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F E D E R A L R E S E R V E BA NK
O F N EW YORK
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PROPOSED NEW REGULATION C
IMPLEMENTING THE HOME MORTGAGE DISCLOSURE ACT OF
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of 7973,
Printed below is the text of a statem ent issued M arch 26 by the Board of Governors of the
Federal Reserve System, proposing a new regulation— Regulation C— to implement the pro
visions of the Home M ortgage Disclosure A ct of 1975.
The Board of Governors of the Federal Reserve System today proposed for public comment a new
regulation to implement the Home Mortgage Disclosure Act of 1975—which requires disclosure of mort
gage lending by geographic areas.
The Board scheduled a hearing on its proposal for April 22. It will accept comment in writing
through May 3. The Act goes into effect June 28, 1976.
In issuing the draft regulation the Board urged the public to comment not only on provisions they
believe should be changed or added, but also on provisions they believe should remain in the regulation.
The Board's proposed new Regulation C would require institutions that are subject to the Act to
disclose publicly where their mortgage loans are made. The Act grew out of allegations that there are
mortgage credit shortages in some parts of large urban areas. The Act and the regulation specify that
nothing in them is meant to encourage unsound lending practices or the allocation of credit.
Depository institutions subject to the Act are those with $10 million or more in assets, that have
offices in principal metropolitan areas ("standard metropolitan statistical areas"— S M S A s) and that are
Federally insured or regulated. The regulation will affect an estimated 4,400 commercial banks, 3,000
savings and loan associations, 470 mutual savings banks and 600 credit unions.
The Act defines depository institutions as commercial banks, savings banks, savings and loan as
sociations, building and loan associations or homestead associations (including cooperative banks), and
credit unions.
The principal provisions of the proposed new regulation are:
—Designation of the mortgage loan information to be disclosed.
— Directions for determining what mortgage loan information should be reported by census tract
and what should be reported by zip code.
—A sample form, suggesting how required data may be reported.
— Establishment of procedures to be followed by State-chartered depository institutions seeking
exemption from the Act.
The data to be disclosed are to be made available at lending institutions subject to the Act. Infor
mation to be disclosed includes the following:
—Loans on one-to-four family residences and on family residences of more than four units;
— Loans on individual units of cooperatives and condominiums;
— Secured and unsecured home improvement loans.
Junior mortgages as well as first mortgage loans would be covered, as would participating inter
ests in mortgage loans (to the extent of the participation). Refinancing of a mortgage loan would be
covered, but extension of the maturity of a mortgage would not. No temporary financing, such as con
struction loans, would be included.
Under the Act, the proposed regulation would require the breakdown of the disclosed mortgage loan
information into two main categories and several classes under each main category. These a r e :
(A ) Loans made originally by the depository institution.
(B ) Loans originated by another institution but purchased by the depository institution.
Within each of these categories data would be divided according to loans on property located
within the SM S A s where the headquarters or branches of depository mortgage lenders are located, and
loans outside those SMSAs. In each case the following itemizations of information would be made for
loans on one-to-four family residences:
1. Loans insured or guaranteed by the Federal Housing Administration, the Veterans Ad
ministration and Farmers Home Administration.
2. Conventional mortgage loans.
3. Home improvement loans.
The lender would also be required to indicate mortgage loans on one-to-four family residences
made to borrowers who did not, at the time of execution of the mortgage, intend to live in the mort
gaged residence.
To implement a further provision of the Act, the Board proposed that as a general rule, mortgage
loan disclosures on properties within SMSAs where the lender is headquartered or has a branch be
itemized according to the census tract in which the property is located. However, in certain limited cir
cumstances reporting by zip code would be permissible. Loans on properties not located in SMSAs
where the lender has an office would be reported but not itemized either by census tract or zip code.
A census tract is a small geographical territory, containing about 4,000 inhabitants into which
counties in SMSAs have been divided for purposes of statistical analysis. Census tracts are laid out with
the objective of achieving some uniformity of population characteristics and economic status.
On the basis of the 1970 census, the Census Bureau has issued a series entitled "1970 Census Popu
lation and Housing: Census Tracts, Final R ep o rts/P H C (l) Series". This contains tract maps for every
portion of all the SMSAs designated at that time and for some adjacent areas. Since 1970, the Office
of Management and Budget of the White House has redehned many SMSAs and added others. Tract
maps for the new or redehned SMSAs are readily available only to the extent they appear on the P H C (l)
series of 1970.
Consequently, the Board proposed:
1. To determine if it is subject to the Act, an institution would refer to currently designated
SMSAs.
2. Institutions subject to the Act would determine if itemization by census tract would be
required by referring to the 1970 census tract data.
3. Loans in areas not then included in census tracts would be itemized by zip code areas.
The Board will make available, through the Board and Reserve Banks, a list of currently dehned
SMSAs showing portions for which census tract itemization would be required.
The Board also proposed to permit use of zip code itemization in
disclosure statements for
full hscal years ending before July 1, 1976, (as well as for any portion of the current Ascal year if a
disclosure statement for that period is made available by August 31, 1976).
These proposed provisions are intended to give institutions subject to the Act an opportunity to be
gin keeping a record of mortgage loan by census tract, before the loans must be reported in that way.
To code 1975 loans by census tract would be burdensome and difficult, and could result in an unacceptable
degree of inaccuracies. Also, a transition period is needed to give time for distribution of census tract
maps and materials for converting street addresses to census tracts, and for computer programming and
training personnel.
For hscal years ending by June 30, 1976, where zip code itemization would be permitted, mortgage
loan disclosure statements would be due by August 31, 1976. Later year statements, relating loans to
census tracts, would be due within 90 days after the end of the hscal year. For hscal years straddling
June 30, 1976, reporting dates would differ according to whether reporting is done by zip code or by
census tract.
