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Federal Reserve Bank OF DALLAS ROBERT and D. M c T E E R , J R . P R E S ID E N T c h ie f e x e c u tiv e o ffic e r T J a n u a r y Z j, mnn Lyy I DALLAS, TEXAS 7 5 2 6 5 -5 9 0 6 Notice 97-07 TO: The Chief Executive Officer of each financial institution and others concerned in the Eleventh Federal Reserve District SUBJECT Request for Public Comment on Proposed Revisions to Regulation C (Home Mortgage Disclosure) DETAILS The Board of Governors of the Federal Reserve System has requested public comment on proposed revisions to Regulation C (Home Mortgage Disclosure). The proposed revisions, which implement recent amendments to the Home Mortgage Disclosure Act (HMDA), would increase the exemption threshold for deposi tory institutions. Other proposed changes would modify the disclosure requirements. The Board must receive comments by February 25, 1997. Please address comments to William W. Wiles, Secretary, 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-0951. ATTACHMENT A copy of the Board’ notice as it appears on pages 68168-72, Vol. 61, s No. 250, of the Federal Register dated December 27, 1996, is attached. MORE INFORMATION For more information, please contact Eugene Coy at (214) 922-6201. For additional copies of this Bank’ notice, please contact the Public Affairs Department at s (214) 922-5254. Sincerely yours, F or additional copies, bankers and others are encouraged to use one of the following toll-free num bers in contacting the Federal Reserve Bank of Dallas: Dallas Office (800) 333 -4460; E l Paso Branch Intrastate (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) 68168 Federal Register / Vol. 61, No. 250 / Friday, December 27, 1996 / Proposed Rules FEDERAL RESERVE SYSTEM 12 CFR Part 203 [ R e g u la tio n C; D o c k e t No. R -0 9 5 1 ] Home Mortgage Disclosure Board of Governors of the Federal Reserve System. ACTION: Proposed rule. AGENCY: The Board is publishing for comment proposed revisions to Regulation C (Home Mortgage Disclosure). The revisions would implement the amendments to the Home Mortgage Disclosure Act included in the Economic Growth and Regulatory Paperwork Reduction Act of 1996. Those amendments increase the exemption threshold for depository institutions and modify certain SUMMARY: Federal Register / Vol. 61, No. 250 / Friday, December 27, 1996 / Proposed Rules disclosure requirements. The Board also proposes to extend the information collection authority under the Paperwork Reduction Act for another three years, and to make technical amendments to the transmittal sheet accompanying the loan/application register. DATES: Comments must be received on or before February 25,1997. ADDRESSES: Comments should refer to Docket No. R-0951, and may be mailed to William W. Wiles, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, N.W., Washington, D.C. 20551. Comments also may be delivered to Room B— 2222 of the Eccles Building between 8:45 a.m. and 5:15 p.m. weekdays, or to the guard station in the Eccles Building courtyard on 20th Street, N.W. (between Constitution Avenue and C Street) at any time. Comments received will be available for inspection in Room MP-500 of the Martin Building between 9:00 a.m. and 5:00 p.m. weekdays, except as provided in 12 CFR 261.8 of the Board’s rules regarding availability of information. FOR FURTHER INFORMATION CONTACT: Jane Jensen Gell or Manley Williams, Staff Attorneys, Division of Consumer and Community Affairs, Board of Governors of the Federal Reserve System, at (202) 452-3667 or (202) 452-2412; for the hearing impaired only, Dorothea Thompson, Telecommunications Device for the Deaf, at (202) 452-3544. SUPPLEMENTARY INFORMATION: I. Background On September 30, the President signed into law the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (the 1996 Act) (Pub. L. 104208, 110 Stat. 3009) . The 1996 Act, in part, amends the Home Mortgage Disclosure Act of 1975 (HMDA) (12 U.S.C. 2801 et seq.). HMDA requires most mortgage lenders located in metropolitan areas to collect data about their housing-related lending activity. Annually, lenders must file reports with their federal supervisory agencies and make disclosures available to the public. The Board’s Regulation C (12 CFR Part 203) implements HMDA. II. Proposed Revisions A. Increasing the Exemption Based on Asset Size Currently, depository institutions with assets of $10 million or less are exempt from HMDA. The 1996 Act increases this exemption for depository institutions by adjusting the $10 million figure by the change since 1975 in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPIW)— rounded to the nearest million. The Board proposes