The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
0
FEDERAL RESERVE BANK
OF NEW YORK
[
Circular No. 10604
December 16, 1992
"1
J
HOME MORTGAGE DISCLOSURE
Amendments to Regulation C
To All Depository Institutions in the Second
Federal Reserve District, and Others Concerned:
The following statement has been issued by Board of Governors of the Federal
Reserve System:
The Federal Reserve Board has issued an amendment to its Regulation C, Home
Mortgage Disclosure, that will expand the regulation’s coverage of mortgage compa
nies.
The rule will require a mortgage company with an office in a metropolitan area
to disclose data about home lending activity if its assets exceeded $10 million, or if
the company made 100 or more home purchase loans in the preceding calendar year.
The new rule carries out a provision in the FDIC Improvement Act authorizing
the Board to set a small-institution exemption standard for mortgage companies that
is comparable to the exemption for depository institutions.
Enclosed — for depository institutions and others maintaining sets of the
Board’s regulations — is a copy of the text of the amendments to Regulation C,
which has been reprinted from the Federal Register of December 2. Questions
regarding this matter may be directed to our Compliance Examinations Department
(Tel. No. 212-720-5914).
E. G e r a l d C o r r ig a n ,
President.
0
*
C IR C U L A R N O .
Board of Governors of the Federal Reserve System
HOME MORTGAGE DISCLOSURE
A M ENDM ENTS TO REGULATION C
(E ffe c tiv e J a n u a r y 1 , 1 9 9 3 )
currently report under HMDA and
extends coverage to firms that are active
12CFR P art 203
mortgage lenders despite their smaller
asset size.
[Docket No. R-0771; Regulation C]
The Board also has revised the
instructions for reporting loan
Home Mortgage Disclosure; Final
Regulatory Amendments
applications received through a loan
broker or correspondent to conform the
AGENCY: Board of Governors of the
rule for reporting loan approvals to the
Federal Reserve System.
existing rule for reporting loan denials.
ACTION: Final rule.
____________ This revision applies to all lenders
covered by HMDA, not only
SUMMARY: The Board is publishing a
final rule amending Regulation C, which iiondepository mortgage lenders,
implements the Home Mortgage
EFFECTIVE DATE: January 1,1993.
Disclosure Act. The Federal Deposit
Insurance Corporation Improvement Act FOR FURTHER INFORMATION CONTACT: Jane
Jensen Gell or W. Kurt Schumacher,
of 1991 authorized the Board, in
Staff Attorneys, or John C. Wood, Senior
consultation with the Department of
Attorney, Division of Consumer and
Housing and Urban Development, to
Community Affairs, Board of Governors
develop a new exemption standard for
nondepository mortgage lenders that is of the Federal Reserve System,
Washington, DC 20551, at (202) 452comparable to the exemption for
2412 or (202) 452-3667. For the hearing
depository institutions. Under the
impaired only, contact Dorothea
standard that has been adopted by the
Board, a nondepository mortgage lender Thompson, Telecommunications Device
with an office in a metropolitan area is for the Deaf (TDD), at (202) 452-3544.
covered if it meets either an asset-size
SUPPLEMENTARY INFORMATION:
test or a lending activity test.
A nondepository mortgage lender
(1) Background
continues to be covered if its assets
exceed $10 million. Regardless of asset Exemption for Small Nondepository
Mortgage Lenders
size, however, under the final rule a
nondepository mortgage lender is also
The Home Mortgage Disclosure Act
covered if it originated 100 or more
(HMDA) requires lenders that have over
home purchase loans (which includes
$10 million in assets and have offices in
refinancings of home purchase loans) in metropolitan areas to disclose their
the preceding calendar year. This dual
housing-related lending activity each
year. Amendments to HMDA in 1989
standard maintains coverage for all
nondepository mortgage lenders that
extended its scope to cover independent
FEDERAL RESERVE SYSTEM
mortgage lenders—nondepository
lenders that are unaffiliated with
depository institutions or holding
companies. Under Regulation C,
nondepository mortgage lenders have
been subject to the act if the volume of
their home purchase loan originations
equals or exceeds 10 percent of their
total loan origination volume in dollars.
