proposed Aggregation Tables

Section I. Aggregate Data
Aggregation of HMDA data for all covered
depository institutions in each SMSA
disclosed by either census tract or county
name in which an institution has offices.
Tables also provide racial, income, and

11796

Federal Register / Vol. 46, No. 27 / Tuesday, February 10, 1981 / Proposed Rules

housing unit age characteristics for each
geographic area.

Section II. Income Categories
Each census tract in an SMSA is
categorized by the relationship between its
median family income and the median family
income of the entire SMSA:
(a) Low income areas—census tracts with
median family income less than 80 percent of
SMSA median family income.
(b) Middle income areas—census tracts
with median family income between 80
percent and 120 percent of SMSA median
family income.
(c) Upper income areas—census tracts with
median family income greater than 120
percent of SMSA median family income.

Section III. Race Categories
Each census tract in an SMSA is
categorized by the racial characteristics of its
population:
(a) Census tracts with less than IS percent
minority population.
(b) Census tracts with between 15 and 75
percent minority population.
(c) Census tracts with greater than 75
percent minority population.

Section IV. Location Categories
Each census tract in an SMSA is
categorized by its general location; that is
central SMSA city(s) or within the SMSA but
outside the central city:
(a) Central SMSA city(s)—SMSA census
tracts that fall in the core SMSA city(s).
(b) SMSA less central city(s)—all SMSA
census tracts and counties not included in the
core city.

Section V. Age o f Housing Stock Categories
Each census tract in an SMSA is
categorized by the median age of its housing
stock relative to the SMSA median housing
stock age:
(a) Census tracts whose median housing
unit age is less than the SMSA median
housing unit age.
(b) Census tracts whose median housing
unit age is equal to the SMSA median
housing unit age.
(c) Census tracts whose median housing
unit age is greater than the SMSA median
housing unit age.
BILUNG COOC M10-01-M

Federal Register / Vol. 46, No. 27 / Tuesday, February 10,1981 / Proposed Rules

11797

11798________ Federal Register / Vol. 46, No. 27 / Tuesday. February 10,1981 / Proposed Rules
Sac Clem 11
"Name"
0KXGXHATX0HS
smsa

Cm s u i T rac e
In co M
C a tsg o ry

FHA, FWU o r VA
Loans
(1 -4 t a l l y
d w e llin g s )
No. o f

P r ln c lp s l

OthST
la s ld a n tla l
Mor tg a g a Loans
( " C o n v u tlo n a l” )
(1 - 4 f u l l y
dv a l l i n n )
Vo. o f
P rin c ip a l

T o ta l H
amm
Iap co v u ad c
Loan*
(1 -4 Caad.ly
d w a llin s a )
Ho. o f
P r in c i p a l

T o ta l Mor t gaga
L o ans on M u ltiF a a lly
D v a llin iB
No. o f
P rin c ip a l

Hon-Occupanc
Loans
(1 -4 f u l l y
d im ll ln ta )
■o . of
P r in c i p a l
Loan*
AaouQC

Low In c o a a
A ru i:
M iddle Incc—
A ra a s:
Uppar In c o a a
A ru a :
Co lim n T o ta l

S a e tla a I I I
SMSL "B U B "
O U G m ziO H S

C anaua T r a c t
R a c ia l
C acagory

FHA, FnHA o r VA
L osns
(1 -4 f s a l l y
d ia llin g s )
Mo. o f
Loans

Laaa chan 15Z
m in o r ity t r a c t s ;
152 co 7SX
m in o r ity c r a c t a :
g r a a c a r th a n 75X
m in o r ity t r a c t s :
C ol t a n T o ta l

P r in c ip a l
A aotm t

O th s r
K a a ld a n tla l
M o rtgag * L oaaa
( " C a m r a tlo o a l" )
(1 - 4 tm L L y
d m llla a a )
H o. o f
P r in c ip a l
Lum a
im m u

T o t a l Hoaa
L oaaa
(1 - 4 t m i l j
4 w « llia t» )
*«• o f
P r in c ip a l
Lm o i
Aaomc

T o ta l H o rtg a g s
L oans on B feiitiP u lly
D w a llln ss
Ho. o f
P rin c ip a l
Loan a
A am ae

S on-O ccupant
Loans
(1 -4 f u l l y
d w a llln u )
Ho. o f
P r in c i p a l
Loana
Aaauac

Federal Register / Vol. 46, No. 27 / Tuesday, February 10,1981 / Proposed Rules

11799

S e c tio n IT
SXSA "NAMS"
OUCUUTIONS
L o c a tio n
C ateg o ry

FRA, h U

Lnmf

o r VA

(1 -4 f a a l l y
d w a llln g a )
No. o f
Long

P r in c ip a l

Am
ount

O th a r
R a a ld a n tla l
M ortg aga L oans
(" C o n v e n tio n a l" )
(1 - 4 fa m ily
J w llln w )
N o. o f
P rin c ip a l
A aoimt

T o ta l 1
Imprciir— r t
(1 -4 fa n lly
d w a llln a a )
P r in c ip a l
No. of
Loaaa

T o ta l M ortgaga
L oaaa on M u lti-

Faaiy

D w iH n n
No. o f
Loana

P rin c ip a l
iH IM t

N on-O ccupant
(1 -4 f a U y
d w a llln a a )
NO. Of
P r in c i p a l

C a n tr a l C l t y ( a ) :
SMSA L aaa C a n tr a l
C lty (a )i

T o ta l

2/

SMSA la a a c a n t r a l c i t y ln c lu d a a a l l c a n a u a t r a c t a a n d n o n tr a c ta d c o u n tla a o u ta ld a th a c a n t r a l c i t y ( a ) b u t w ith in th a SMSA.

S a c tlc n I
8 3 4 "NAM"
H ooalng
S to c k a g a t

ouenuxxon

C anaua T r a c t:
M adlan h o o k in g
aga i r c a t a r .
la a a th a n , o r
a q u a l to SMSA
oadlia b o a a la g -

o r TA
(1 - 4 f a d l ;
d m llln g a )

O th a r
la a ld a n tla l
M o rtgag a Loana
(" C o m ra n tla n a l" )
(1 - 4 f s a l l y
d w a llln a a )

(1 -4 [ a d l ;
.

T o t a l M ortgaga
L o aaa on I h i l t l Fsa& ly
D w a llln a a

■o n -O c c u p a a t
(1 -4 f a l l y
d m llln a s )

L aaa th a n
SMSA o a d la n :
E qual to
SMSA n a d la n t
G r a a ta r th a n
SMSA n a d l am

U
B acauaa th a c aa a u a d a ta on h o o a ln g ( to c k a g a l a c a t a g o r ls s d I n l n t a n r a l a o f a a v a r a l y a a r a , th a a s d l s n h o u a ln g s to c k a g a o f
a can ao a t r a c t l a d a ta r n ln a d by c a l c u l a t i n g th a n l d - p o l n t o f th a l n t a r v a l I n w h ich th a n a d Ja n i a i i t f a l l a .

*

*

*

*

*

By order of the Board of Governors,
February 3,1981.
James McAfee,

Assistant Secretary o f the Board.
(FR Doc. 81-4559 Filed 2-0-81:8:45 am|
BfUJNO COO£ 6210-01-C


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102