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FEDERAL RESERVE BANK
OF NEW YORK
C ircu la r N o.
[
10754
D ecem b er 3 0 , 1994
~l
J
HOME MORTGAGE DISCLOSURE
— Amendments to Regulation C Concerning Annual Reporting Requirements
— FFIEC Letter Highlighting Changes in Reporting Requirements
To All State Member Banks and Other Mortgage Lending Institutions,
and Bank Holding Companies, in the Second Federal Reserve District:
The following statement has been issued by the Board of Governors of the Federal Reserve System:
The Federal Reserve Board has adopted amendments to its Regulation C, Home Mortgage Disclosure Act (HMDA).
HMDA requires most lenders in metropolitan areas annually to report to regulators, and disclose to the public, data on
their morgage lending activity.
Under the new rule, institutions will be required to report in machine-readable form (such as by magnetic tape or
computer diskette), except for institutions with 25 or fewer line entries to report. In addition, institutions must update their
loan/application registers (the forms used for reporting data to regulatory agencies) on a quarterly basis. These changes
are intended to enhance the quality of the data and to help in bringing about earlier public disclosure. Other revisions to
the regulation clarify reporting requirements, in response to questions raised by institutions.
Institutions may comply with the amendments at their option beginning January 1, 1995. Compliance is mandatory
for the collection of data that begins January 1, 1996, for submission by March 1, 1997.
Enclosed — for banks, saving associations, credit unions, and other addressees who maintain sets of the Board’s
regulations — is the text of the amendments to Regulation C, which has been reprinted from the Federal Register.
In addition, we are also enclosing — for all morgage lending institutions — a letter, dated December 9, 1994,
addressed to all financial institutions subject to the Home Mortgage Disclosure Act from the Federal Financial
Institutions Examination Council (FFIEC). The letter highlights the changes in reporting requirements, and discusses
some of the procedural changes that will have an impact on the processing of 1994 HMDA data. The attachments
to which the letter refers consisted of the Board’s press release, reprinted above, and the enclosed Federal Register
notice. We request bank holding companies to pass this material on to their mortgage-banking subsidiaries.
Questions concerning Regulation C may be directed to our Compliance Examinations Department
(Tel. No. 212-720-5914); questions regarding your institution’s HMDA reporting responsibilities should be directed
to the appropriate supervisory agency, whose telephone number is listed on page 5 of the FFIEC letter.
W il l ia m J. M c D o n o u g h ,
President.
I 0 ~ 7 S f
Board of Governors of the Federal Reserve System
HOME MORTGAGE DISCLOSURE
Amendments to Regulation C
(E ffe c tiv e J a n u a ry 1 , 1 9 9 5 )
12 CFR Part 203
[Regulation C; Docket No. R-0839]
Home Mortgage Disclosure
Board of Governors of the
Federal Reserve System.
ACTION: Final rule.
AGENCY:
The Board is publishing a
final rule to amend Regulation C (Home
Mortgage Disclosure) and to revise the
instructions and reporting forms that
financial institutions must use in
complying with the annual reporting
requirements. The amendments respond
to the statutory provisions regarding
earlier availability of the Home
Mortgage Disclosure Act (HMDA)
disclosure statements to the public;
provide clarifications requested by
financial institutions that report under
HMDA; and are intended to help
improve the quality of the HMDA data.
The amendments require reporting in
machine-readable format; require
institutions to update their loan
application registers quarterly during
the year as data are being collected; and
make a number of other changes.
DATES: E ffective date: January 1,1995.
C om plian ce dates: Compliance is
mandatory for paragraphs III.B. and
III.C. of Appendix A to Part 203, the
amendment regarding the transmittal
sheet, for the submission of calendar
year 1995 data, which is due no later
than March 1,1996. For all other
amendments, compliance is mandatory
for the collection of data that begins
January 1,1996, which is to be
submitted to supervisory agencies no
later than March 1,1997. Institutions
SUMMARY:
supervisory agency submits the data to
the Federal Reserve Board, which
FOR FURTHER INFORMATION CONTACT: Jane processes the data on behalf of member
agencies of the Federal Financial
Jensen Gell, Staff Attorney, or John C.
Institutions Examination Council
Wood, Senior Attorney, Division of
(FFIEC) and the Department of Housing
Consumer and Community Affairs,
and Urban Development. The Board
Board of Governors of the Federal
Reserve System, Washington, DC 20551, then prepares public disclosure
at (202) 452-2412 or (202) 452-3667; for statements for each reporting lender.
The statements are sent to lenders and
the hearing impaired only, contact
the lenders are required to make the
Dorothea Thompson,
statements available to the public at
Telecommunications Device for the
their home office and at certain branch
Deaf, at (202) 452-3544.
offices.
The Board also prepares aggregate
SUPPLEMENTARY INFORMATION:
disclosure tables covering all lenders in
I. Background
each MSA, and sends them, along with
The Board’s Regulation C (12 CFR
the individual lenders’ disclosure
Part 203) implements the Home
statements, to a central data depository
Mortgage Disclosure Act of 1975
in each MSA. The central depositories
(HMDA) (12 U.S.C. 2801 et seq.). The
are usually public libraries, regional
regulation requires most mortgage
planning agencies, or other public
lenders located in metropolitan
offices.
statistical areas (MSAs) to report
annually to federal supervisory
II. Summary of Amendments
agencies, and disclose to the public,
In June 1994, the Board proposed
information about their home mortgage amendments to Regulation C (59 FR
and home improvement lending
30310, June 13,1994). Approximately
activity. The reports and disclosures
300 comments were received on the
cover loan originations, applications
proposal. While many commenters
that do not result in originations (for
supported the proposal, a number raised
example, applications that are denied or concerns about some of the specific
withdrawn), and purchases of loans.
provisions. After reviewing the
Information reported includes the
comment letters and upon further
location of the property to which the
analysis the Board is adopting
loan or application relates; the race or amendments to Regulation C.
national origin, gender, and income of
A principal reason for amending
the applicant; and the type of purchaser Regulation C is to make HMDA data
for loans sold in the secondary market. available to the public earlier than has
Lenders are required to report data
been the case in the past. Statutory
about originations, applications, and
amendments to HMDA enacted in 1992
purchased loans for each calendar year provide that starting with the HMDA
to their supervisory agency by March 1 reports for calendar year 1994, the
of the following year. The reports are
FFIEC should make every effort to
made on a HMDA Loan/Application
ensure that disclosure statements for
Register (HMDA-LAR) in a transactionindividual lenders are available to the
by-transaction format. The lender’s
may comply with the amendments
beginning January 1,1995.
FEDERAL RESERVE SYSTEM
PRINTED IN NEW YORK, FROM F E D E R A L
R E G IS T E R ,
For this R egulation to be com p lete, retain:
1) Pam phlet dated M arch 1, 1 993.
2) T h is slip sheet.
[E n c. Cir. N o. 10754]
VOL. 59, NO. 236, pp. 63698-63706
Federal Register / Vol. 59, No. 236 / Friday, December 9, 1994 / Rules and Regulations
public by July 1 of the following year,
and that aggregate tables are available at
the central depositories by September 1.
Another purpose for the amendments
is to improve further the accuracy of the
HMDA data. The accuracy of the HMDA
reports has been improving from year to
year, but concerns continue about data
quality. Amendments that require
institutions to report in machinereadable format and to update their
HMDA/LARs on a quarterly basis are
intended to help improve data quality,
as well as aid in earlier data availability.
