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F ed er a l R e s e r v e B ank OF DALLAS ROBERT D. M c T E E R , J R . PRESIDENT DALLAS, TEXAS 75222 AND CH IE F E X EC U TIV E O F F IC E R January 11, 1993 Notice 93-10 TO: The Chief Executive Officer of each member bank and others concerned in the Eleventh Federal Reserve District SUBJECT Request f o r Comment on Proposal to Amend Regulation C (Home Mortgage Disclosure Act) DETAILS The Federal Reserve Board has issued for public comment a proposal to amend Regulation C, which carries out the Home Mortgage Disclosure Act, (HMDA) to incorporate new statutory provisions. The Housing and Community Development Act of 1992 contains amend ments to HMDA that will require financial institutions to make their loan application register data available to the public beginning March 31, 1993. This register must be modified in accordance with Board regulations before release to the public. The act also requires institutions to make their disclosure state ment available to the public within three business days of receiving it from the Federal Financial Institutions Examination Council. Currently, they have 30 days to do so. The revised rules will apply beginning with loan and application data collected for calendar year 1992. The Board must receive comments by January 29, 1993. Comments should be addressed to William W. Wiles, Secre tary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, N.W., Washington, D.C. 20551. All comments should refer to Docket No. R-0789. ATTACHMENT A copy of the Board’s notice (Federal Reserve System Docket No. R-0789) is attached. For additional copies, bankers and others are encouraged to use one of the following toll-free numbers in contacting the Federal Reserve Bank of Dallas: Dallas Office (800) 333-4460; El Paso Branch Intrastale (800) 592-1631, Interstate (800) 351-1012; Houston Branch Intrastate (800) 392-4162, Interstate (800) 221-0363; San Antonio Branch Intrastate (800) 292-5810. This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) - 2 - MORE INFORMATION For more information, please contact Marion White at (214) 922-6155. For additional copies of this Bank’s notice, please contact the Public Affairs Department at (214) 922-5254. Sincerely yours, FEDERAL RESERVE SYSTEM 12 CFR Part 203 [Docket No. R-0789; Regulation C] Home Mortgage Disclosure; Proposed Regulatory Amendments AGENCY: ACTION: SUMMARY: Board of Governors of the Federal Reserve System. Proposed rule. The Board is publishing for comment a proposal to amend Regulation C, which implements the Home Mortgage Disclosure Act, to incorporate new statutory provisions. The Housing and Commu nity Development Act of 1992 contains amendments that will reguire financial institutions to make their loan application register data available to the public beginning March 31, 1993; the register must be modified in accordance with Board regula tions before release to the public. The act also reguires institutions to make their disclosure statement — as compiled by the Federal Financial Institutions Examination Council — available to the public within three business days of receiving it from the Examination Council; they currently have 30 days to do so. The revised rules will apply to the disclosure of the loan and application data collected for calendar year 1992. DATES: Comments must be received on or before January 31, 1993. ADDRESSES: Comments should refer to Docket No. R-0789 and be mailed to William W. Wiles, Secretary, Board of Governors of the Federal Reserve System, Washington, DC 20551. They may also be delivered to the guard station in the Eccles Building Courtyard - on 20th Street, N.W. 2 - (between Constitution Avenue and C Street, N.W.) between 8:45 a.m. and 5:15 p.m. weekdays. Except as provided in § 261.8 of the Board's rules regarding the availability of information (12 CFR 261.8), comments received will be available for inspection and copying by any member of the public in the Freedom of Information Office, Room B-1122 of the Eccles Building, between 9:00 a.m. and 5:00 p.m. weekdays. FOR FURTHER INFORMATION CONTACT: Jane Jensen Gell or W. Kurt Schumacher, Staff Attorneys, or John C. Wood, Senior Attorney, Division of Consumer and Community Affairs, Board of Governors of the Federal Reserve System, Washington, DC 20551, at (202) 4522412 or (202) 452-3667. For the hearing impaired only, contact Dorothea Thompson, Telecommunications Device for the Deaf (TDD), at (202) 452-3544. SUPPLEMENTARY INFORMATION: (1) Background The Home Mortgage Disclosure Act (HMDA) reguires certain depository and nondepository mortgage lenders that have offices in metropolitan areas to disclose their housing-related lending activity each year. The Housing and Community Development Act of 1992 (Pub. L. 102-550, 106 Stat. 3672) amends HMDA in several respects. The statutory amendments reguire institutions to make modified versions of their loan application registers available to the public; the modified registers must be available before April 1 for reguests made on or before March 1 following the year for which the data are compiled, and within 30 days for reguests made after March 1. The amendments reguire the Board to specify deletions or modifications from institutions' registers needed to - 3 - protect the privacy interest of any applicant or borrower, and to protect an institution from liability under federal or state privacy laws. HMDA and Regulation C currently reguire financial institutions to make their mortgage loan disclosure statement publicly available no later than 30 calendar days after they receive the statement from their supervisory agency. The