to revise § 203.3(a)(1)(h) of Regulation C to implement this amendment to section 309 of HMDA (12 U.S.C. 2808). The Bureau of Labor Statistics calculates the CPIW monthly and publishes the data with a lag of a few weeks. The seasonally adjusted figures are available with a longer lag. Accordingly, the Board proposes to use the “not seasonally-adjusted” figure. The 1996 Act calls for an initial adjustment based on the percentage by which the CPIW for 1996 exceeds the CPIW for 1975. To ensure that the public is informed of the new threshold promptly, the Board intends to publish a notice with the adjusted threshold as soon as the December 1996 data become available in early January. Based on the increase in the CPIW from December 1975 to October 1996, the adjusted figure would be $27.9 million, rounded to an exemption threshold of $28 million. Thus, institutions with assets of $28 million or less would be exempt from data collection in 1997. Institutions covered during 1996 but exempt subsequently because of the new threshold (for example, institutions with assets of $17 million) are required to collect data for all of 1996, and to submit those data by March 1,1997. Such institutions will not be subject to the data collection requirements for 1997. The 1996 Act provides that the exemption is to be adjusted annually to reflect future changes in the CPIW. The Board could make the adjustment using December data or, if it wanted to announce the new threshold by yearend, using November data. To make the year-to-year adjustments consistent with the initial adjustment, the Board proposes to base the adjustments on December data and publish the results in the Federal Register as soon as those data become available in January. If the adjustment uses December data the threshold might be higher, but some institutions that are actually exempt might have to collect the data in the early weeks of the year because of the uncertainty as to the threshold. For example, one year the threshold could be $29 million based on November data and $30 million based on December data. An institution with assets of $28.5 million as of that December 31 might want the Board to use the November data and publish the threshold in December so it could cease data collection beginning January 1. An institution with assets of $29.5 million might want the Board to use the 68169 December data so that it would qualify for exemption, even though the institution would have collected data for the first few weeks of January before the new threshold was published. The Board requests comment on whether earlier notice based on November data is preferable to a potentially higher exemption threshold using December data. Conforming amendments relative to the asset exemption would be made in several sections of Appendix A—Form and Instructions for Completion of HMDA Loan/Application Register, and in § 203.3 of Supplement I—Staff Commentary. Section 309 of HMDA (12 U.S.C. 2808), as amended in 1991, requires the Board, in consultation with the Secretary of the Department of Housing and Urban Development, to establish an exemption for nondepository institutions comparable to the exemption for depository institutions. The 1996 Act amends section 309 by adding a parenthetical stating that the comparable exemption shall be “determined without regard to the adjustment made by subsection (b) (the CPIW adjustments].” Currently, a nondepository institution with offices in an MSA is exempt from HMDA if it had assets of $10 million or less as of the preceding December 31 and originated fewer than 100 home-purchase loans in the preceding calendar year. In 1996, depository institutions with assets of $28 million or less, on average, reported about 50 HMDA loan/application register entries apiece. Accordingly, the Board, in consultation with the Secretary, has determined that no change to the existing coverage of nondepository institutions is appropriate at this time. B. Elimination of the Branch Disclosure Requirement Currently, HMDA provides that within ten business days of receiving the disclosure statement from the Federal Financial Institutions Examination Council (FFIEC), an institution must make a copy of the statement available to the public for inspection and copying in at least one branch office in each additional MSA where the institution has offices. The institution must also make the disclosure statement available at its home office. Regulation C added the requirement that an institution must post a general notice concerning the availability of HMDA data at the institution’s home office and at each physical branch in an MSA. The 1996 Act amends section 304 of HMDA (12 U.S.C. 