As a result, HMDA covers many
nondepository mortgage lenders that
make loans in metropolitan areas, but
only if their assets exceed $10 million.
Most nondepository mortgage lenders
originate loans and then sell them
within a short time, and their asset
levels often can be relatively low (well
under $10 million). Because the 1989
amendments failed to cover as many of
these lenders as Congress had intended,
Congress amended HMDA again in
1991. The Federal Deposit Insurance
Corporation Improvement Act of 1991
authorized the Board, in consultation
with the Department of Housing and
Urban Development, to establish a new
small institution exemption standard for
nondepository mortgage lenders in
order to exempt those lenders that are
“comparable within their respective
industries” to depository institutions
that are currently exempt.
In August 1992 the Board published
a proposal that included an explicit
measure of lending activity together
with the existing asset-size test (57 FR
36024, August 12,1992). The Board
received about 40 comment letters on its
proposal. After review of these
PRINTED IN NEW YORK, FROM FEDERAL REGISTER, VOL. 57, NO. 232, pp. 56963-56968
For Regulation C to be complete, retain:
1) Pamphlet effective January 1, 1990.
2) Amendments, effective January 1, 1992
3) This slip sheet.
[Enc. Cir. No. 10604]
.____O H
5 6 9 6 4 Federal Register / Vol. 57, No. 232 / Wednesday, December 2, 1992 / Rules, and Regulations
before the institution becomes subject to
comments and upon further analysis,
HMDA.
the Board has adopted a final rule.
Under the final rule, for-profit
The Board’s proposal noted that
nondepository mortgage lenders are
nondepository mortgage lenders
covered regardless of lending volume if
specialize in home loans, unlike most
their assets (including those of any
small depository instructions, which
engage primarily in other types of retail parent company) exceeded $10 million
at the end of the previous calendar year.
lending. The data reported by
In addition, firms that have assets of $10
depository institutions currently
million or less are covered if they
covered by HMDA indicate that small
originated 100 or more home purchase
savings and loan associations (the
loans (including refinancings of such
depository institutions most like
loans) in the previous calendar year.
nondepository mortgage lenders in the
This dual standard maintains coverage
type of lending they do) extended an
for all nondepository mortgage lenders
average of 40 home loans in 1991.
that currently report under HMDA and
Because nondepository mortgage
extends coverage to firms that are active
lenders focus on home purchase loans,
mortgage lenders despite their smaller
however, the Board believes it is
asset size. The Board believes that this
appropriate to base the exclusion for
dual standard establishes a smallsmall nondepository institutions on a
institution exemption for nondepository
higher threshold of loan activity than
mortgage lenders comparable to the
the average loan volume for small
current exemption for depository
depository institutions.
In its proposal the Board solicited
institutions.
comment on whetherlOO home
Applications
Received Through Loan
purchase loans is the appropriate level
Brokers
or
Correspondents
for the small-institution exemption
Since 1990 the instructions to the
applicable to nondepository mortgage
HMDA Loan/Application Register
lenders. Most commenters addressing
(HMDA-LAR) have required that
this issue agreed with the proposed
covered lenders report as loan
level, although a few believed that the
exemption standard should be based on originations only those loans that
actually closed in the lender’s name.
a smaller number of transactions to
But for applications received through
expand the act's coverage. Several
loan brokers or correspondents,
commenters suggested that the
transactions comprising the volume test institutions reported data for all
also should be widened to include home applications they denied, whether or
improvement loans, refinancings of both not the loans would have closed in their
home purchase and home improvement name. If a loan closed in the name of a
loan broker or correspondent and was
loans, and even applications for these
immediately purchased by the
types of loans.
institution, the institution reported the
In response to the comments and
transaction as a loan purchase—even if
upon further analysis, the Board has
determined that 100 loans is appropriate it had made the initial credit decision
approving the loan application prior to
as the threshold for coverage of
nondepository mortgage lenders, but the closing.