Complete mortgage loan data would be made available at the home office of each institution subject
to the Act. In addition, at least one branch office in each SMS A would be required to make available
mortgage loan data on properties located in that SMSA.
The Act authorizes the Board to grant exemptions to State-chartered depositories subject to local
mortgage disclosure laws that are substantially similar to the requirements imposed under the Act. Under
the Board's proposed regulation, an application for an exemption may be hied by the State or by an
affected depository institution, under procedures similar to those for determining such exemptions from
the Board's Regulation Z, implementing the Truth in Lending Act.
The Home Mortgage Disclosure Act makes the Board responsible for writing a regulation to im
plement it. The regulation is to be enforced by the Board, the other Federal bank regulatory agencies,
the Federal Home Loan Bank Board and the Administrator of the National Credit Union Administration.
Printed on the following pages is the tex t of the proposed regulation. Comments thereon
should be submitted by May 3, and may be sent to our Bank Regulations Departm ent.
Additional copies of this circular will be furnished upon request. A list of Standard
M etropolitan Statistical A reas will also be furnished upon request.
P A U L A . V O LCKER,
FEDERAL RESERVE SYSTEM
Board of Governors of the Federal Reserve System
[12 CFR Part 203]
HOME MORTGAGE DISCLOSURE ACT OF 1975
Notice of Proposed Rulemaking
[Docket No. R-0029]
The Board of Governors of the Federal Reserve System is proposing
for comment regulations to implement the Home Mortgage Disclosure Act of
1975 (Title III of Pub. L. 94-200; 89 Stat. 1125 et seq.) (hereinafter
referred to as "the Act"), which requires the disclosure of mortgage loan
data by depository institutions located in standard metropolitan statis
tical areas that make federally related mortgage loans as determined by
the Board.
Among other things, the proposed regulations describe the
mortgage loan data to be disclosed, indicate the extent to which such data
are to be itemized by census tracts or ZIP codes, suggest a guideline
mortgage disclosure statement form, specify the dates by which mortgage
loan disclosure statements are to be made available to the public, and
establish procedures to be followed by State-chartered depository institu
tions seeking an exemption from the Act.
Institutions subject to the Act. - The Act applies to depository
institutions (with assets of more than $10 million) that have home or
branch offices in standard metropolitan statistical areas ("SMSAs") and
that make "federally related mortgage loans."
The term "depository
institution" is defined in the Act to mean "any commercial bank,
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savings bank, savings and loan association, building and loan association,
or homestead association (including cooperative banks), or credit union."
Under the proposals, any majority-owned subsidiary of a depository insti
tution would be considered to be part of the depository institution with
the result that mortgage loans originated or purchased by such subsidiary
would be included in the depository institution's mortgage loan disclosure
statement.
Standard metropolitan statistical areas are defined and redefined
from time to time by the Office of Management and Budget of the United States
Government in terms of entire counties (or independent cities) everywhere
except New England where they are defined in terms of cities and towns.
of March 22, 1976, there were 276 SMSAs (including four in Puerto Rico).
The OMB definitions in effect on June 28, 1976, will determine which
depository institutions are subject to the Act on that date. If a
depository institution is not subject to the Act on that date because it
is not in a SMSA but the area in which it is located is subsequently
designated as a new SMSA or as an addition to an existing SMSA, the
depository institution will become subject to the Act (assuming it
has assets of more than $10,000,000) on the effective date of the OMB
changes; it would be treated the same as a depository institution that
is subject to the Act on June 28, 1976, to the extent that its first
mortgage loan disclosure statement would relate to its previous fiscal
year and itemization of the data where required would be by ZIP codes.
As
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The Act authorizes the Board to determine what are "federally
related mortgage loans," and the Board proposes to adopt essentially
the definition of that term in the Real Estate Settlement Procedures
Act of 1974, as set forth in the proposed regulations.
The result would
be that every depository institution (with assets of more than $10,000,000)
located in a SMSA would be subject to the Act if (i) it makes first lien
mortgage loans on one- to four-family residences and (ii) it is federally
insured or regulated, or originates loans that are insured or guaranteed
by HUD or are intended to be sold to FNMA, GNMA, or the FHLMC.
Mortgage loan data to be disclosed. - Depository institutions
subject to the Act would be required to disclose aggregate mortgage loan
data in terms of number of loans and total dollar amounts with respect
to all mortgage loans ("federally related" and otherwise) that they
originate or purchase each year (beginning with the last full fiscal year
of the institution prior to July 1, 1976).
The term "mortgage loan" is
defined in the Act to mean "a loan which is secured by residential real
property or a home improvement loan."
As the Board proposes to implement
this definition, mortgage loan data would include loans on single-family
homes, residences for from one to four families, and multi-family
dwellings (i.e., residences for more than four families); loans on indi
vidual units of condominiums and cooperatives; and both secured and
unsecured home improvement loans. Junior mortgages as well as senior
mortgages would be covered, and a participating interest in specific
mortgage loans would be disclosed to the extent of the participation.
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An extension of the maturity of such loans would not be treated as
a new loan made at the time of the extension, but a refinancing of
a mortgage loan involving an increase in the unpaid principal amount
would be treated as a new mortgage loan (in the full amount of the
loan) made at the time of the refinancing. Neither temporary financing,
such as construction loans, nor investments in pools of mortgages
would be included in the mortgage loan data required to be disclosed.
Loans on mobile homes would also not be included.
Breakdowns of required mortgage loan data. - The Act requires
that mortgage loan data be divided into two categories:
(A) originations
(i.e., loans originally made by the depository institution) and (B) pur
chased loans.