Institutions are expected to accurately
compile and check their data before
submission. Some of the amendments
are intended to clarify and simplify the
reporting requirements, thus facilitating
institutions’ performance of these tasks.
The Board intends to publish by yearend 1994 a proposed staff commentary
to Regulation C. The commentary will
provide a vehicle for interpretations to
help lenders better understand and
comply with the regulation’s
requirements. The commentary will
supplement the instructions provided in
Appendix A to Regulation C for
completion of the HMDA-LAR.
The Board, the Office of the
Comptroller of the Currency (OCC), the
Federal Deposit Insurance Corporation
(FDIC), and the Office of Thrift
Supervision (OTS) recently proposed to
amend their Community Reinvestment
Act (CRA) regulations, and included a
proposal that would require some
lenders to collect additional mortgage
data (59 FR 51232, October 7,1994).
Accordingly, the Board published for
comment proposed amendments to
Regulation C to implement the CRA
changes (59 FR 51323); the final
amendments set forth below do not
include final action on that HMDA
proposal.
Institutions must comply with the
new or changed requirements beginning
with the collection of data for calendar
year 1996, to be reported by March 1,
1997; institutions may choose to comply
beginning January 1,1995. (For the
amendments concerning the transmittal
sheet, compliance is mandatory
beginning with the submission of the
1995 data that are due by March 1,
1996.) In other cases, the amendments
merely clarify existing rules already in
effect, with no substantive change, and
institutions must continue to comply
with the existing rule. The amendments
setting forth such clarifications are those
relating to: the definition of “financial
institution” (§ 203.2(e)); reporting of
gross annual income (§ 203.4(a)(7));
treatment of counteroffers (Appendix A,
paragraphs V.A.8.f. and V.B.2.a. and c.);
and reporting of property location
(Appendix A, paragraph V.C.5.).
Section 203.2— D efinitions
Paragraph (e)—Financial Institution
The Board is amending paragraphs
(e)(1) and (e)(2) to clarify that a
refinancing of a home purchase loan is
itself a home purchase loan for the
purposes of this definition. This
technical revision (which was not
addressed in the proposed rule)
conforms the regulatory language to
existing language in the HMDA-LAR
instructions (see Appendix A,
paragraphs I.B., C., and D. of this part).
Paragraph (f)—Home Improvement Loan
The existing definition of “home
improvement loan” sets two conditions:
The stated purpose of the loan is to
repair, rehabilitate, or remodel a
dwelling; and the loan is classified by
the financial institution as a home
improvement loan.
The Board proposed to define a home
improvement loan as a loan “stated by
the borrower (at the time of the loan
application) to be for home
improvement purposes,” to broaden the
coverage to improvements to the real
property but not to the “dwelling” itself.
Some commenters expressed concerns
that the proposed definition would
cover only loans expressly stated by the
borrower to be for home improvement
purposes, noting that an applicant might
not specifically say that a loan is “for a
home improvement purpose.”
Commenters suggested deleting the
requirement that the borrower “state”
that a loan is for “home improvement.”
Based on the comments received and
upon further analysis, the Board has
revised the definition to provide that a
home improvement loan is one for the
purpose of repairing, rehabilitating,
remodeling, or improving either a
dwelling or the real property on which
the dwelling is located (even if it is not
called a “home improvement” loan by
the borrower). For example, a loan that
the borrower states is for a driveway,
detached garage, or landscaping is a
home improvement loan subject to the
regulation.
The Board proposed to eliminate the
second part of the definition—thaf the
loan be classified in the records of the
financial institution as a home
improvement loan. This revision would
have made the manner in which an
institution classifies a loan irrelevant for
HMDA purposes. This proposed change
was intended to enable an institution to
report home improvement loans on its
HMDA-LAR even if the institution did
not record them as home improvement
63699
loans for other purposes. Commenters
supporting the proposal noted that loans
may be for home improvement purposes
but may not be “classified” in the
institution’s records as home
improvement loans.
Many other commenters requested
that the Board not change this part of
the definition. They said that deleting
the classification aspect of the home
improvement loan definition could
work a hardship on institutions that do
not now classify loans in all their
product lines, and that would have to
adopt procedures to identify which
loans are in fact used for home
improvement purposes. The Board has
retained the current classification
provision. The Board believes, however,
that institutions wishing to report loans
that have a home improvement purpose
need-not make major modifications to
their recording procedures to meet the
definition. Classification can mean that
a loan is recorded on an institution’s
books or otherwise identified or coded
in some manner as a home improvement
loan. For example, loans that are
marketed, “booked,” or classified on
call reports as home improvement loans
could be considered “classified” as
home improvement loans under the
revised definition.
Some commenters requested a change
in the treatment of a multiple-purpose
loan where a portion is for home
improvement. The Board has previously
interpreted the definition of home
improvement loan to mean that if more
than 50 percent of the proceeds of a loan
will be used for home improvement
purposes, the total loan amount may be
reported as a home improvement loan.
Commenters suggested that compliance
would be made easier if the Board
instead provided that regardless of the
amount of a multi-purpose loan
specified for home improvement
purposes, institutions may report the
loan as a home improvement loan. After
further analysis, the Board has revised
the definition of a home improvement
loan to provide that if a portion of a loan
is for home improvement purposes, it
may be reported as such, assuming it is
classified by the institution as a home
improvement loan. The Board believes
that in most instances this revision will
not result in institutions having to
report multipurpose transactions not
previously reportable, because reporting
is still limited to those transactions that
are classified by an institution as home
improvement loans.
\ G
63700
i s q
F e d e r a l R e g i s t e r / V o l . 5 9 * N o . 2 3 6 / F r id a y * D e c e m b e r 9 , 1 9 9 4 / R u l e s a n d R e g u l a t i o n s
Section 2 0 3 A — C om pilation o f Loan
D ata
Paragraph (a)—Data Format and
Itemization
M aintenance ofL A R s on current
basis. The regulation requires covered
institutions to report HMDA data for a
given calendar year to their supervisory
agency by March 1 of the following year.
The Board proposed to require
institutions to record transactions on the
HMDA-LAR within (me month after
final action is taken (such as origination
of a loan* or denial or withdrawal of an
application). Comment was requested
on whether any burden caused by a
periodic maintenance requirement
might be reduced if institutions were
required to update the HMDA-LAR on
a quarterly basis.
Most comm enters who addressed the
issue stated that it would be costly and
burdensome to record all the HMDALAR information within one month after
final action. On the other hand,
commenters generally supported the
Board’s alternative proposal requiring
institutions to maintain the HMDA-LAR
on a quarterly basis. These commenters
believed that it would be feasible to
update the HMDA-LAR quarterly,
noting that the OCC requires national
banks to update their HMDA-LARs
within thirty calendar days after the end
of each calendar quarter (12 CFR
27.3(a)(1)(H)). The FDIC requires
institutions it supervises to enter all
required information on the HMDALAR within thirty calendar days of final
action (12 CFR 338.8(c)).
The Board believes that quarterly
updating will help in improving the
accuracy and timeliness of the HMDA
data without imposing an undue
compliance burden on institutions.