2803) to specify that 68170 Federal Register / Vol. 61, No. 250 / Friday, December 27, 1996 / Proposed Rules Appendix A to Part 203 and implement the data collection and reporting requirements established by the Home D. Revisions to the HMDA Loan/ Mortgage Disclosure Act. The Application Register respondents are mortgage lenders in The Board proposes to make three metropolitan statistical areas. Under the minor revisions to the HMDA loan/ act, each respondent must make its application register. To comply with the loan/application register available to the requirements of the Paperwork public for three years; and must provide Reduction Act of 1995 (44 U.S.C. ch. for five years the disclosure statement 3506; 5 CFR 1320 Appendix A.l), the that the FFIEC prepares from the data following text would be added: “An submitted by the respondent. Local agency may not conduct or sponsor, and public officials use the data to help an organization is not required to identify target areas for residential respond to, a collection of information redevelopment and rehabilitations. unless it displays a currently valid OMB Members of the public use the data to control number. The OMB control help evaluate the extent to which number for the HMDA-LAR is 7100mortgage lenders are serving local 0247.” In addition, to facilitate prompt community and housing needs. communication with a respondent, a The amendments that the Board has blank for the respondent’s facsimile proposed for public comment would number would be added to the decrease the number of respondents and transmittal sheet. To reduce burden, the ease compliance with the public Board proposes to modify the disclosure requirements of the transmittal sheet so that a respondent regulation. Small businesses are directly will no longer have to enter the name affected by the proposed amendments: and address of its supervisory agency. many would no longer be required to collect, report, or disclose the III. Form of Comment Letters information. Comment letters should refer to Regulation C applies to all types of Docket No. R-0951. The Board requests financial institutions and other that, when possible, comments be mortgage-lending institutions that meet prepared using a standard courier the coverage tests. Under the Paperwork typeface with a type size of 10 or 12 characters per inch. This will enable the Reduction Act, however, the Board accounts for the paperwork burden Board to convert the text into machineassociated with Regulation C only for readable form through electronic state member banks, their subsidiaries, scanning, and will facilitate automated subsidiaries of bank holding companies, retrieval of comments for review. and other entities regulated by the Comments may also be submitted on computer diskettes, using either the 3.5" Federal Reserve. Any estimates of paperwork burden for other respondents or 5.25" size, in any IBM-compatible are provided by the federal agency or DOS-based format. Comments on agencies that supervise them. computer diskettes must be The Board estimates that the accompanied by a paper version. amendments’ impact on the burden per IV. Regulatory Flexibility Analysis response is negligible. The estimated In accordance with section 3(a) of the burden per response varies from 10 to Regulatory Flexibility Act (5 U.S.C. 10,000 hours, depending on individual 603), the Board’s Office of the Secretary circumstances, with estimated averages has reviewed the proposed amendments of 202 hours for state member banks and to Regulation C. Overall, the 160 hours for mortgage banking amendments are expected to reduce the subsidiaries. burden on small entities. The proposed It is estimated that of the 565 state regulatory revisions implement the 1996 member banks that are currently Act which, in part, increases the covered because they exceed the $10 exemption threshold for depository million asset threshold, 39 will be C. Disclosure Formats institutions. The 1996 Act also creates exempt as a result of the higher an alternative means for making branch .threshold. The 93 mortgage banking Currently, Appendix A to Regulation C provides that an institution may make disclosures available. A final regulatory subsidiaries reporting HMDA data to the the public disclosures available in paper flexibility analysis will be prepared after Federal Reserve are and would remain covered. The total amount of annual or automated form (a computer diskette, consideration of comments received during the comment period. burden is estimated to decrease from for example). The 1996 Act amends 129,168 hours to 121,368 (a change of section 304 of HMDA (12 U.S.C. 2803) V. Paperwork Reduction Act