In August the Board proposed to
Board has broadened the standard by
conform the rule for reporting loan
specifying that refinancings of home
approvals to the rule for reporting loan
purchase loans are to be counted in
determining whether a lender meets the denials. That is, a lender that
loan volume test. The Board considered preapproved a loan which then closed
in another’s name, and acquired the
but decided against expanding the
threshold to include home improvement loan at or after closing, would report the
loan as a loan origination rather than as
loans and applications. The Board
believes that keeping the focus on home a loan purchase. Most commenters
purchase loans (including refinancings) agreed with the Board’s position that
for determining initial coverage is more this change would more accurately
consistent with other provisions of the
reflect an institution’s overall credit
act and regulation. For instance, besides decisions.
Under the final version ol the revised
having assets of more than $10 million
instructions, if an institution receives an
and having offices in metropolitan
areas, a depository institution must have application through a loan broker or
correspondent, approves it, and then by
originated at least one first-lien, home
purchase loan in the preceding calendar pre-arrangement with the broker or
year to be covered by HMDA. Similarly, correspondent acquires the loan at
closing or thereafter, that institution
a nondepository institution's
will report the loan as an origination,
originations of home purchase loans
whether or not the loan closed in that
must amount to 10 percent or more of
institution's name. This change affects
its total loan originations, in dollars,
2
all lenders covered by HMDA, not just
nondepository mortgage lenders.
As has been the case since 1990,
lenders will report denials of
applications (and other actions taken
besides originations, such as
applications withdrawn) even if the
same applications are denied by other
institutions to which they are referred
by a loan broker or correspondent.
Institutions that purchase a loan from
another entity will continue to report
the loan as a loan purchase, as long as
they did not approve the corresponding
application prior to loan origination. If
an institution approves an application
for a loan, but does not acquire the
resulting loan (because it is sold to
another lender, for example), the
institution will report the loan as
“approved but not accepted."
(2) Revisions
This section describes the chailges
that have been made to the regulatory
provisions and the instructions.
Section 203.2 Definitions
(g) Home Purchase Loan
The Board had proposed, for purposes
of defining coverage of lenders, to
exclude refinancings from the definition
of a home purchase loan. Some
commenters noted that nondepository
institutions might originate a significant
number of home purchase refinancings
yet could end up not being covered
under the Board’s proposed 100 home
purchase loan test. Based on the
comments and upon further analysis,
the Board has adopted a rule that
includes refinancings of home purchase
loans in defining the threshold.
Consequently, the Board did not adopt
the proposed change to paragraph
203.2(g).
Section 203.3 Exempt Institutions
(a) Exemption Based on Location, Asset
Size, or Number of Home Purchase
Loans
The Board is adopting in final form its
proposal that the exemption standard
for nondepository mortgage lending
institutions be based on asset size and
number of home purchase loan
originations. As discussed above, the
Board has established 100 loans as the
threshold for the coverage of
nondepository mortgage lenders.
However, the Board has broadened this
standard by specifying that refinancings
of home purchase loans are to be
counted in determining whether a
lender meets the loan volume test.
Thus, under the final rule a
nondepository mortgage lender, like a
depository institution, is covered if its
C IR C U L A R MO
w w w 'X
Federal Register J Vol. 57, No. 232 / Wednesday, December 2, 1992 / Rules and Regulations 5 6 9 6 5
assets exceeded $10 million at the end
of the previous calendar year.
Additionally, regardless of asset size, a
nondepository mortgage lender is also
covered if it originated 100 or more
home purchase loans (which includes
refinancings of home purchase loans) in
the prior calendar year.