Under the final rule, an institution must
record transactions within thirty
calendar days after the end of the
calendar quarter in which final action is
taken (such as origination of a loan, or
denial or withdrawal of an application).
For example, institutions must record
by April 30 all transactions in which
final action is taken during the first
quarter. Calendar year 1996 is the first
year during which quarterly updating
will be reauired.
Under tnis final rule, current-year
registers will be available to examiners
so that the supervisory agency can work
with the institution to ensure that any
errors are promptly corrected.
Institutions are expected to make a good
faith effort to enter all data concerning
transactions completely and accurately.
If an examiner finds, on reviewing a
quarterly update, that some data are
incorrect or incomplete despite such
effort, the error or omission w ill not
constitute a violation of Regulation C.
The new requirement is intended to
facilitate early detection of errors by
examiners or by the institution itself, so
that errors can be corrected before the
annua) report is submitted. The Board
believes that updating the HMDA-LAR
within one month after the end of each
quarter is an important step toward
improving the accuracy and timeliness
of HMDA reports.
Institutions should keep in mind that
the new Regulation C rule is only a
minimum requirement and does not
supersede stricter updating rules that a
supervisory agency may impose on
institutions under its jurisdiction (such
as those that the FDIC and the OCC
currently have in place).
R eportin g in co m e. The Board
proposed to revise the regulation to
clarify how institutions report applicant
income. Regulation C currently provides
that financial institutions shall collect
data on the “income relied upon in
processing the loan application.” The
instructions for completing the HMDALAR similarly state that an institution
must enter the “gross annual income
that your institution relied upon in
making the credit decision” (Appendix
A, paragraph V.D.5.). If no income is
“asked for or relied on” in the credit
decision, institutions are instructed to
enter “NA” (not applicable) in the
income field (Appendix A, paragraph
VD.5.C.).
The Board proposed that lenders
should report on their HMDA-LAR the
income reported on the application,
including income of coapplicants,
whether or not the lender relied on a
particular source of income to qualify
the applicant for a certain amount of
credit.
Most commenters opposed the
proposed change. Many said that
reporting all income stated on the
application, whether or not relied on in
the credit decision, would involve
significant procedural and programming
modifications. Commenters believed
that expanding the income-reporting
requirement would increase their
burden without a commensurate
increase in data quality and accuracy.
Some commenters also suggested that
income relied upon serves as a better
measure of a lender’s decision-making
process.
Based on the comments received and
further analysis, the Board has retained
the existing rule. As under the current
regulation, the income to be reported for
HMDA purposes is the income relied on
by the creditor in making the credit
decision.
Currently lenders need not report
income for streamlined refinancings or
other loans in which they do not ask for,
or do not rely on, income information,
hi addition, fo r privacy mesons, an
institution need not record applicants*
income on the HMDA-LAR far loans
made to the institution’s own
employees. These rules will remain in
place.
Under Regulation B (12 CFR Part 202),
creditors may not discount or exclude
from consideration the income of an
applicant or the spouse of an applicant
because of a prohibited basis (such as
race, color, religion, national origin, sex,
marital status, or age) or because the
income is derived from part-time
employment or an annuity, pension, or
other retirement benefit. However,
creditors may consider the amount and
probable continuance of any income in
evaluating an applicant’s
creditworthiness. This rule applies in
reporting income under Regulation C; if
a lender determines that some portion of
the income reported by the applicant
cannot be verified, is overstated, or is
unreliable, the lender need not report
that income on the LAR.
In addition, a technical change has
been made to $ 203.4(a)(7) of Regulation
C to reflect the instructions for
completing the HMDA-LAR, winch
specify that lenders must report the
gross an n u al income relied upon in
making the credit decision.
S ection 203.5— D isclosu re a n d
R eportin g
Paragraph (a)—Reporting to Agency
P ro p o sed ch a n g e in reporting
dea d lin e. Statutory amendments
contained in the Housing and
Community Development Act of 1992
provide that starting with loan and
application data for calendar year 1994,
the FFIEC shall make “every effort” to
ensure that individual lenders’ public
disclosure statements are available at
the lenders’ offices before July 1 of the
following year. Similarly, the
amendments call for the FFIEC to make
both the individual disclosures and the
aggregate tables available at the central
depositories before September 1.
To facilitate earlier availability, the
Board proposed to make February 1 the
deadline for HMDA-LAR submission by
lenders to their regulatory agencies,
instead of March 1. Many commenters
expressed objections to this proposal
and stated that a February 1 deadline
would be extremely difficult or
impossible to meet. Commenters
pointed out the difficulties already
present in the current March 1 deadline,
given the time required for institutions
Federal Register / Vol. 59, No, 236 / Friday, December 9, 1994 f Rules and Regulations
with large branch networks to collect
the data in a central location at year-end
and review and compile the data prior
to submission to their regulator. Other
commenters mentioned the marry other
reports that are already due at the end
of January, making it difficult to meet a
February 1 deadline for HMDA.
Some commenters questioned
whether an earlier deadline was
necessary to meet the agencies’ earlier
timetables given the other changes that
the Board was proposing to make {such
as the requirements that data be
maintained on a current basis and
submitted to the agencies in an
automated, edited format). Some
suggested that this proposed change
could result in less accurate data
because there would be less time to
audit the data and correct any errors.
Based on the comments received and
further analysis, the Board has decided
not to change the reporting deadline
from the current March 1 date. With the
expectation of further efficiencies in the
agencies’ internal processing schedules,
the Board believes that adoption of the
other amendments will assist in meeting
the earlier timetables for release of data
without the proposed change in
deadline.
Reporting in machine-readable
format. The Board proposed to require
that all institutions report HMDA data
in machine-readable form and that they
edit the data before submission, either
using agency-supplied HMDA software
or using the same edits in private
vendors’ software. The proposed change
wras intended to help lenders ensure
submission of accurate data. The Board
also requested comment on w hether
requiring machine-read able data
submission from all institutions would
create a hardship for some, and if so,
whether supervisory agencies should
have discretion to grant waivers on a
case-by-case basis.
A significant proportion of lending
institutions still report HMDA data in
paper form. For example, among
institutions reporting to the OCC, 24
percent report in paper farm; for
institutions reporting to the FDIC, the
National Credit Union Administration,
and the Board, the figures are 27
percent. 47 percent, mod 20 percent,
respectively. Same commenters
(especially smaller institutions with few
transactions to report) stated that it
would be burdensome for them to report
in automated form. Many others
indicated that they would have no
difficulty in doing so.
The Board believes that reporting in
machine-readable form should not be
overly burdensome for mo6t
institutions, considering the availability
63701
of personal-computer software at no cost readable form effective with the data
due on March 1,1997.
from most of the supervisory agencies
and the existence of private vendors that
Paragraph E
sell software for preparing reports or
A new paragraph II. E. reflects the
that offer report-preparation services.
requirement that the HMDA-LAR be
The Board has therefore adopted the
updated within 30 days after the end of
requirement for machine-readable
reporting, but is making the requirement the calendar quarter, beginning m
calendar year 1996. See the discussion
applicable to calendar year 1996 data.
under § 203.4(a), above.
This delay in effective date will enable
institutions to minimize expenses by
III. Submission of HMDA-LAR and
allowing them to make changes to
Public Release o f Data
procedures over a reasonable period of
Paragraphs B and C
time.