statutory revisions amend HMDA to reguire institutions to make the disclosure statement publicly available, upon reguest, within three business days after receiving it from the Federal Financial Institutions Examination Council (FFIEC). The statutory provisions contain additional amendments relating to the time periods within which the federal supervisory agencies must make disclosure statements and aggregate tables available to financial institutions and the public. The statute reguires that for data collected in 1993, disclosure statements must be publicly available before September 1, 1994. The aggregate data that are compiled by the FFIEC are to be publicly available (in central data depositories) before December 1, 1994. For data collected in 1994 and subseguent years, federal supervisory agencies must make every effort to ensure that disclosure statements are publicly available before July 1, and aggregate disclosure reports before September 1, following the year for which the data are compiled. In addition, the statutory revisions make various other amendments to HMDA that are discussed below. The comment period ends on January 31, 1993. Because prompt implementation of the statutory amendments is in the public - 4 - interest, the Board has set a 30-day comment period in place of the 60 days normally called for in the Board's policy statement on rulemaking (44 FR 3957, January 19, 1979). The Board believes an abbreviated comment period is necessary to ensure that a final rule is in place as guickly as possible to provide guidance to covered lenders. In accordance with section 3507 of the Paperwork Reduction Act of 1980 (44 U.S.C. Ch. 35; 5 CFR 1320.13), the proposed revisions will be reviewed by the Board under the authority delegated to the Board by the Office of Management and Budget after consideration of the comments received during the public comment period. (2) Summary of Proposed Regulatory Amendments The following discussion summarizes the proposed amendments to Regulation C section by section. Heading changes and certain other changes that are self-evident are not discussed. Section 2 03.5 203.5(a) Disclosure and reporting Reporting to acrency. The Board proposes to revise this section to reguire institu tions to retain copies of their complete loan application register for a minimum period of three years, not two years as presently reguired. This change is consistent with the provisions in the new law (see proposed section 203.5(d)). 203.5(b) Public disclosure of statement. The statutory revisions reguire institutions to make their disclosure statement publicly available, upon reguest, no later than three business days after they receive the statement from the FFIEC. The Board proposes to incorporate this reguirement into this sub- - 5 - section, in lieu of the current 30 calendar days for public data availability. However, the Board proposes to limit the three- business day requirement for availability-to the institution's home office. Because of the need for duplication and distribution, many institutions could find it difficult to make disclosure statements available in a branch office in other MSAs within three business days after receipt. Therefore, the Board proposes that institutions have ten business days in which to make their disclosure statements available in these MSAs. The Board solicits comments on this pro posed timing. 203.5(c) Public disclosure of loan application register. The statutory revisions require institutions to make their loan application registers available to the public upon reguest, and require the Board to specify deletions or modifications from institutions' registers to protect the privacy interests of appli cants and borrowers, and to protect institutions from liability under federal or state privacy laws. The Board proposes to add this new subsection to reflect this reguirement. The three items to be deleted (application or loan number, date application received, and date of action taken) are specified in the instructions to the HMDALAR found in Appendix A; they correspond to the items specified by the statutory amendments. The proposed language also incorporates the statutorily man dated time periods by which an institution must make its modified register publicly available. 203.5(d) Availability of data. The proposed revisions to paragraph (d) reflect the amendments to the statute reguiring that modified loan application register - 6 - information be retained by institutions and made publicly available for a period of three years. The Board proposes to use the existing rule concerning the availability of disclosure statements at the branch office level as the rule governing the availability of an institution's modified register data. The Board also proposes to incorporate language from the statutory amendments regarding the imposition of fees by an institution for providing or reproducing the modified loan application register or the disclosure statement. APPENDIX A TO PART 2 03 — FORM AND INSTRUCTIONS FOR COMPLETION OF HMDA LOAN/APPLICATION REGISTER III. SUBMISSION OF HMDA-LAR AND PUBLIC RELEASE OF DATA D. Availability of disclosure statement. The proposal would incorporate the new rule discussed above that an institution must make its disclosure statement available at its home office within three business days of receiving it from the FFIEC. The Board proposes to specify that disclosure statements must be made available in at least one branch office in each additional MSA within ten business days after receipt from the FFIEC. As mentioned above, the Board solicits comment on this proposed timing. As an alternative, the