Within each of these categories, the data must be segregated
between loans on property located within the relevant SMSA (i.e., the SMSA
where a home or branch office is located) and loans on property located
outside the relevant SMSA; and each of these segregations must be
itemized to show the number of loans and total dollar amounts of:
(1) mortgage loans which are insured under Title II of the National
Housing Act (commonly referred to as "FHA loans") or under Title V of
the Housing Act of 1949 (commonly referred to as FmHA loans") or which are
guaranteed under Chapter 37 of Title 38, United States Code (commonly
referred to as "VA loans"); (2) mortgage loans made to mortgagors who did
5
not, at the time of execution of the particular mortgage, intend to reside
in the property securing the mortgage loan; and (3) home improvement
loans.
The Board proposes to implement these statutory itemizations by
requiring that data regarding loans on multi-family dwellings (i.e.,
residences for more than four families) be separately itemized, and this
multi-family dwelling itemization would not be subdivided into FHA,
FmHA, VA or home improvement loans or loans to non-occupants.
The Board
believes that this approach would make the data more meaningful to the
public, ease the reporting burden on depository institutions, and be con
sistent with Congressional intent.
To permit classification of the data with the required breakdowns
where necessary information may be unavailable, the Board proposes (1)
not to require inclusion of loans that were (i) both originated and sold
or (ii) both purchased and sold during a full fiscal year ending prior to
July 1, 1976; and (2) to establish a presumption, to be relied upon only
if the records of the depository institution do not contain information
to the contrary, that a loan originated prior to June 28, 1976, or pur
chased at any time, was made to a mortgagor who intended, at the time
of execution of the mortgage, to reside in the property securing the
mortgage, if such property is a residential dwelling used or to be used
by from one to four families.
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To assist in the understanding of the preparation of
disclosure statements, the Board is proposing a form to be used as
a guideline (which is included below in this notice). Variations in
the format are permissible provided that the kind of detailed data
required by the proposals are clearly and conspicuously disclosed
in the mortgage loan disclosure statement. For example, the order
of the columns may be rearranged or each of the columns (i.e., total
mortgage loans, home improvement loans, etc.) may be stated as separate
schedules; or greater detail than that required may be provided by
dividing the "FHA, FmHA, or VA loans" column into separate columns
for FHA loans, FmHA loans, and VA loans.
Nothing in the proposed
regulations is intended to preclude a depository institution from
disclosing additional mortgage loan data, provided that any such
additional data are stated separately from required data.
To illustrate the operation of these requirements with respect
to a depository institution that operates in more than one SMSA, let it
be assumed that the home office and the only branch offices of a
California bank are located in Los Angeles-Long Beach (a SMSA), San
Francisco-Oakland (a SMSA), and Eureka (not a SMSA).
The location of
the property, not the location of the office initiating the loan,
determines how the loan is to be reflected in the mortgage loan dis
closure statement. Loans made by the bank (through any of its offices,
including the Eureka office) on property in Los Angeles-Long Beach
7
would be reflected on the disclosure statement in the part pertaining
to "mortgage loan data relating to residential real property located
within the relevant SMSA," and the relevant SMSA in this case would
be identified as Los Angeles-Long Beach. Loans made by the bank on
property in San Francisco-Oakland would be grouped separately from
the Los Angeles Long Beach property loans; they would also be reflected
as "mortgage loan data relating to residential real property located
within the relevant SMSA," but, in this case, the relevant SMSA would
be identified as San Francisco-Oakland.
(Presumably, the bank would
use separate pages in the disclosure statement for each SMSA.) Loans
made by the bank (through any of its offices) on property located
anywhere other than Los Angeles-Long Beach or San Francisco-Oakland
(such as in Eureka or any other place in or outside the State) would
be reflected in the disclosure statement as "mortgage loan data relating
to residential real property located outside the relevant SMSA
(or SMSAs)."
Itemization by census tracts or ZIP codes. - Pursuant to
section 304 of the Act, itemized mortgage loan data relating to residen
tial real property located within the relevant SMSA must be further
itemized "by census tracts, where readily available at a reasonable
cost, as determined by the Board, otherwise by ZIP code." Since passage
of the Act, the Board has been gathering information on the cost and avail
ability of census tract maps, and directories and computer programs for
8
matching addresses to census tracts. On the basis of information
obtained to date, the Board proposes to require generally that the
further itemization of mortgage loan data required by the Act be by
census tracts, as discussed below.
On the basis of data gathered in the 1970 Census, the Bureau
of the Census prepared a series entitled "1970 Census of Population and
Housing:
CENSUS TRACTS, Final Reports, PHC(l) Series" that contains
tract maps for every portion of all the SMSAs defined at that time
and for selected areas adjacent to such SMSAs. Since the preparation
of that series, 0MB has redefined many of the SMSAs listed in that
series to include additional areas and has defined a number of new
SMSAs.
Tract maps for areas added to SMSAs since the PHC(l) series
was prepared and for areas newly defined as SMSAs are readily available
only to the extent that they appear on the maps in the PHC(l) series.
To implement section 304 of the Act, the Board proposes the
following approach:
(1)
For the purpose of determining whether it is subject to
the Act, a depository institution refers to the currently defined SMSAs.
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(2)
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If an institution is subject to the Act, the PHC(l)
series is the reference point to determine to what extent itemization
by census tracts is required.
Loans on property located in an area
that is tracted in that series as a portion of the then-defined SMSAs
or as a selected area adjacent to such SMSAs must be itemized by census
tracts. If a portion of a currently defined SMSA is not tracted in
that series, loans on property in that portion may be itemized, instead,
by ZIP codes. (For the convenience of depository institutions, the
Board is making available (through its own offices and through the
Federal Reserve Banks) a list of currently defined SMSAs delineating
the portions thereof for which census tract itemization would be required
and indicating in which PHC(l) series report the tracts of those portions
are mapped.)
(3)
If new areas are added to the relevant SMSA after the
first day of the fiscal year for which the disclosure statement is
being prepared, loans on property within that added area would be
deemed to be loans on property outside the relevant SMSA and would
not have to be itemized by census tracts or ZIP codes.