The Board recognizes that for
Requirement to Report Total HMDAinstitutions that have only a few lines of LAR Entries on Transmittal Sheet
data to report, changing over from paper
Regulation C requires that a
to machine-readable reporting could be
transmittal sheet accompany an
expensive on a per-transaction basis.
institution’s HMDA-LAR data
Even if the cost of computer hardware
submission, containing general
and software and related costs, such as
information such as the name, address,
for training, are modest, the costs may
and identifying numbers of the
outweigh the benefits for a very small
institution. The Board proposed to
amount of data. Accordingly,
amend the regulation to require
institutions with 25 or fewer line entries financial institutions to report on the
to report w ill continue to be permitted
transmittal sheet the total number of
to submit their data in paper form. (For
line entries included in the data
the 1995 data collection year, the
submission, and to send a transmittal
existing rule remains in place; lenders
sheet with the initial and any
reporting more than 100 line entries are subsequent submissions of data, rather
expected to submit data in machinethan only with the initial submission.
readable form.)
An institution will sometimes send
The Board decided against the
HMDA data to its supervisory agency in
granting of waivers from the machinemore than one submission when
readable reporting requirement on the
revisions to the initial submission are
grounds that a waiver procedure would
necessary, for example, or because
likely be cumbersome for both agencies
transactions were found to have been
and institutions and that institutions
inadvertently omitted. The proposed
might not know on a timely enough
changes were intended to reduce the
basis whether they had to report in
likelihood of any data being lost during
machine-readable form.
the collection process.
The Board has adopted the changes as
Paragraph (e)—Notice of Availability
proposed. The final amendment clarifies
The Board has adopted the technical
that the number to be reported on the
change to § 203.5(e) concerning the
transmittal sheet is the total number of
suggested language for the lenders’
line entries contained in the
notice of availability. As discussed in
accompanying submission. If the
the proposal, amendments contained in submission is not the first submission of
the Housing and Community
data by an institution, the number to be
Development Act of 1992 and
reported is the line-entry count for that
incorporated into Regulation C (58 FR
particular submission, not a cumulative
13403, March 11,1993) require lending
number for all submissions to date. For
institutions to make their loan/
submissions that include line entries
application registers available to the
representing revisions or deletions of
public (after deleting certain data
previously submitted entries, the
fields).
number to be reported is the total of line
entries in that submission (including
Appendix A—Form and Instructions
revisions, deletions, entries being
loir Completion of HMDA-LAR
resubmitted without change, and entries
II. Required Format and Reporting
being submitted Cor the first time).
Procedures
Paragraph G Posters
Paragraph A
The Board has adopted suggested
language for the notice of availability
As discussed above, the revised
regulation requires that HMDA-covered that lenders post in their home and
branch offices in metropolitan areas, to
institutions, except those whose
correspond to the technical change
HMDA-LARs contain 25 or fewer line
made to § 203.5(e). The final sentence
entries, submit data in machine-
lO~15H
63702
Federal Register / Vol. 59, No. 236 / Friday, December 9, 1994 / Rules and Regulations
has been revised to mirror more
accurately the requirements of § 203.5(b)
and (c), indicating that the data need
only be available in one branch office in
each MSA.
The poster language is optional.
Lenders may continue to use their
existing posters without violating the
regulation. When they next reprint their
poster supplies, they should use
language similar to that suggested here.
V . I n s tr u c tio n s fo r C o m p le t io n o f L o a n /
A p p lic a t io n R e g is te r
A. Application or Loan Information
5. Explanation of Purpose Codes
Code 2: Home improvement. The
HMDA-LAR instructions have been
revised to reflect the Board’s
amendments to the definition of home
improvement loans in § 203.2(f), as
discussed above. Paragraphs a. and c.
under Code 2 have been revised for
consistency with this change to the
regulation.
Code 3: Refinancings. The regulation
requires lenders to report refinancings,
which are defined as loans that satisfy
an existing obligation and replace it
with a new obligation undertaken by the
same borrower. The Board sought
comment on the exclusion of certain
refinancings based on the “predominant
purpose” test. Under this test, a
refinancing is reported only if the
amount outstanding on the loan being
refinanced, plus the amount of any new
money for home purchase or home
improvement purposes, equals more
than 50 percent of the total new loan
amount. Many commenters suggested
that this 50 percent test could be
abolished without making the data
collected any less useful and that this
would greatly ease compliance, thereby
promoting greater accuracy in reporting.
The Board agrees, and has revised
paragraph c. under Code 3; refinancings
may be reported regardless of the
purpose of, or the amount outstanding
on, the original loan and regardless of
the amount of new money (if any) that
is for home purchase or home
improvement purposes. However, if an
institution knows that the purpose of
the original loan was not home purchase
or home improvement, the refinancing
need not be reported.
Many commenters noted that to
ensure that the collection of data under
HMDA is related to the housing credit
needs of communities (as specified in
the act), reportable refinancings should
be limited to those secured by a
dwelling. In keeping with the revisions
to paragraph c. under Code 3, the Board
has revised paragraph a. under Code 3
to state that only refinancings of loans
secured by a lien on residential
dwellings are to be reported. Therefore,
refinancings of unsecured home
improvement loans will no longer be
reported under HMDA.
While these changes in the reporting
of refinancings may result in some net
increase in the number of refinancings
reported, the Board believes that the
greater ease in determining whether a
given transaction is to be reported
outweighs any additional reporting
burden.
In its proposed rule the Board sought
comment on whether to require the
reporting of certain types of loan
modifications (sometimes called
modification, extension, and
consolidation agreements or "MECAs”),
which are technically not
"refinancings” but which can be their
functional equivalent. Some
commenters suggested that lenders
ought to be allowed to report
modifications that are truly the
functional equivalent of refinancings.
The Board believes, however, that the
advantages of a bright-line test for
determining whether a transaction is to
be reported outweigh the benefits of the
additional data on modifications.
Accordingly, the final rule limits
reporting of refinancings to those that
result in the satisfaction of an existing
obligation and its replacement by a new
obligation undertaken by the same
borrower.
The Board has made a technical
change to the language in paragraph a.
Previously, paragraph a. stated that
refinancings would not be reported if,
under the loan agreement, a lender was
“unconditionally obligated to renew or
refinance the obligation,” or was
“obligated to renew or refinance the
obligation subject to conditions within
the borrower’s control.” As the renewal
of an existing obligation does not
involve the satisfaction of that
obligation, the Board has deleted this
language to avoid confusion.
8. Loan Amount
Paragraphs b, c, and d. Paragraphs b.,
c., and d. have been revised for
consistency with the changes, discussed
above, regarding home improvement
loans and refinancings.
Paragraph f. Paragraph f. has been
revised to make clear that a counteroffer
not accepted by the applicant is to be
reported as a denial, consistent with
new paragraphs B.2.a. and c., discussed
below.
B. Action Taken
2. Explanation of Codes
As was proposed, the final rule
clarifies in new paragraphs a. and c.
(existing paragraphs a. and c. have been
redesignated) that counteroffers are to
be reported as loan denials if the
applicant does not accept the
counteroffer, not as applications
withdrawn or approved but not
accepted. Commenters generally
supported th e Board’s interpretation.
Some commenters stated that this
clarification was necessary to conform
the treatment of counteroffers in
Regulation C with the treatment of
counteroffers in Regulation B (12 CFR
Part 202, Equal Credit Opportunity).