To better differentiate between the
exemption criteria that apply to
depository institutions and {hose that
apply to nondepository mortgage
lenders, § 203.3(a) sets forth the criteria
for exemption in separate
subparagraphs.
toan/Appficaiidrr Register Code Sheet
The Board has revised the Loan/
Application Register Code Sheet to
reflect the change to the category of the
action taken code “application
approved but not accepted” discussed
above. A copy of the revised Code Sheet
accompanies this final rule.
(3) Regulatory Flexibility Analysis
The Board’s Division of Research and
Statistics has prepared a Regulatory
Flexibility Analysis of the revisions to
Regulation C. A copy may be obtained
from Publications Services, Board of
Governors of the Federal Reserve
System, Washington, DC 20551, at (202)
Appendix A to Part 203—Form and
452-3245.
Instructions for Completion of HMDA
Loan/Application Register
List of Subjects in 12 CFR Part 203
L W ho M u s t F ile a R ep o rt
Banks, banking, Federal Reserve
System, Mortgages, Reporting and
The Board is amending Appendix A— recordkeeping requirements.
Form and Instructions for Completion of
For the reasons set forth in this final
HMDA Loan/Application Register—to
rule
and pursuant to the Board’s
reflect the new exemption standard for
authority under section 305(a) of the
nondepository mortgage lenders. The
Home Mortgage Disclosure Act (12
criteria for these institutions are set
U.S.C. 2804(a)), the Board amends
forth in a separate paragraph to clearly
Regulation C, Home Mortgage
distinguish this standard horn the
Disclosure (12 CFR part 203) as set forth
exemption criteria for depository
below.
institutions.
IV. T y p e s o f L o a n s a n d A p p lic a tio n s
C o vered a n d E x c lu d e d b y H M D A
The Board has revised the
instructions in paragraph IV.A.3 and has
. added a new paragraph as IV.A.4 to
reflect the requirements for reporting
loan applications that are received
through a loan broker or correspondent.
As discussed above, the Board has
conformed the rule for reporting loan
approvals to the rule for reporting
applications that did not result in
originations—for example, loan denials
and applications withdrawn. New
language in paragraph IV.A.4 clarifies
that a loan origination is only reported
once.
PART 203— HOME MORTGAGE
DISCLOSURE
1. The authority citation for part 203
continues to read as follows:
Authority: 12 U.S.C. 2 8 0 1 -2 8 1 0 .
2. Section 203.3 is amended by
revising paragraph (a) and by revising
paragraph (c)(1) to read as follows:
§203.3 Exempt institutions.
(a) E x e m p tio n b a se d on lo c a tio n ,
a sset
size, or n u m b e r o f h o m e p u r c h a s e lo a n s.
(1) A bank, savings association, or credit
union is exempt from the requirements
of this part for a given calendar year if
on the preceding December 31:
(1) The institution had neither a home
office nor a branch office in an MSA; or
(ii) The institution’s total assets were
V. In stru c tio n s f o r C o m p le tio n o f L o a n /
$10 million or less.
A p p lic a tio n R eg ister
(2) A for-profit mortgage lending
Several commenters pointed out that
institution (other than a bank, savings
under the previous rule, the category of association, or credit union) is exempt
the action taken was actually
frofii the requirements of this part for a
“application approved but not accepted given calendar year if:
(i) The institution had neither a home
b y a p p lic a n t” (emphasis added).
Accordingly, the Board has revised this office nor a branch office in an MSA on
category—found in paragraph V.B.l. of the preceding December 31; or
(ii) The institution’s total assets
the instructions—to read “application
combined with those of any parent
approved but not accepted.” It has also
corporation were $10 million or less on
revised the explanation in paragraph
the preceding December 31, and the
V.B.2.a. to make clear that this code
applies when either the applicant or the institution originated fewer than 100
home purchase loans in the preceding
broker or correspondent does not
respond to a lender’s deadline regarding calendar year.
*
*
*
*
*
an approved application.