(Of course,
the disclosure statement for the following fiscal year would be based
on the expanded SMSA.)
To illustrate the operation of these provisions, the following
examples are furnished (and are based on the assumption that no changes
in SMSA definitions will be made before June 28, 1976):
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(1)
Chicago, IL SMSA is currently defined as comprising Cook,
Du Page, Kane, Lake, McHenry, and Will Counties and is so defined in the
PHC(l) series.
Depository institutions in the Chicago SMSA would itemize
by census tracts all their mortgage loans on property in that SMSA.
(2)
Charleston, WV SMSA is currently defined as comprising
Kanawha County and Putnam County.
It is defined in the PHC(l) series as
comprising only Kanawha County, and Putnam County is not tracted in that
series.
A depository institution in the Charleston SMSA would itemize its
mortgage loans on property in Kanawha County by census tracts and loans
on property in Putnam County by ZIP codes.
(3)
Salt Lake City-Ogden UT SMSA is currently defined as
comprising Davis, Salt Lake, Tooele, and Weber Counties.
In the PHC(l)
series, Salt Lake City, UT SMSA is defined as comprising Salt Lake and
Davis Counties; Ogden, UT SMSA is defined as comprising Weber County;
and Tooele County is not tracted in the series.
A depository insti
tution located in the Salt Lake City-Ogden SMSA would itemize its mortgage
loans on property in Tooele County by ZIP codes and loans on property
in the other three counties by census tracts utilizing the PHC(l) series
maps for Salt Lake City in the case of Salt Lake and Davis Counties
and the PHC(l) series maps for Ogden in the case of Weber County.
(4)
Nassau-Suffolk, NY SMSA is currently defined as comprising
Nassau and Suffolk Counties.
It is not defined as a SMSA in the PHC(l)
series; but both of the component counties are tracted in the series
11
as portions of the New York, NY SMSA.
Depository institutions in the
Nassau-Suffolk SMSA must itemize all their mortgage loans on property
in that SMSA by census tracts.
(5)
Florence, AL SMSA is currently defined as comprising
Colbert and Lauderdale Counties.
It is not defined as a SMSA in the
PHC(l) series; and neither of the component counties is tracted in the
series.
Depository institutions in the Florence SMSA
would itemize their
mortgage loans on property in that SMSA by ZIP codes.
The PHC(l) series reports containing the tract maps may be
ordered through the U. S. Government Printing Office at prices ranging
from $.45 to $12.75,(with 97 per cent of the reports priced at less
than $4.00). There has been some difficulty in the past in obtaining
the reports for certain SMSAs. To assure that maps will be available,
the Bureau of the Census has undertaken to become another public source
of the maps at a similar price range.
(Inquiries should be addressed
to Customer Services Branch, Data User Services Division, Bureau of
the Census, Washington, D.C. 20233.) Census block maps, providing
greater geographical detail for urbanized core areas of SMSAs, may
also be ordered through the Government Printing Office or the Bureau
of the Census . There are also commercial firms that produce the maps,
frequently with special overlay features, including at least one company
that publishes an atlas for all SMSAs.
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Materials are available for use in conjunction with census
tract maps that will facilitate itemization of loans by census tracts
for each SMSA.
The Census Bureau provides address coding guides for
matching street addresses to census tracts (at $65 per reel to produce a
printed copy and $80 per reel of computer tape).
Directories similar
to ZIP code directories may be available for this purpose from some
local governmental agencies or from commercial firms. In addition, there are
data processing firms in the business of furnishing computer services
for automatically matching addresses to census tracts.
The Board proposes, however, to permit ZIP code itemization,
rather than census tract itemization, in all cases with respect to the
initial mortgage loan disclosure statement relating to full fiscal
years ending prior to July 1, 1976 (as well as to the portion of the
current fiscal year for a period that ends on June 30, 1976, if a
statement for such period is made available by August 31, 1976, and
to the initial statement due from a depository institution that becomes
subject to the Act in the future). The Board proposes this approach
for two principal reasons:
First, the Board believes that depository institutions should be
given the opportunity to record census tracts manually as loans are made
(most likely, by the pinpointing of the location of the property on census
tract maps by the appraiser who visits the property or an employee with
the aid of the borrower). Obviously, most depository institutions have not
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had the occasion to code loans by census tracts on an ongoing basis
with respect to loans made in the past. To code 1975 loans manually
at this time may be difficult and burdensome and result in an unacceptable
degree of inaccuracy.
To code 1975 loans through automated programs
may require much processing of the data, thereby disproportionately
increasing costs; and, in view of apparent shortcomings in such programs
(e.g., certain areas of some SMSAs have not been indexed by street
addresses, and many of the existing indexes need updating or correction),
much of the data may have to be coded manually with the problems
attendant in that procedure.
Second, time is needed to permit (1) the production of
sufficient quantities of census tract maps and materials for matching
street addresses to census tracts; (2) resolution of some of the
shortcomings in directories and computer programs for coding loans
by census tracts; (3) in the case of depository institutions that
intend to code loans manually, the establishment of procedures and
training of personnel to assure a high degree of accuracy in the data;
and (4) in the case of depository institutions that intend to utilize
automated programs, the development of adequate programs.
Dates when mortgage loan disclosure statements are due. Since the mortgage loan disclosure statement for a fiscal year ending
prior to July 1, 1976, would involve only ZIP code itemization, the
Board proposes to require that such statements be made available to the
public by August 31, 1976.
Statements relating to later fiscal years would
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be made available, under the proposals, within ninety days of the end of
the relevant fiscal year.