Other commenters were concerned
that classifying unaccepted
counteroffers as denials would not
reflect an institution’s offer of credit,
.although in a different amount or on
different terms from those applied for.
Some suggested that unaccepted
counteroffers should be reported as
applications approved but not accepted
or as withdrawn. However, under
Regulation C an application that is
approved but not accepted is one that
the lender has approved in the amount
and on the terms applied for, not in a
different amount or on different terms as
in the case of a counteroffer. A
withdrawn application is one that the
applicant has withdrawn unilaterally
and before the lender has
communicated its decision to the
applicant. The Board believes that
neither of these categories is appropriate
for reporting an unaccepted counteroffer
for HMDA purposes.
C. Property Location
5. Outside-MSA
Under Regulation C, for loans on
property located outside the
metropolitan areas in which an
institution has a home or branch office
(or outside any MSA), the institution
has the option to enter on the HMDALAR information on the location of the
property to which the loan relates, or to
enter “NA.” The Board proposed to
revise this paragraph to clarify that, if a
lender chooses to enter data in the
property-location fields of the HMDALAR for these loans, the data must
accurately reflect the location of the
property in question. The Board has
adopted the proposal in final form, with
additional clarification on how the
location data are to be entered.
Under the CRA proposal recently
issued for comment (59 FR 51323,
October 7,1994), certain depository
institutions would have to report
property location for all their HMDA
loan transactions, whether or not the
property to which the loan relates is
located in an MSA in which the
institution has a home or branch office
Federal Register > Yol. 59, Ncx 236 / Friday, December 9, 1994 / Rules and Regulations
Fiual action is skii) pending o a that
proposal; th e public comment period
closed on November 21.
D. A p p lica n t Inform ation —R ace or
N ation al O rigin. S ex r a n d In com e
5 Income
The Board is making a technical
change in paragraph c., which states
that if income is not asked for or relied
on m a credit decision, the creditor
should enter “NA” for income on the
HMDA-LAR. The Board has deleted the
parenthetical reference to “no income
verification” loans as possibly
inaccurate; the Board intends to provide
guidance oa types af loans that would
qualify under this paragraph in the staff
commentary to Regulation C.
III. Other Matters
In addition to seeking comment on
the proposed amendments, the Board
solicited comment on other matters
related to HMDA reporting: home equity
lines, prequalification programs, and the
collection of racial or ethnic
information. These are discussed below.
H om e E q a ity Lines
The Board solicited comment on ways
in which Regulation C might be changed
to better address problems of accuracy
of the HMDA data. Specifically, the
Board asked whether allowing o t
requiring all home-equity credit lines to
be reported—rather than only the
portion of a line the borrower intended
to use for home improvement oc home
purchase—would simplify reporting
and therefore bring about greater
consistency,
A number o f commenters suggested
that the Board should allow the entire
amount of the home-equity credit line to
be reported under HMDA. regardless of
the amount earmarked for home
improvement or home purchase
purposes. They believed that such a
change would simplify the reporting
process. However, other commenters
questioned whether allowing the entire
credit line to be reported is consistent
with the stated purpose of the act—to
determine whether financial institutions
are meeting their obligations to serve the
housing needs of their communities.
Based on the comments and further
analysis, the Board is leaving
unchanged the reporting rules for homeequity credit lines.
P requalification Programs
The Board requested comment on the
treatment of prequahfications under
HMDA. In particular, for denials of
prequalification requests that are
covered by HMDA questions have been
raised about the reporting of the loan
63703
amount, loan type, and property
next several years. T he Board will
location data fields on the HMDA-LAR. reexamine this matter at that time.
Although ”NA" is an acceptable entry
IV. Regulatory Flexibility Analysis
for property location (for example, if the
The proposed am endments to
pros pert ire homefmyerhas not
R e fla tio n C that the Board published
requested financing for a specific
for comment in June 1994 were
property), for loan amount the
intended to uppcove the quality of
regulation currently does not provide
HMDA data and make the data available
any acceptable code if the prospective
to the public earlier. Many commenters
homebuyer has not requested a
supported the objectives of the proposal
particular amount of credit.
but thought that some of the proposed
Based on the comments and upon
changes were unnecessarily
further analysis, the Board has
burdensome. In many cases,
determined that for 1994 and 1995 data
oom nenters suggested alternatives that
collection, mstitntions need not report
prequalification requests on the HMDA- they believed would help achieve the
objectives of the proposed amendments
LAR. The Board expects to address,
at
a lower cost. The revised
issues related to prequalification
amendments have been responsive to
requests in the staff commentaries for
the advice in the public commen ts. The
Regulations B and C
revised amendments should disrupt
Co Section o f fktcial o r Ethnic
current practices much less and
Inform ation
therefore have lower compliance costs
Regulation C provides that applicants than the changes originally proposed. At
the same time, the revised am endm ents
for mortgage and home improvement
would achieve the original objective of
loans be requested, but not required, to
more accurate and timely HMDA data.
provide information about their race or
national origin, gender, and income. If
V. Paperwork Reduction Art
this information is not provided when
In accordance with section 3507 of
the application is taken in person, the
the Paperwork Reduction Act of 1980
loan officer is required to enter the
(44 U.S.C. 55; 5 CFR 1320.13) these
information on the basis of visual
revisions have been reviewed under the
observation or surname. The purpose is authority delegated to the Federal
to gather data that may help supervisory Reserve Board by the Office of
agencies determine whether a lending
Management and Budget after
institution is complying with the fair
consideration of the comments received
lending laws.
during the comment period. Where
The categories in Regulation C for
appropriate, steps were taken to
data collection on race/national origin
minimize any increase in burden.
of applicants include the category of
The amended regulation revises the
"other." The categories used by the
transmittal sheet few*the HMDA-LAR by
Office of Management and Budget
requiring a record count to be included;
(OMB) for government statistical
the Board believes that the paperwork
purposes do not provide that option.
expansion associated with this
Comment was solicited on whether the
requirement is de minimis. The
Board should consider deleting the
amended regulation requires lenders to
"other” category.
file submission in machine-readable
Commenters generally believed that
format, with an exception for
the “other” category serves a useful
institutions whose reports contain 25 or
purpose. Several commenters expressed fewer line entries. The burden
the view that providing this option
associated with machine-readable
helps ensure the integrity of the existing reporting is likely to he minimal,
categories. These commenters stated
particularly given the lead-time
that the HMDA data are more useful and provided for mandatory compliance.
accurate when persons who believe they The one-time costs for machine-readable
do not fit into a specific category are not reporting will be offset by savings in the
forced into one. Commenters also noted
ongoing costs of reporting.
that use of this category should not
The amended regulation requires
affect HMDA data analysis significantly, quarterly updating of the HMDA-LAR.
because only 45,000 applicants out of 10 Many institutions already maintain their
million records (less than half of one
data on an ongoing basis, rather than
percent) utilized this option in 1992.
entering all data at year-end. Overall,
The Board has retained the “other"
thrs change does not represent an
category for the present. OMB is
increase in paperwork burden.