3
(c) Loss o f exem p tion .-(ij An
institution losing an exemption that was
based on the criteria set forth in
paragraph (a) of this section shall
comply with this part beginning with
the calendar year following the year in
which it lost its exemption.
*
•
-
*
-
*
*
3. Appendix A to part 203 is amended
by revising paragraphs I.A. through I D.,
by revising paragraph IV.A.3, by
redesignating paragraph IV.A.4 as
IV.A.5 and republishing it, by adding a
new paragraph IV.A.4, and by revising
paragraphs V.B.l. and V.B.2.a. to read as
follows:
Appendix A to Part 203—Form and
Instructions for Completion of HMDA
Loan/Application Register
f
t
'
*
*
*
*
I. Who Must File a Report
A. D epository In stitu tion s
Subject to th e ex c e p tio n d iscu ssed b elow ,
banks, savin gs association s, and cred it
u n io n s m ust co m p lete a register listin g data
about loan a p p lication s received , loan s
originated, and loans purchased if on the
preced in g D ecem ber 31 an institution:
1. Had assets o f m ore than S10 m illio n , and
2. Had a h om e or a branch office in a
"m etropolitan statistical area” or a "primary
m etropolitan statistical area” (both are
referred to in th ese in stru ction s by the term
“ M SA")
Exam ple: If on D ecem ber 31 y o u had a
h om e or a branch office in an M SA and your
assets exceed ed $ 1 0 m illio n , you m ust
com p lete a register that lists the h om e
purchase and h om e im provem en t lo a n s that
you originate or purchase (and a lso lists
ap p lication s that d id not result in an
origination) b egin n in g January 1.
B. D epository in stitu tio n s— E xcep tion
Y ou n eed not co m p lete a register—ev en if
you m eet the tests for asset siz e and
location — if your in stitu tion is a bank,
savin gs association , or credit u n io n that
m ade no first-lien h om e p urchase loans
(in clu d in g refinancings) on one-to-fourfam ily d w ellin g s in the p reced in g calendar
year. T his ex cep tio n d o es not a p p ly in the
case o f n on d ep ository in stitu tio n s
; C. Other Lending Institutions
Subject to the ex cep tio n d iscu ssed b elo w ,
for-profit m ortgage len d in g in stitu tio n s (other
than banks, savin gs a ssociation s, an d credit
u n ion s) m ust co m p lete a register listin g data
about loan ap p lication s received , loan s
originated, and loans pu rch ased if the
in stitu tion had a h om e or branch office in an
M SA on the p reced in g D ecem ber 31, and
1. Had assets o f m ore than $ 1 0 m illio n
(based on the com b in ed assets o f the
in stitu tion and any parent corporation) on
the p receding D ecem ber 31, or >•
2. O riginated 100 or m ore h om e purchase
loan s (inclu d in g refin an cings o f su ch loans)
during the preced in g calendar year,
regardless o f asset size.
——— J Q V i
ft # j y
| * <*
5 6 9 6 6 Federal Register / Vol. 57, No. 232 / Wednesday, December 2. 1992 / Rules and Regulations
that application on your register for the yeai
have closed in your institution's name). For
all of these loans aind applications, report the in which final action is taken.
race or national origin, sex, and income
1— Loan originated
information, unless your institution is a
2— Application approved but not accepted
bank, savings association, or credit union
3— Application denied
with assets of $30 million or less on the
4— Application withdrawn
preceding December 31.
5— File closed for incompleteness
; 4. Originations are to be reported only
6— Loan purchased by your institution
once. If you are the loan broker or
correspondent, do not report as origination;,
2. Explanation o f codes, a. Use code 2
loans that you forwarded to another lender
when an application is approved but the
for approval prior to closing, and that were
applicant (or a loan broker or corresponded
approved and subsequently acquired by that fails to respond to your notification of
lender
(whether
or
not
they
closed
in
your
IV, Types o f Loans and Applications Covered
approval or your commitment letter within
name).
and Excluded byHMDA
the
time.