approximately 6 percent) as a to provide that an institution may not A. Paperwork Burden consequence of the higher exemption make the information available in threshold. The Board estimates that automated form (in place of paper) The proposed revisions to the information collection requirements are there would be no capital or start up unless the person requesting the cost associated with these amendments, information agrees to receiving the data found in 12 CFR 203.3, 203.5 and an institution need not make the information available at branch offices if the institution posts a notice and makes the information available upon a written request sent to the home office. The proposal amends § 203.5(b) concerning the public disclosure of an institution’s mortgage loan disclosure statement accordingly. For an institution choosing to make the HMDA data available upon written request, the 1996 Act requires a notice stating that the information is available from the home office upon written request. Currently, § 203.5(e) requires an institution to post—at the home office and at each branch office—a general notice about the availability of its HMDA data. Upon request, the institution must promptly provide the location where the data is available, and at its option may include the location in the notice. The Board believes the current provisions provide adequate notice and that requiring more detailed notices would not produce sufficient additional benefit to the public to justify the burden of preparing the new notices. A literal reading of the 1996 Act could suggest that a request for HMDA data must be sent to the home office. The Board believes that specifying the home office as the location where requests are sent would not improve the public availability of this information. Accordingly, the revised § 203.5(e) would allow an institution to specify whatever address it wishes. The institution could either provide the address promptly upon request, or include the address in its notice. Technical amendments to paragraphs (b) and (c) of § 203.5 clarify that an institution may continue to provide the data on an MSA-by-MSA basis. For example, if a person requests the disclosure statement for a particular branch location, the institution may provide just the statement for the MSA in which that branch is located. Conforming amendments would be made in several sections in Appendix A—Form and Instructions for Completion of HMDA Loan/Application Register. in that format. Appendix A, Section ffl.F. would be revised accordingly. Federal Register / Vol. 61, No. 250 / Friday, December 27, 1996 / Proposed Rules and that there is no annual cost burden beyond the estimated burden hours. 68171 (b) Public disclosure o f statement. ► ( 1 ) - ^ A financial institution shall make its mortgage loan disclosure B. OMB Control Number statement (to be prepared by the Federal List of Subjects in 12 CFR Part 203 Under the Paperwork Reduction Act, Financial Institutions Examination an agency may not conduct or sponsor, Banks, banking, Consumer protection, Council) available to the public at its and an organization is not required to Federal Reserve System, Mortgages, home office no later than three business respond to, a collection of information Reporting and recordkeeping days after receiving it from the unless it displays a currently valid OMB requirements. Examination Council. [A financial control number. The OMB control institution shall also make its disclosure Text of Proposed Revisions number applicable to the HMDA-LAR statement available to the public within data collection is 7100-0247. Certain conventions have been used ten business days in at least one branch to highlight the proposed revisions to office in each additional MSA where the C. Confidentiality the regulation. New language is shown institution has offices. The disclosure The Board has previously determined inside bold-faced arrows, while statement at a branch office need only that the HMDA loan/application register language that would be deleted is set off contain data relating to properties in the is required by law (12 U.S.C. 2801with bold-faced brackets. MSA where the branch office is 2810; 12 CFR Part 203) and completion located.] For the reasons set forth in the of the register, submission to the ► ( 2 ) In addition, a financial preamble, the Board proposes to amend appropriate federal supervisory agency, institution shall either: 12 CFR part 203 as follows: and disclosure to the public on request (i) Make its disclosure statement are mandatory. The data, as modified PART 203—HOME MORTGAGE available to the public within ten according to Appendix A of the DISCLOSURE (REGULATION C) business