The amended requirements for
currently exploring changes that may be
reporting refinancings and home
adopted for use in the decennial census
improvement loans will likely mean
for the year 2000. and is expected to \
that a higher volume of transactions will
announce changes in categories in the
ic r ts q
63704
Federal Register / VoL 59, No. 236 / Friday, December 9, 1994 / Rules and Regulations
be reported. Lenders will find
compliance easier, however, as they will
have less difficulty in determining
whether particular refinancings or home
improvement loans are covered by
HMDA, offsetting any marginal increase
in the cost of reporting additional
transactions. Thus, no increased burden
should result. The remaining
amendments clarify existing rules, make
minor technical changes, or make
changes that are optional for
institutions, and do not represent an
increase in paperwork burden.
Based on its analysis of the impact of
the amended regulation, the Board
believes that there is no net change in
the Board’s current estimate of
paperwork burden associated with
Regulation C. The public reporting
burden for collection of the HMDA data
is estimated to vary from 10 to 10,000
hours per response, with an average of
200 hours per response. This includes
the time to gather and maintain the data
needed and to review instructions and
complete the information collection.
List of Subjects in 12 CFR Part 203
Banks, banking, Consumer protection,
Federal Reserve System, Home mortgage
disclosure, Mortgages, Reporting and
recordkeeping requirements.
For the reasons set forth in the
preamble, the Board amends 12 CFR
Part 203 as set forth below:
PART 203—HOME MORTGAGE
DISCLOSURE (REGULATION C)
1. The authority citation for Part 203
continues to read as follows:
Authority: 12 U.S.C. 2801-2810.
2. Section 203.2 is amended by
republishing paragraph (e) introductory
text, and by revising paragraph (e)(1)
introductory text, and paragraphs (e)(2)
and (0 to read as follows:
§ 203.2 Definitions.
*
*
*
*
*
(e) F inancial in stitu tion means:
(1) A bank, savings association, or
credit union that originated in the
preceding calendar year a home
purchase loan (other than temporary
financing such as a construction loan),
including a refinancing of a home
purchase loan, secured by a first lien on
a one- to four-family dwelling if:
* * * * *
(2) A for-profit mortgage lending
institution (other than a bank, savings
association, or credit union) whose
home purchase loan originations
(including refinancings of home
purchase loans) equaled or exceeded ten
percent of its loan origination volume,
measured in dollars, in the preceding
calendar year.
(f)
H o m e im p ro ve m en t loan means
any loan that:
ll) Is for the purpose, in whole or in
part, of repairing, rehabilitating,
remodeling, or improving a dwelling or
the real property on which it is located;
and
(2) Is classified by the financial
institution as a home improvement loan.
* * *
*
*
3. Section 203.4 is amended by
revising the second sentence of the
introductory text in paragraph (a), and
paragraph (a)(7), to read as follows:
§ 203.4 Compilation of loan data.
(a) D ata fo rm a t a n d item ization .
* * * These transactions shall be
recorded, within thirty calendar days
after the end of each calendar quarter in
which final action is taken (such as
origination or purchase of a loan, or
denial or withdrawal of an application),
on a register in the format prescribed in
Appendix A of this part and shall
include the following items:
* * * * *
(7)
The race or national origin and
of the applicant or borrower, and the
gross annual income relied upon in
processing the application.
* * *
*
*
4. Section 203.5 is amended by
revising paragraph (a), and by revising
paragraph (e), to read as follows:
A. Institutions must submit data to their
supervisory agencies in an automated,
machine-readable form. The format must
conform exactly to that of form FR HMDALAR, including the order of columns, column
headings, etc. Contact your federal
supervisory agency for information regarding
procedures and technical specifications for
automated data submission; in some cases,
agencies also make software for automated
data submission available to institutions. The
data must be edited before submission, using
the edits included in the agency-supplied
software or equivalent edits in software
available from vendors or developed inhouse. (Institutions that report 25 or fewer
entries on their HMDA-LAR may collect and
report the data in paper form. An institution
that submits its register in nonautomated
form must send two copies that are typed or
computer printed, and must use the format
of form FR HMDA-LAR (but need not use the
form itself). Each page must be numbered,
and the total number of pages must be given
(for example, “Page 1 of 3”).)
*
*
*
*
*
E. Applications and loans must be
recorded on your register within thirty
calendar days after the end of the calendar
quarter in which final action (such as
origination or purchase of a loan, or denial
sexor withdrawal of an application) is taken.
The type of purchaser for loans sold need not
be included in these quarterly updates.
*
*
*
*
*
§ 203.5 Disclosure and reporting.
(a) R eportin g to agency. By March 1
following the calendar year for which
the loan data are compiled, a financial
institution shall send its complete loan
application register to the agency office
specified in Appendix A of this part,
and shall retain a copy for its records for
a period of not less than three years.
* * * * *
(e)
N o tice o f ava ila b ility. A financial
institution shall post a general notice
about the availability of its HMDA data
in the lobbies of its home office and any
physical branch offices located in an
MSA. Upon request, 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.
5. Item II. of Appendix A to Part 203
is amended by revising paragraph A.
and by adding a new paragraph E., as
follows:
Appendix A to Part 203—Form and
Instructions for Completion of HMDA
Loan/Application Register
*
*
*
*
*
II. Required Format and Reporting
Procedures
6.
Item III. of Appendix A to Part 203
is amended by revising paragraphs B.,
C., and G., as follows:
* *
*
*
*
til. Submission of HMDA-LAR and Public
Release of Data
*
*
*
*
*
B. You must submit all required data to
your supervisory agency in one complete
package, with the prescribed transmittal
sheet. An officer of your institution must
certify to the accuracy of the data. Any
additional data submissions that become
necessary (for example, because you discover
that data were omitted from the initial
submission, or because revisions are called
for) also must be accompanied by a
transmittal sheet.
G The transmittal sheet must state the total
number of line entries contained in the
accompanying data submission. If the data
submission involves revisions or deletions of
previously submitted data, state the total of
a ll line entries contained in that submission,
including both those representing revisions
or deletions of previously submitted entries,
and those that are being resubmitted
unchanged or are being submitted for the first
time. If you are a depository institution, you
also are asked to provide a list of the MSAs
where you have a home or branch office.
*
*
*
*
*
G.
Posters. Some of the agencies provide
HMDA posters that you can use to inform the
public of the availability of your HMDA data,
or you may create your own posters. If you
print your own, the following language is
suggested but is not required:
Federal Register / Vol. 59, No. 236 / Friday, December 9, 1994 / Rules and Regulations
Home Mortgage Disclosure Act Notice
The HMDA data about our residential
mortgage lending are available for review.
The data show geographic distribution of
loans and applications; race, gender, and
income of applicants and borrowers; and
information about loan approvals and
denials. Inquire at this office regarding the
locations where HMDA data may be
inspected.
Code 3: Refinancings.
a. Use this code for refinancings (and
applications for refinancings) of loans
secured by one- to four-family residential
dwellings. A refinancing involves the
satisfaction of an existing obligation that is
replaced by a new obligation undertaken by
the same borrower. But do not report a
refinancing if, under the loan agreement, you
are unconditionally obligated to refinance the
* * * * *
obligation, or you are obligated to refinance
7.