With respect to a fiscal year that straddles
June 30, 1976, a partial year statement for the period of that year
through June 30 would be required by August 31, 1976, if the depository
institution wishes to itemize loans during that period by ZIP codes, and a
separate statement for the remaining period of the fiscal year would be
required within ninety days of the end of that year with itemization of
loans during that remaining period by census tracts to the extent dis
cussed above; if the depository institution does not wish to prepare
separate statements for the two portions of such a straddle fiscal
year, a single statement for the entire fiscal year would be required
within ninety days of the end of the fiscal year with all mortgage
loan data itemized by census tracts to the extent discussed above.
Offices at which mortgage loan data would be made available. In the case of a depository institution that has offices in only one SMSA,
complete mortgage loan data would be made available at the home office
of the depository institution and at least at one branch office in that
SMSA.
In the case of a depository institution that has offices in more
than one SMSA, at least one branch office in each SMSA would be required
to make available the data relating to mortgage loans on property in that
particular SMSA.
For example, in the illustration discussed above con
cerning a multi-SMSA California bank, the home office would be required
-
to make available data on:
15
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(i) mortgage loans on property in
Los Angeles-Long Beach itemized by census tracts; (ii) mortgage loans
on property in San Francisco-Oakland itemized by census tracts; and
(iii) mortgage loans on property located anywhere other than
Los Angeles-Long Beach or San Francisco-Oakland not further itemized
by census tracts or ZIP codes.
A branch office of the bank in
Los Angeles-Long Beach would be required to make available only the
data described in (i) and (iii) in the preceding sentence; and a branch
office of the bank in San Francisco-Oakland would be required to make
available only the data described in (ii) and (iii) in the preceding
sentence.
In the case of limited access depository institutions (such
as credit unions located in restricted Government areas or in private
industrial plants), provisions are proposed permitting disclosure of the
data by mail or through a designated place conveniently accessible to the
general public.
Procedures for obtaining State exemptions. - The Act authorizes
the Board to grant exemptions for State-chartered depository institutions
subject to local mortgage disclosure laws that are substantially similar to
the provisions of the Act and contain adequate provisions for enforcement.
There are only a few jurisdictions that presently have mortgage loan dis
closure laws.
Under the proposals, an application for an exemption may
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be filed by the State or an affected depository institution subject to State
or local mortgage disclosure laws; while that application is pending
before the Board, the time for the filing of the initial mortgage loan dis
closure statement would be stayed. The procedures to be followed in determini
such exemptions would be similar to those followed under Regulation Z
("Truth-in-Lending") with respect to requests for exemptions for certain
classes of transactions.
Pursuant to the authority granted in the Home Mortgage Disclosure
Act of 1975 (Title III of Pub. L. 94-200, 89 Stat. 1125 et seq.), the Board
proposes to adopt the following regulations:
1. A new Part 203 (Regulation C) would be added, as follows:
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INDEX TO SECTIONS
SECTION 203.1
AUTHORITY, SCOPE, AND ENFORCEMENT
SECTION 203.2
DEFINITIONS
SECTION 203.3
EXEMPTIONS
SECTION 203.4
COMPILATION OF MORTGAGE LOAN DATA
SECTION 203.5
DISCLOSURE REQUIREMENTS
SECTION 203.6
SANCTIONS FOR VIOLATIONS
SECTION 203.7
EFFECTIVE DATE
SECTION 203.1 - AUTHORITY, SCOPE, AND ENFORCEMENT
(a)
Authority and scope. - This Part comprises the reg
tions issued by the Board of Governors of the Federal Reserve System
pursuant to the Home Mortgage Disclosure Act of 1975 (Title III of
Pub. L. 94-200; 89 Stat. 1125 et seq.).
This Part applies to depository
institutions which make federally-related mortgage loans. Nothing in the
Act or this Part is intended to, nor shall it be construed to, encourage
unsound lending practices or the allocation of credit.
(b)
Administrative enforcement. -
As set forth more fully in
sections 305 and 306 of the Act, compliance with the provisions of the
Act and this Part shall be enforced by the Comptroller of the Currency,
the Board of Governors of the Federal Reserve System, the Board of
Directors of the Federal Deposit Insurance Corporation, the Federal Home
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Loan Bank Board (acting directly or through the Federal Savings and Loan
Insurance Corporation), and the Administrator of the National Credit Union
Administration.
SECTION 203.2
For
- DEFINITIONS
the purposes of this Part, the following definitions apply
unless the context indicates otherwise:
(a)
"Act" means the Home Mortgage Disclosure Act of 1975
(Title III of Pub. L. 94-200; 89 Stat. 1125 et seq.).
(b)
"Branch office" means any office approved as a branch
of the depository institution by that depository institution's federal or
State supervisory agency.
(c)
"Depository institution" means any commercial bank,
savings bank, savings and loan association, building and loan association,
or homestead association (including cooperative banks) or credit union
which makes federally related mortgage loans; and shall include any majorit
owned subsidiary of a depository institution.
(d)
"Federally related mortgage loan" means any loan (other
than temporary financing such as a construction loan) which (A) is secured
by a first lien on residential real property (including individual units of
condominiums and cooperatives) designed principally for the occupancy of
from one to four families; and (B)(i) is made in whole or in part by a de
pository institution the deposits or accounts of which are insured by any
-1 9 -
agency of the Federal Government, or is made in whole or in part by any
depository institution which is regulated by any agency of the Federal
Government; or (ii) is made in whole or in part, or insured, guaranteed,
supplemented, or assisted in any way, by the Secretary of Housing and Urban
Development or any other officer or agency of the Federal Government or
under or in connection with a housing or urban development program administered
by any other such officer or agency; or (iii) is intended to be sold by the
depository institution that originates the loan to the Federal National
Mortgage Association, the Government National Mortgage Association, the Federal
Home Loan Mortgage Corporation, or a financial institution from which it is
to be purchased by the Federal Home Loan Mortgage Corporation.