days of receiving it from the regulation (paragraph III.E.), are made Examination Council in at least one 1. The authority citation for part 203 publicly available and are not branch office in each additional MSA continues to read as follows: considered confidential. Information where it has offices (the disclosure that might identify individual borrowers A u th o rity : 12 U.S.C. 2801-2810. statement need only contain data or applicants is given confidential relating to properties in the MSA where 2. Section 203.3 would be amended treatment under exemption 6 of the by revising paragraph (a)(l)(ii) to read as the branch office is located); or Freedom of Information Act (5 U.S.C. (ii) Mail or deliver a copy of its follows: 552(b)(6)). disclosure statement to any person §203.3 Exempt Institutions. requesting it, within 15 calendar days of D. Extension o f Authority (a) Exemption based on location, asset receiving a written request (the In accordance with the Paperwork size, or number o f home purchase loans. disclosure statement need only contain Reduction Act of 1995 (44 U.S.C. 3506; 1 data relating to properties in the MSA 5 CFR 1320 Appendix A.l), the Board for which the request is made).-^ (ii) The institution’s total assets were has reviewed Regulation C under the (c) Public disclosure o f loan [$10 million or less] ► a t or below the authority delegated to the Board by the application register. * * * [The asset threshold established by the Office of Management and Budget. The modified register made available at a Board. For 1997 data collection, the Board proposes to extend the authority branch office need only contain data asset threshold is $28 million as of to collect the HMDA loan/application relating to properties in the MSA where December 31,1996. For subsequent register for three years through March the branch office is located.] ► T h e years, the Board will adjust the 31, 2000. modified register need only contain data threshold based on the year-to-year E. Comments change in the Consumer Price Index for relating to the MSA for which the request is m a d e .^ Urban Wage Earners and Clerical In keeping with OMB regulations, * * * * * Workers, not seasonally adjusted, as of comments are invited on: (a) Whether the month of December, with rounding the proposed collection of information (e) Notice o f availability. * * * Upon is necessary for the proper performance to the nearest million. The Board will request, it shall promptly provide the publish the adjusted asset figure in of the Federal Reserve’s functions; location of the institution’s offices January^. including whether the information has where the statement is available ► f o r * * * * * practical utility; (b) the accuracy of the inspection and the address where a Federal Reserve’s estimate of the burden 3. Section 203.5 would be amended as written request may be sent for a copy of the proposed information collection, of the data*^. At its option, an follows: including the cost of compliance; (c) institution may include [the locations] a. Under paragraph (b), the first ways to enhance the quality, utility, and sentence would be designated as ► t h i s information-^ in its notice. clarity of the information to be 4. Appendix A to Part 203 would be paragraph (b)(1), sentences two and collected; and (d) ways to minimize the three of the newly designated paragraph amended as follows: burden of information collection on a. Paragraph I.A. would be amended (b)(1) would be removed, and a new respondents, including through the use by redesignating the introductory text, paragraph (b)(2) would be added; of automated collection techniques or paragraph 1., and 2. as paragraph 1., b. Under paragraph (c), the last other forms of information technology. paragraph l.a., and paragraph l.b., sentence would be revised; and Comments on the collection of respectively; c. Under paragraph (e), the last two information may be sent to the Office of sentences would be revised. b. Newly designated paragraph l.a. Management and Budget, Paperwork would be revised; The revisions and additions would Reduction Project (7100-0247), c. A new paragraph 2. would be read as follows: Washington, D.C. 20503, with copies to added; and § 203.5 Disclosure and reporting. Mary M. McLaughlin, Chief, Financial d. The undesignated paragraph * * * * * Reports Section, Division of Research EXAMPLE, would be designated as and Statistics, Mail Stop 97, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. ( ). . . 