Item V. of Appendix A to Part 203 the obligation subject to conditions within
the borrower’s control.
is amended as follows:
*
*
*
*
*
a. Paragraphs A.5.Code 2 a. and c.,
c. You may report all refinancings of loans
A. 5. Code 3 a. and c., and A.8. b., c., d.,
secured by one- to four-family residential
and f. are revised;
b. Paragraphs B.2.a., B.2.b., and B.2.c. dwellings, regardless of the purpose of or
amount outstanding on the original loan, and
are redesignated as paragraphs B.2.b.,
regardless of the amount of new money (if
B. 2.d., and B.2.e., respectively;
any) that is for home purchase or home
c. New paragraphs B.2.a. and B.2.C.
improvement purposes.
are added;
*
*
*
*
*
d. Paragraph C.5. is revised; and
e. Paragraph D.5.C. is revised.
The revisions and additions read as
follows:
* * * * *
8. Loan Amount
*
*
*
*
*
b. For home improvement loans (both
originations and purchases), you may include
unpaid finance charges in the loan amount if
V. Instructions for Completion of Loan/
that is how you record such loans on your
Application Register
books. For a multiple purpose loan classified
A. Application or Loan Information
by you as a home improvement loan because
*
*
*
*
*
it involves a home improvement purpose,
enter the full amount of the loan, not just the
5. Explanation of Purpose Codes
amount specified for home improvement.
*
*
*
*
*
c. For home-equity lines of credit (if you
Code 2: Home improvement.
have chosen to report them), enter as the loan
a. Code 2 applies to loans and applications amount only that portion of the line that is
for loans if (i) a portion of the proceeds is to
for home improvement purposes. Report the
be used for repairing, rehabilitating,
loan amount for applications that did not
remodeling, or improving a one- to fourresult in originations in the same manner.
family residential dwelling, or the real
property upon which it is located, and (ii) the Report only in the year the line is
established.
loan is classified as a home improvement
d. For refinancings of dwelling-secured
loan.
loans, indicate the total amount of the
* * * * *
refinancing, including the amount
c. At your option, you may report data
outstanding on the original loan and the
about home-equity lines of credit—even if
amount of new money (if any).
the credit line is not classified as a home
*
*
*
*
*
improvement loan. If you choose to do so.
f.
If
you
make
a
counteroffer
for an amount
you may report a home-equity line of credit
different from the amount initially applied
as a home improvement loan if some portion
for, and the counteroffer is accepted by the
of the proceeds will be used for home
applicant, report it as an origination for the
improvement. (See Paragraph 8. "Loan
amount.”) If you report originations of home- amount of the loan actually granted. If the
applicant turns down the counteroffer or fails
equity lines of credit, you must also report
applications for such loans that did not result to respond, report it as a denial for the
amount initially requested.
in originations.
63705
B. Action Taken
*
*
*
*
*
2. Explanation of Codes
a. Use code 1 for a loan that is originated,
including one resulting from a counteroffer
(your offer to the applicant to make the loan
on different terms or in a different amount
than initially applied for) that the applicant
accepts.
* * * * *
c. Use code 3 when an application is
denied. This includes the situation when an
applicant turns down or fails to respond to
your counteroffer. Do not report as a
withdrawn application or as an application
that was approved but not accepted.
*
*
*
*
*
C.
*
Property Location
*
*
*
*
5. Outside-MSA
For loans on property located outside the
MSAs in which you have a home or branch
office (or outside any MSA), you have two
options. Under option 1, you may enter the
MSA, state, and county codes and the census
tract number. You may enter "NA” in the
MSA or census tract column if no code or
number exists for the property. (Codes exist
for all states and counties.) If you choose
option 1, the codes and tract number must
accurately identify the location for the
property in question. Under option 2, you
may enter "NA” in all four columns, whether
or not the codes or number exist for the
property.
*
*
*
*
*
D. Applicant Information— Race or National
Origin. Sex, and Income
*
*
*
*
*
*
*
5. Income
*
*
*
c. If no income information is asked for or
relied on in the credit decision, enter "NA."
*
*
*
*
*
8.
A Loan/Application Register
Transmittal Sheet is added to Appendix
A to Part 203 immediately following
paragraph VI.G., to read as follows:
* * * * *
BILUNG COOE 6210-01-P
\ 0 l 5 H
63706
Federal Register / Vol. 59, No. 236 / Friday, December 9, 1994 / Rules and Regulations
_
FomPAHMOA-lM*
0M8N0 7I0CMJ24T A oc***avw aaM M *Jl UST
Ham pariawonaa 10 *>10.000 <200 aiaraeai
______
LOAN/APPUCATION REGISTER
TRANSMITTAL SHEET
You mutt complete this transmittal sheet (pleas* type or print) and attach It to th# L o a n / Application
Register, required by the Horn* Mortgage Disclosure Act, that you submit to your supervisory agency.
Ajeney
Coot
AtooneriioanMicauonNgmMr
____ i_ l______ 1 1 i
-
-
Tow ana anma* conwwao n
anacrwo LoarvA«wca»on
nappin g Taa *n na*ca*o* N W ar
I____1 - 1- I
1-1
1 ■ I I
________
The loan,'Application Register that is attached covers activity cbnng 19_____ and contains a total o t______ pages
Enter the name and address ot your institution The disclosure statement that is produced by the Federal Financial Institutions
Examination Council will be mailed to me address you supply below
Nam* o* mmuMn
Aooraaa
c»r Sww
zip
Enter the name and telephone numoer ot a person who may be contacted about questions regarding your repster
_________________________
(
)_____________________
Nanw
TawpmwaNwnoa«
H your msMutron W a subsidiary ot another mstrtuaon or corporation, anter the name ot your parent
O y SWW. ZIP
Enter the name and address ot your supervisory agency (Or your parents supervisory agency)
Nam*
Cay Stata. ZIP
An otticer ot your institution must complete the following section
t certify to the accuracy of the data contained In this register.
Nam* o' o n e * '
BILLING CODE 6210-01-C
*
a
a
*
a
By order of the Board of Governors of the
Federal Reserve System, December 5,1994.
William W. Wiles,
Secretary of the Board.
|FR Doc. 94-30271 Filed 12-8-94: 8:45 am|
BILLING COOC 4M 0-01-P
S e r a iu 'e
Daw
t o
i s
V
Federal Financial Institutions Examination Council
2100 Pennsylvania Avenue, NW, Suite 200 • Washington, DC 20037 • (202)634-6526 • FAX (202)634-6556
DATE:
December 9, 1994
TO:
Financial Institutions Subject to the Home Mortgage Disclosure Act
FROM:
Joe M. Cleaver, Executive Secretary
Home Mortgage Disclosure Act (HMDA) data submissions covering mortgage lending
activity for calendar year 1994 are due to your supervisory agency no later than March 1,
1995. You may have already received instructions from your supervisory agency. This letter
highlights common errors to avoid and upcoming changes in reporting requirements. It also
discusses some procedural changes that will have an impact on the processing of your 1994
data, and describes amendments and clarifications of Regulation C that the Federal Reserve
Board issued recently. A copy of that document is attached. Most changes take effect on a
mandatory basis starting with collection of data for 1996.
Promptness and accuracy are essential in the reporting of your HMDA data. As you know,
the data are receiving close scrutiny from enforcement agencies, the media, and the general
public. This letter lists some of the common errors that you should check for in preparing
your HMDA data for submission. The agencies require resubmission of corrected data
when errors are found; this can be a time-consuming process for an institution. Agencies
also may impose civil money penalties for late or inaccurate submissions. This year, some
agencies required institutions to pay substantial penalties as a consequence of errors found
on their calendar year 1992 and 1993 data submissions.