(e)
"FHA, FmHA, or VA loans" means mortgage loans whic
insured under Title II of the National Housing Act or under Title V of the
Housing Act of 1949 or which are guaranteed under Chapter 37 of Title 38,
United States Code.
(f)
"Home improvement loan" means a loan, secured or unsecured,
the proceeds of which are to be used for the purpose of repairing, rehabili
tating, or remodeling an existing residential dwelling as stated by the
borrower at the time of the loan transaction and as recorded on the books
of the depository institution.
(g)
"Mortgage loan" means a loan which is secured by residential
real property or a home improvement loan; and shall include (i) a refinancing
- 2 0 -
of an existing loan involving an increase in the outstanding balance of the
principal due, and (ii) a loan secured by a junior lien undertaken for
any purpose (such as financing of
a college education), but shall not include
(i) temporary financing (such as a construction loan), or (ii) purchase of
an interest in a pool of mortgage loans (such as mortgage participation
certificates issued by the Federal Home Loan Mortgage Corporation, the
Government National Mortgage Association, or the Farmers Home Administration),
or (iii) an extension of the maturity of an existing mortgage loan involving
no increase in the unpaid principal due.
(h)
"Residential real property" means improved real property
used or to be used for residential purposes, including single-family
homes, multi-family dwellings, and individual units of condominiums and
cooperatives.
SECTION 203.3 - EXEMPTIONS
(a)
The following categories of depository institutions are
from the compilation of data and disclosure requirements of sections 203.4
and 203.5 of this Part:
(1)
Any depository institution that has total assets as of
the last day of its last full fiscal year of $10,000,000 or less; or
(2)
any depository institution that has neither a home office
any branch office located in a standard metropolitan statistical area ("SMSA"
as currently defined by the Office of Management and Budget of the United
States government; or
- 2 1 -
(3)
any State-chartered depository institution subject t
the mortgage loan disclosure laws (statutes or regulations) of a State or
subdivision thereof that the Board determines,
in accordance with the pro
cedures set forth in the Supplement to this Part, contain (i) requirements
substantially similar to those imposed under the Act, and (ii) adequate
provisions for enforcement.
(b)
A depository institution that was exempt on or after the
effective date of this Part on the basis of paragraph (a) of this section
and that subsequently becomes no longer exempt shall compile the data
described in section 203.4 of this Part for each fiscal year beginning with
its last full fiscal year ending prior to the date it was no longer exempt,
and that last full fiscal year shall be deemed to be a "full fiscal
year ending prior to July 1, 1976" for the purposes of section 203.4
of this Part.
SECTION 203.4 - COMPILATION OF MORTGAGE LOAN DATA
(a)
Data to be ineluded. - (1)
Each depository institution
shall aggregate, separately for each standard metropolitan statistical area
("SMSA") in which it has a home office or branch office, its mortgage loan
data for each fiscal year beginning with its last full fiscal year ending
prior to July 1, 1976.
Mortgage loan data relating to residential real
property located within the relevant SMSA (i.e., the SMSA where a home or
branch office is located) shall be segregated from mortgage loan data
relating to residential real property located outside the relevant SMSA
- 2 2 -
and shall be itemized by the census tract in which the principal
residential property securing the mortgage loan is located (except
as provided in subsection (2) of this paragraph) according to the
following classifications (in a format similar to guideline Form HMDA-1,
which is set forth in the Appendix to this Part):
(i)
home improvement loans (except on multi-family
(i.e., more than four-family) dwellings), subdivided as to those loans
(A) originated and (B) purchased by the depository institution;
(ii)
FHA, FmHA, or VA loans (except on multi-family
dwellings), subdivided as to those loans (A) originated and (B) purchased
by the depository institution;
(iii)
mortgage loans (except on multi-family dwellings)
other than home improvement loans or FHA, FmHA, or VA loans, subdivided
as to those loans (A) originated and (B) purchased by the depository
inst itut ion;
(iv)
all mortgage loans (home improvement; FHA, FmHa, or
VA loans, and other) on multi-family dwellings, and
(v)
all mortgage loans (home improvement; FHA, FmHA, or
VA loans; and other) except on multi-family dwellings made to mortgagors
who did not, at the time of execution of the particular mortgages,
intend to reside in the property securing the mortgage loans, subdivided
as to those loans (A) originated and (B) purchased by the depository insti
tution .
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Mortgage loan data relating to residential real property located outside
the relevant SMSA (or relevant SMSAs in the case of a depository insti
tution with home or branch offices in more than one SMSA) shall also be
itemized according to the classifications set forth above, but further
itemization of that data by census tracts or United States Postal Service
ZIP codes is not required.
(2)
Mortgage loan data relating to residential real property
located within the relevant SMSA may be itemized, according to the
classifications specified in subsection (1) of this paragraph, by United
States Postal Service ZIP codes for the area in which the principal resi
dential property securing the mortgage loan is located, in lieu of
census tracts, to the extent that such data relate to:
(i)
(ii)
a full fiscal year ending prior to July 1, 1976; or
a part of a fiscal year if that part ends on June 30,
1976, provided that a mortgage loan disclosure statement for that part of
the fiscal year is made available by the depository institution by
August 31, 1976, and a separate mortgage loan disclosure statement for
the remaining part of that fiscal year (itemizing mortgage loan data
relating to residential real property within the relevant SMSA by census
tracts) is made available by the depository institution within ninety days
of the end of that fiscal year; or
(iii)
residential real property located in an area of the
currently defined relevant SMSA that is not tracted on the maps (as a
portion of then-defined SMSAs or otherwise) in the series "1970 Census of
-24-
Population and Housing:
CENSUS TRACTS, Final Reports, PHC(l) Series"
prepared by the Bureau of the Census of the United States Department
of Commerce.