Board solicits comment on the feasibility of specifying that copies of disclosure statements must be made available at the applicable branch offices, upon request, within a "reasonable time" of an institution's receipt of the statements from the FFIEC. E. Availability of modified loan application register. Paragraph 1 of this subsection would incorporate the reguirement in the new provisions that the Board specify deletions - 7 - or modifications from an institution's register to protect the privacy interests of applicants and borrowers. proposed revisions to § 203.5(c).) (See also the The da-letions that the Board proposes to reguire are specified by the newly enacted statute. These items are those that the FFIEC presently deletes prior to the public release of the edited raw data that it makes available. F. Location and format of disclosed data. The statutory amendments encourage institutions to make their modified register data available in census tract order, and allow the public release of this information (and of disclosure statements) — in any media — including hard copy or in automated form that is not prohibited by the Board. The statute makes clear, however, that aside from making the specified deletions, institutions are not required to change the format of the data from that used by institutions to internally maintain this information. The Board's proposed paragraph F. in the appendix reflects these statutory provisions. Additionally, the revisions to HMDA require institutions' disclosure statements to be accompanied by a clear and conspicuous notice that the statement is subject to final review and revision, if necessary. Given that the FFIEC compiles the disclosure statements of financial institutions for public release by the institutions, the Board proposes that the FFIEC add this notice on the disclosure statements, thereby eliminating the need for financial institutions to supply the notice. As mentioned in the supplementary information to § 203.5(d) above, the Board proposes to use the existing rule concerning the availability of disclosure statements at the branch office level as - 8 - the rule for availability of an institution's modified register data. (3) Form of Comment Letters Comment letters should refer to Docket No. R-07 89. The Board reguests that, when possible, comments be prepared using a standard typeface with a type size of 10 or 12 characters per inch. This will enable the Board to convert the text into machine-readable form through electronic scanning, and will facilitate automated retrieval of comments for review. or 5 \ Comments may also be submitted on 3 % inch inch computer diskettes in any IBM-compatible DOS-based format, but must be accompanied by an original document in paper form. (4) Regulatory Flexibility Analysis HMDA does not cover small depository institutions (those with assets of $10 million or less), or small nondepository mortgage lenders (those with fewer than 100 home purchase loan originations and assets of $10 million or less). HMDA also exempts from coverage institutions that have neither a home nor a branch office in an MSA. Covered institutions currently must provide their loan/application registers to their supervisory agencies by March 1 for the preceding calendar year. Any incremental burden caused by this proposal would result from the reguirement that these registers be modified prior to public release in the manner proposed by the Board. Small financial institutions will likely have fewer modifications to make to their registers (based on their fewer numbers of reportable transactions). This proposal is not expected to have a significant impact on the costs of small institutions. - 9 - (5) List of Subjects in 12 CFR Part 203 Banks, banking, Federal Reserve System, Mortgages, Reporting and recordkeeping reguirements. (6) Text of Proposed Revisions For the reasons set forth in this proposed rule and pursuant to the Board's authority under section 305(a) of the Home Mortgage Disclosure Act (12 U.S.C. 2804(a)), the Board proposes to amend Regulation C, Home Mortgage Disclosure (12 CFR part 2 03), as set forth below. Certain conventions have been used to highlight the proposed changes to the regulation and the instructions. Language to be added is shown inside bold-faced arrows, while language that would be removed appears within bold-faced brackets. The Board is publishing only those sections of the regulation and instructions that would be affected by the changes. PART 2 03 1. HOME MORTGAGE DISCLOSURE The authority citation for part 2 03 continues to read as follows: Authority: 2. 12 U.S.C. 2801-2810. Section 2 03.5 would be amended by redesignating paragraphs (c) and (d) as (d) and (e), by adding a new paragraph (c), and by revising paragraphs (a) through (e) to read as follows: § 203.5 (a) Disclosure and reporting. Reporting to agency. By March 1 following the calendar year for which the loan data are compiled, a financial institution shall send two copies of its complete ►loan applications register to the agency office specified in Appendix A of this regulation, and - 10 - shall retain a copy for its records for a period of not less than ►threes [two] years. (b) ►Publics disclosure ►of statements rto the public!. A financial institution shall make its mortgage loan disclosure statement (to be prepared by the Federal Financial Institutions Examination Council) available to the public ►at its home offices no later than ►three businesss [30 calendar] days after-the institution receives it from its supervisory agency ►or from the Examination Council. The disclosure statement also shall be made available in