I. Changes for Processing Calendar Year 1994 Data
Some changes will affect the processing of calendar year (CY) 1994 HMDA data. Primarily,
these changes will help the FFIEC meet target dates for earlier release of the HMDA data
to the public. The Congress has asked that HMDA disclosure statements be available at
offices of lending institutions by July l,and individual and aggregate disclosures should be
available at central depositories by September 1. Another change affecting CY 1994 data
waives the requirement for reporting prequalifications.
[Ref. Cir. No. 10754]
Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, National Credit Union Administration,
Office of the Comptroller of the Currency, Office of Thrift Supervision
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The changes for 1994 are:
A. Institution Register Summary (IRS) reports. Previously, the IRS reports were sent to all
institutions at the end of May. In 1995, the FFIEC or your supervisory agency will send the
IRS reports to lenders along with edit reports. You may receive this report as early as
March 15. The IRS report gives counts of the number of loans of various types that have
been received from your institution. When you receive your report, you are asked to review
it immediately and call the contact person listed in the edit report package about any errors
that you may find.
B. Elimination of 30-day review period. In order to meet the September 1 target for
release of HMD A reports to central depositories, the agencies are eliminating the 30-day
window that lenders had in the past to review their HMDA disclosure statements and to
notify supervisory agencies of errors. The agencies expect that providing the IRS report
with each edit report will result in fully accurate disclosure statements.
C. Prequalifications. In the amendments to Regulation C, the Federal Reserve Board
addressed the reporting of prequalifications, and determined that lenders are not to include
data about prequalifications in HMDA-LARs for CY 1994 (or for CY 1995). If data about
prequalifications are or have been collected under your data collection system, you are
asked to remove these entries before submission, if you are able to do so. If you cannot
easily do so, the FFIEC or your supervisory agency may be able to help you to identify and
remove these entries from your submitted data.
II. Review of CY 1994 HM DA-LARfor Accuracy
The agencies find that reporting institutions need to check their data for certain types of
errors that occur frequently. Before submitting your HMDA-LAR, make sure that your
report does not contain the following errors:
• Property location codes (MSA, state, county, and census tract) that are not entered
correctly. If you use census tract numbers from an appraiser, remember that you are
responsible for the correctness of the numbers. Also note that certain MSA
boundaries were changed in 1993, taking effect on January 1, 1994. (The PC software
available from most of the HMDA agencies contains built-in edit checks for property
location, and takes account of the changed MSA boundaries.)
• Respondent ID, agency code, or tax ID that are incorrect (or missing).
• Entries that report monthly
that you must round to the
for example, a gross annual
rules apply to the reporting
income, instead of gross annual income. (Also remember
nearest thousand, and must truncate the last three digits;
income of $29,500 would be reported as 30. The same
of loan amount.)
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• Entries that leave blank the "co-applicant race and sex" columns when there is no co
applicant (instead of entering the codes for "not applicable").
• Illegible HMDA-LARs filed in paper form. The instructions specify that paper-copy
reports must be typewritten or computer printed.
• Incorrect treatment of counteroffers. A counteroffer that is accepted by the applicant
is reported as an origination for the amount of the loan actually granted. But if the
applicant does not accept the lender’s counteroffer, the transaction must be reported
as a denial for the loan amount originally requested. Do not report the transaction as
withdrawn or approved but not accepted.
• Failure to report transactions that involve multifamily dwellings. HMDA covers loans
on all residential dwellings, regardless of the number of units and regardless of
whether the property is owner-occupied. Thus, for example, a loan to purchase or to
rehabilitate a 50-unit apartment building is to be reported under HMDA.
HI. CY 1995/1996 Data Collection
As you prepare for data collection beginning January 1, 1995, keep the following points in
mind.
A. Reporting in machine-readable form
1. CY 1995 data. For data covering 1995 transactions, lenders are strongly encouraged to
submit reports in machine-readable form. (These reports are due no later than March 1,
1996.) Lenders that report more than 100 line entries are expected to submit their reports
in machine-readable form. If you report to one of the agencies that provides data collection
and reporting software, you will receive the version for 1995 calendar year reporting in early
January 1995.
2. CY 1996 data. For data covering 1996 transactions, lenders will be required to submit
their reports in machine-readable form (these reports are due no later than March 1, 1997).
There is an exception for lenders that report 25 or fewer line entries.
B. Keeping HMDA-LAR current
1. CY 1995 data. You are strongly encouraged to keep your HMD A-LAR current as
transactions occur during the year, rather than waiting until year-end to compile the data.
Entering data on a current basis reduces the likelihood of errors because information is
more likely to be readily available, the job can be spread out over time rather than having
to meet a tight timeframe, and you will then have time to get the answers to questions you
may have.
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2. CY 1996 data. Starting in 1996, Regulation C will require that lenders update the
HMDA-LAR on a quarterly basis (within 30 calendar days of the close of the quarter). This
requirement corresponds to the OCC’s rule for national banks; the FDIC requires
transactions to be entered within 30 days after final action.
C. Record count on Transmittal Sheet
For CY 1995 data, to be submitted in 1996, you will have to indicate on the transmittal
sheet the total number of line entries. This requirement applies both to the initial
submission and any later data submissions.
D. Other significant changes for CY 1996 data collection
The Federal Reserve Board has adopted other amendments to Regulation C:
•
All refinancings secured by a one- to four-family dwelling are to be reported. Previously,
lenders had to calculate whether 50 percent or more of the amount being refinanced, or
of the new proceeds, were for home purchase or home improvement purposes.
•
The definition of home improvement loan has been expanded. Lenders may now report
loans for the purpose of maintaining or improving either the dwelling or the land on
which the dwelling is situated. The condition that the loan be classified in the
institution’s records as a home improvement loan remains in place.
Refer to the attached Federal Register notice for further information on the amendments.
IY. HMD A Poster
The Board has revised the suggested language for the HMD A poster for your lobbies. You
may continue to use the old poster without violating the regulation, but should use language
similar to the following when you print a new poster:
The HMDA data about our residential mortgage lending are available for
review. The data show geographic distribution of loans and applications;
race, gender, and income of applicants and borrowers; and information
about loan approvals and denials. Inquire at this office regarding the
locations where HMDA data may be inspected.
V. New Census Tract Street Index from Census Bureau
The Bureau of the Census has released Version 2 of the Census Tract Street Index (CTSI)
in computer printout, CD-ROM, and computer tape. The CD-ROM product comes on four
CDs for the entire nation, containing files in debase format and with retrieval software for
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both DOS and Windows users. Tape files are available in EBCDIC and ASCII format at
6250 bpi. Information and ordering forms can be obtained from the Bureau’s Customer
Services at 301/457-4100 (fax: 301/457-4714); these are new numbers effective December
16,1994.
***
If you have questions on your HMD A reporting responsibilities, call your supervisory agency
at the number shown below.
Federal Reserve System, HMDA Assistance Line, 202/452-2016
Federal Deposit Insurance Corporation, 800/934-3342
Office of Thrift Supervision, Financial Reports Division, 214/281-2068
Comptroller of the Currency, Compliance Management, 202/874-4446
National Credit Union Administration, Office of Examinations and Insurance, 703/518-6360
Department of Housing and Urban Development, Office of Housing, 202/708-5852.
Attachment
@FedFRASER