(3)
Mortgage loan data to be compiled as described in this
paragraph shall be in terms of number of loans and total dollar amounts
(original amounts of loans originated by the institution to the extent
of its interest, where the loan is made jointly or cooperatively,
and unpaid principal balances of loans purchased by the depository
institution, to the extent of its interest in such purchased loans);
and the compilations shall be on an annual basis and relate to mortgage
loans originated or purchased solely during the relevant fiscal year.
(4)
It is not required that mortgage loan data to be compiled
pursuant to paragraph (a) of this section include any mortgage loan that
was (i) both originated and sold or (ii) both purchased and sold during
a full fiscal year ending prior to July 1, 1976.
(b)
Applicable SMSAs, census tracts and ZIP codes.
the purpose of determining whether a mortgage loan is to be included in
the classifications relating to residential real property within the
relevant SMSA as described in paragraph (a) of this section (but not for
the purpose of determining exemptions pursuant to section 203.3(a)(2)
of this Part), the applicable areas of the relevant SMSA shall be those
as defined by the Office of Management and Budget of the United States
Government and in effect on June 28, 1976, or the first day of the
fiscal year to which the mortgage loan disclosure statement relates,
whichever is the later date.
(1) F
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(2)
Applicable census tract numbers and boundaries shall
be those appearing on the census tract maps in the series "1970 Census
of Population and Housing: CENSUS TRACTS, Final Reports, PHC(l) series"
prepared by the Bureau of the Census, United States Department of
Commerce.
If the number itself would be duplicated in the mortgage
loan disclosure statement for the relevant SMSA, the county, city,
or town that uniquely identifies the census tract shall be identified
in that disclosure statement.
(3)
An applicable ZIP code shall be that for the area
in which the principal residential property securing the mortgage loan
is located. No depository institution is obligated to revise its mortgage
loan data to reflect official changes of ZIP code numbers or boundaries
made after the ZIP code for a particular loan is recorded.
(4)
Nothing contained in this paragraph is intended to
prohibit the use of maps, directories, computer programs, or the like
that have more recent definitions of the applicable SMSA areas than
those specified in subsection
(1), provided that every mortgage loan
relating to residential real property within the applicable areas
of the relevant SMSA as specified in subsection (1) of this paragraph
or within the areas of the relevant SMSA as more recently defined shall
be included in the data to be itemized by census tracts or ZIP codes
as required by paragraph (a) of this section. If such updated revisions
are utilized, the mortgage loan disclosure statement shall indicate
the source of the revision.
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(c)
Applicable presumption. - For the purpose of compilin
mortgage loan data described in paragraph (a) of this section, a
depository institution may presume (unless its records relating to
that loan contain information to the contrary) with respect to any
mortgage loan originated prior to June 28, 1976, or purchased at any
time that the mortgagor intended, at the time of execution of the
mortgage, to reside in the property securing the mortgage, if such
property is a residential dwelling used or to be used by from one
to four families.
SECTION 203.5 - DISCLOSURE REQUIREMENTS
(a)
Dates disclosure statements due. - (1)
Each deposito
institution shall make available to the public by the following dates
mortgage loan disclosure statements required to be compiled pursuant to
section 203.4 of this Part:
(i)
August 31, 1976, in the case of a disclosure
relating to a full fiscal year ending prior to July 1, 1976, except as
provided in subsection (2) of this paragraph;
(ii)
within ninety days of the end of the relevant
year in the case of a disclosure statement that relates to a full fiscal
year ending subsequent to June 30, 1976; and
(iii)
within sixty days of the date a depository ins
becomes no longer exempt in the case of the initial disclosure statement
required pursuant to section 203.3(b) of this Part.
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(2)
If an application for an exemption is filed by
August 31, 1976, pursuant to section 203.3(a)(3) of this Part, a Statechartered depository institution subject to the mortgage disclosure
laws of a State or subdivision thereof being considered in the application
shall not be required to compile and make available to the public a
mortgage loan disclosure statement relating to a full fiscal year ending
prior to July 1, 1976, while the application is pending before the
Board.
If the State-chartered depository institution is not granted
an exemption by the Board's determination on the application, that
depository institution shall make the disclosure statement for that fiscal
year available within sixty days of the date of the Board's determination.
(3)
Any mortgage loan disclosure statement required to be
made available shall be maintained and made available for a period of five
years after the close of the first fiscal year during which that disclosure
statement is required to be maintained and made available.
(b)
(1)
Offices at which disclosure statements to be made available.
Except as provided in subsection (2) of this paragraph, each deposi
tory institution shall make available to the public disclosure statements
required to be compiled pursuant to section 203.4 of this Part, at the
times specified in paragraph (a) of this section, at home or branch offices
of the depository institution, as follows:
(i)
in the case of depository institutions that have hom
or branch offices in only one SMSA, the entire mortgage loan disclosure
-28-
statement shall be made available at the home office and at least at one
branch office (if there is such a branch office) within that SMSA;
and
(ii)
in the case of depository institutions that have home
and branch offices in mere than one SMSA, (A) the entire mortgage
loan disclosure statement (relating to all SMSAs with respect to
which the depository institution is required to compile mortgage
loan data) shall be made available at the home office and (B) those
portions of the entire mortgage loan disclosure statement relating
to mortgage loans on property within a particular SMSA (including
the SMSA in which the home office is located) and relating to mortgage
loans on property located outside the relevant SMSAs in which the
depository institution has home and branch offices shall be made
available at least at one branch office within that particular
SMSA.