68172 Federal Register / Vol. 61, No. 250 / Friday, December 27, 1996 / Proposed Rules paragraph 3. and would be revised. The addition and revisions would read as follows: Appendix A to Part 203—Form and Instructions For Completion of HMDA Loan/Application Register * * * * * 1. Who Must File a Report A. D epository Institutions. ► l . S * * * [ ^ ► a . S Had assets of m ore th an [S10 m illion] ► t h e asset threshold for coverage as p u b lish ed by the Board each year in Jan u ary -^ , and [2 .]^ b .S * * * ► 2 . For 1997 data collection, the asset thresh o ld is $28 m illion in total assets as of Decem ber 31. 1996.S ► 3 . E xa m p le . S If on Decem ber 31 you had a hom e or branch office in an MSA and your assets exceeded [S10 million] ► t h e asset th resh o ld -^ , you m ust com plete a register th at lists the hom e-purchase and hom e-im provem ent loans that you originate or p u rchase (and also lists applications that d id not result in an origination) beginning January 1. * * * * * 2. Mail or d eliver a copy of yo ur disclosure statem ent to any person requesting it, w ithin 15 calen d ar days of receiving a w ritten request (the disclosure statem ent n eed only contain data relating to the MSA for w hich the request is m a d e ) .S * * * * * F. Location a n d fo rm a t o f disclo sed data. ► l . S A financial in stitution m ust m ake a com plete copy of its disclosure statem ent and m odified register available to the p ublic at its hom e office. Institutions m ay m ake these data available in [hard copy or] ► p a p e r form or. if the person requesting the data a g re e s,-^ in autom ated form (such as by floppy disk or co m p uter tape). (If you have phy sical branch offices in other MSAs, you m ust make available, in at least o ne branch office in each of those MSAs, either a com plete cop y o f the disclosure statem ent or the portion of it that relates to properties in that MSA. Sim ilarly, a m odified register at a branch office need only reflect data c oncerning properties w ith in the MSA w here the b ran ch is located.] ► A m odified register need only reflect data relating to the MSA for w h ich the request is m a d e .S ► 2 . S * * * 5. Paragraph III. of Appendix A to Part G. Posters. 203 would be amended as follows: ► l . Suggested l a n g u a g e * * * a. Under paragraph D. the fourth ► 2 . O ptional inform ation. At y o u r option, sentence would be removed and a new you m ay include the location w here the sentence and new paragraphs 1. and 2. disclosed data are available for inspection would be added at the end; and the ad dress to be used for m aking a b. Under paragraph F. the first w ritten re q u e s t.-^ paragraph following the heading would * * * * * be designated as paragraph 1. and 6. Supplement I to Part 203, under revised, and the second paragraph Section 203.3—Exempt Institutions, would be designated as paragraph 2.; under 3(a) Exemption based on location, and asset size, or number of home-purchase c. Under paragraph G. the first loans, the second sentence of Paragraph paragraph following the heading would be designated as paragraph 1. and a new 1. General would be revised to read as heading would be added to the newly follows: designated paragraph 1., and paragraph Supplement I to Part 203—Staff 2. would be added after the Home Commentary Mortgage Disclosure Act Notice. * * * * * The revisions and additions would read as follows: * * * * * HI. Submission of HMDA-LAR and Public Release of Data * * * * * D. A va ilab ility o f disclosure statem ent. * * * [You aiso m ust make the disclosure statem ent available, w ithin ten b u siness days after receiving it from the FFIEC, in at least one branch office in each additional MSA w here you have physical offices.] For these purposes a business day is any cale n d ar day other than a Saturday, Sunday, or legal p ub lic holiday. ► Y o u also m u st either: 1. Make y our d isclosure statem ent available to the public, w ithin ten business days o f receiving it from the FFIEC, in at least one b ranch office in each a d ditio nal MSA w here you have offices (the disclosure statem ent need only contain data relating to properties in th e MSA w here the b ran ch office is located); or S ection 203.3— E xem p t Institutions 3(a) E xem p tio n based on location, asset size, or n u m b e r o f h om e-purchase loans. 1. G e n e ra l.’1 * * For exam ple, a bank w hose assets [drop to S10 m illion or less] ► a r e at or below the t h r e s h o l d s on Decem ber 31 of a given year reports data for that full calen dar year, in w h ich it was covered, but does not report data for the succeeding calendar year. * * * * * * * * By ord er o f the Board of Governors of the Federal Reserve System, Decem ber 16,1996. William W. Wiles, Secretary o f th e Board. [FR Doc. 96-32305 Filed 1 2 -2 6 -9 6 ; BILUNG CODE 8 2 1 0 - 0 1 -P 8:45 am]