5. Report applications that were received ' specified
*
%
*
*
A. Types of Loans and Applications to be
in the previous calendar year but were acted
Reported
upon
during
the
calendar
year
covered
by
the
By order of the Board of Governors of the
*
*
*
*
*
current register.
Federal Reserve System, November 24,1992
3. In the case of brokered loan applications
William W. Wiles,
or applications forwarded to you through a
Secretary o f the Board.
V. Instructions fo r Completion o f Loan/
correspondent, report as originations loans,
fFR Doc. 92-29088 Filed 12-1-92; 8:45 am]
that you approved and subsequently acquired Application Register
*
*
*
*
*
according to a pre-closing arrangement
BILLING CODE S210-01-M
(whether or not they closed in your
Appendix A [Amended]
B. Action Taken
institution's name). Additionally, report the
1, Type o f action. Indicate the type of
data for all applications that did not result in
4.
The Loan/Application Register
originations—for example, applications that action taken on the application or loan by
Code Sheet that appears at the end of
your institution denied or that the applicant using one of the following codes. Do not
appendix A is revised to read as follow
report any loan application still pending at
withdrew during the calendar year covered
the end of the calendar year; you will report BILLING CODE 6210-01-M
by the report (whether or not they would
D. Other Lending Institutions—Exception
You need not complete a register—even if
you meet the tests for location and asset size
or number of.home purchase loans—if your
institution is a for-profit mortgage lender
(other than a bank, savings association, or
credit union) and home purchase loans that.
you originated in the preceding calendar year
(including refinancings) came to less than 10
percent of your total loan origination volume,
measured in dollars.
4
LOAN/APPLICATION REGISTER
CODE SHEET
Application or Loan Information
Applicant Information
Type:
Race or National Origin:
1 - Conventional (any loan other than FHA,
VA or FmHA loans)
2 - FHA-insured (Federal Housing
Administration)
3 - VA-guaranteed (Veterans Administration)
4 - FmHA-insured (Farmers Home
Administration)
Purpose:
1 - Home purchase (one-to-four family)
2 - Home improvement (one-to-four family)
3 - Refinancing (home purchase or home
improvement, one-to-four family)
4 - Multifamily dwelling (home purchase, home
improvement, and refinancings)
Owner-Occupancy:
Action Taken:
123456-
Loan originated
Application approved but not accepted
Application denied by financial institution
Application withdrawn by applicant
File closed for incompleteness
Loan purchased by your institution
Sex:
1 - Male
2 - Female
3 - Information not provided by applicant
in mail or telephone application
4 - Not applicable
0 - Loan was hot originated or was not
sold in calendar, year covered by register
1 - FNMA (Federal National Mortgage Association)
2 - GNMA (Government National Mortgage
Association)
3— FHLMC (Federal Home Loan Mortgage
Corporation)
4 - FmHA (Farmers Home Administration)
5— Commercial bank
6 - Savings bank or savings association
7 - Life insurance company
8 - Affiliate institution
9 -Other type of purchaser
Reasons for Denial (optional)
1 - Debt-to-income ratio
2 - Employment history
3 - Credit history
4 - Collateral
567—
89-
Insufficient cash (downpayment, closing costs)
Unverifiable information
Credit application incomplete
Mortgage insurance denied
Other
BILLING CODE 6210-01-C.
56967
CIRCULAR NO. .1[?(Q OH*—
1 -Owner-occupied as a principal dwelling
2 - Not owner-occupied
3 - Not applicable
1 - American Indian or Alaskan Native
2 - Asian or Pacific Islander
3 - Black
4 - Hispanic
5 -White
6 - Other
7 - Information nbt provided by applicant
in mail or telephone application
8 - Not applicable
Type of Purchaser
Federal Register / Vol. 57, No. 232 / Wednesday, December 2,1992 / Rules and Regulations
Use the following codes to complete the Loan/Application Register. The instructions to the HMDA-LAR explain the proper use of each code.
@FedFRASER