at least one branch office in each additional MSA where the institution has offices, within ten business days after the institution receives it.s [The financial institution shall make the statement available to the public for a period of five years.] ►(c) Public disclosure of loan application register. A financial institution shall make its loan application register available to the public at its home office after modifying it in accordance with Appendix A. An institution shall make its modified register available following the calendar year for which the data are compiled, by March 31 for a request received on or before March 1, and within 30 days for a request received after March 1. The modified register also shall be made available in at least one branch office in each additional MSA where the institution has offices.s ►(d)s [(c)] Availability of ►datas Tdisclosure statement!. A financial institution shall make ►its modified register available for a period of three years and its disclosure statement available for a period of five years.s [the disclosure statement available at its home office. If it has a physical branch office in other MSAs, - l i the institution shall also make a statement available in at least one branch office in each of those MSAs; the statement] ►The statement and register* at a branch office- need only contain data relating to property in the MSA where that branch office is located. An institution shall make the ►data* [disclosure statement] available for inspection and copying during the hours the office is normally open to the public for business. It may impose a reasonable ►fee for providing or reproducing the data* [charge for photocopying services]. ►(e)* [(d)] Notice of availability. A financial institution shall post a general notice about the availability of its disclosure statement in the lobbies of its home office and any physical branch offices located in an MSA. Upon reguest, it shall promptly provide the location of the institution's offices where the statement is available. At its option, an institution may include the location in its notice. 3. Appendix A to part 203 would be amended by revising the heading of section III., by revising subsection III.D., and by adding new subsections III.E., F., and G., to read as follows: APPENDIX A TO PART 2 03 — FORM AND INSTRUCTIONS FOR COMPLETION OF HMDA LOAN/APPLICATION REGISTER * * * * * III. SUBMISSION OF HMDA-LAR AND ►PUBLIC* RELEASE OF ►DATA* [DISCLOSURE STATEMENTS] * * * * * ►D. Availability of disclosure statement. The Federal Financial Institutions Examination Council (FFIEC) will prepare a disclosure statement from the data you submit. Your disclosure - 12 - statement will be returned to the name and address indicated on the transmittal sheet. Within three business days of receiving your disclosure statement, you must make a copy- available at your home office for inspection by the public. You also must make your disclosure statement available, within ten business days after receipt of the statement from the FFIEC, in at least one branch office in each additional MSA where you have offices. E. Availability of modified loan application register. 1. To protect the privacy of applicants and borrowers, an institution must modify its loan application register before release to the public by removing the following information: the application or loan number, date application received, and date of action taken. 2. A financial institution must make its modified register available following the calendar year for which the data are compiled, by March 31 for a request received on or before March 1, and within 30 days for a request received after March 1. F. Location and format of disclosed data. You must make a complete copy of your disclosure statement and your modified register available to the public at your home office. You may make these data available in hard copy or in automated form (such as by floppy disk or computer tape). Although you are encouraged to make your modified loan application register available to the public in census-tract order, you are not required to do so. In addition, if you have physical branch offices in other MSAs, you must make available in at least one branch office in each of those MSAs either a complete copy of the disclosure statement and - 13 - of the modified register, or the portion of each that relates to properties in that MSA. G. Posters. Your agency can provide -you with HMDA posters that you can use to inform the public of the availability of your disclosure statement, or you may print your own posters.* [D. The Federal Financial Institution Examination Council (FFIEC) will-prepare a disclosure statement from the data you submit. Your disclosure statement will be returned to the name and address indicated on the transmittal sheet. When you receive that disclosure statement you must make a copy available for inspection by the public within 30 calendar days of the date the statement is received by your institution. You must make a complete copy available at your home office. If you have physical branch offices in other MSAs, you must make available, in at least one branch office in each of those MSAs, either the complete statement or the portion of the statement relating to that MSA. Your agency can provide you with HMDA posters that you can use to inform the public of the availability of your disclosure statement, or you may print your own posters.] * * * * * By order of the Board of Governors of the Federal Reserve System, December 28, 1992. /s/ William W. Wiles William W. Wiles Secretary of the Board
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