(2)
Any depository institution all of whose off
(home and branch) are located where there is no general public access
shall make available mortgage loan disclosure statements required to be
compiled pursuant to section 203.4 of this Part, at the times specified
in paragraph (a) of this section, in either of the following ways:
(i)
it shall designate a place convenient and a
to the public within the SMSA of its home office where the entire mortgage
loan disclosure statement (relating to all SMSAs with respect to which
it is required to compile mortgage loan data) will be available at
-29-
reasonable times, and shall designate a convenient and accessible place
within every other SMSA where it has a branch office, at which designated
place will be made available those portions of the entire mortgage loan
disclosure statement relating to mortgage loans on property located
within that other SMSA and relating to mortgage loans on property located
outside the relevant SMSAs in which the depository institution has heme
or branch offices; or
(ii)
it shall promptly furnish by mail to anyone requesting
the information a copy of a required mortgage loan disclosure statement,
imposing no more than a reasonable charge for the cost of reproduction
of the data.
(3)
Upon request, any office of a depository institution
shall promptly provide information regarding the location of any office
or designated place of the depository institution at which mortgage loan
disclosure statements are available.
(c)
Manner of making disclosure statements available. - Each
office or designated place of a depository institution that is required
pursuant to paragraph (b) of this section to make a mortgage loan disclosure
statement available shall make such a mortgage loan disclosure statement
available to anyone requesting it for inspection or copying during the
hours in which such office or designated place is normally open to the
public for business.
If a depository institution makes reproduction
facilities available, it may impose a reasonable charge for the cost
of reproduction of the data.
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SECTION 203.6 - SANCTIONS FOR VIOLATIONS
(a)
A violation of the Act or this Part is subject to sanctions
as provided in section 305 of the Act.
(b)
An error in compiling or disclosing required mortgage loan
data shall not be deemed to be a violation of the Act or this Part if the
error was unintentional and resulted from a bona fide mistake notwith
standing the maintenance of procedures reasonably adopted to avoid any
such error.
SECTION 203.7 - EFFECTIVE DATE
This Part shall be effective on June 28, 1976.
-312.
A new Supplement to Part 203 (Regulation C) would be
added, as follows:
PROCEDURES FOR AN APPLICATION FOR EXEMPTION PURSUANT
TO PARAGRAPH (a)(3) OF SECTION 203.3
1/
(a)
Application. -
Any State or subdivision thereof,
State-chartered depository institution, or association of Statechartered depository institutions, may make application to the Board
pursuant to the terms of this Supplement and the Board's Pules of
Procedure (12 CFR 262) for a determination that, under the laws of
2/
that State or municipality,
a State-chartered depository institu
tion is subject to requirements substantially similar to those
imposed by Regulation C (12 CFR 203) and that there is adequate pro
vision for enforcement of such requirements.
(b)
Supporting documents. - The application, which may be
made by letter, shall be accompanied by (1) a copy of the full text
of the laws of the State or municipality which are claimed by the
applicant to impose requirements substantially similar to those imposed
by this Regulation; (2) a statement of reasons to support the claim that
1/
MereinaFter referred to as a municipality.
2/
Any reference to the laws of a State or municipality in this
Supplement includes a reference to any regulations which implement
such laws and official interpretations thereof, and to regulations
of a State or municipal agency or department having jurisdiction
aver a class or classes of depository institutions.
-32-
applicable requirements of the lavs of the State or municipality are
substantially similar to all requirements imposed under this Regulation
including an explanation of reasons as to why any differences are not
significant; (3) a copy of the full text of the laws of the State or
subdivision thereof which provide for enforcement of the State laws
referred to in subparagraph (1) of this paragraph; and (4) an under
taking to inform the board within 30 days of the occurrence of any change
in the applicable law or regulations of the State or municipality.
(c)
Public notice of filing. -
In connection with any a
cation which has been filed in accordance with the requirements of
paragraphs (a) and (b), notice of such filing will be published by
the Board in the Federal Register, and a copy of such application will be
made available for examination by interested persons during business
hours at the Board and at the Federal Reserve Bank of each Federal Reserve
District in which the applicant is situated.
A period of time will be
allowed from the date of such publication for the Board to receive
written comments from interested persons with respect to that
application.
Should multiple applications be received with respect to
the laws of the same State or municipality, the Board may, in its dis
cretion,
(1) consolidate the notice of receipt of all such applications
in one Federal Register notice, and (2) dispense with publication of
the notice of applications received after the publication of an applicatiot
relating to the laws of the same State or municipality.
-33-
(d) Exemption from requirements. If the Board determines on
the basis of the information before it that under the laws of a State or
municipality some or all State-chartered depository institution(s) are
subject to requirements substantially similar to those imposed by this
Regulation, and that there is adequate provision for enforcement of such
requirements, the Board will exempt those State-chartered depository
institutions in that State or municipality that are subject to such
requirements from the requirements of the Act and the Board's regulations
in the following manner:
(1)
Notice of the
exemption will be published
in the Federal Register and the Board will furnish a copy of such notice
to the applicant, to each State or municipal authority responsible for
administrative enforcement of the laws of the State or municipality and to
the regulatory authorities specified in section 305(b)(1) of the Act.
(2)
The Board will inform the appropriate official of any State or munici
pality in which State-chartered depository institutions that have received
an exemption are located of any subsequent amendments of the Act (including
the implementing provisions of this Part and published interpretations of
the Board) which might call for amendment of the law, regulations or
official interpretations of the State or municipality.
(e)
Revocation o f exemption. -
(1)
The Board reserves the right t
revoke any exemption if it at any time determines that the laws of a State
or municipality do not in fact impose requirements which are substantially
-34-
similar to those imposed by this Regulation or that there is not in fact
adequate provision for enforcement.
(2)
Notice of the Board's intentic-n
to revoke any exemption previously granted shall be published in the Federa
Register and shall be transmitted to the appropriate official of the State
or municipality.
A period of time will be allowed from the date of pub
lication for the Board to receive written comments from interested
persons with respect to the proposed revocation.
(3)
In the event of
revocation of such exemption, notice of such revocation shall be
published by the Board in the Federal Register and a copy of such notice
shall also be furnished to the appropriate official of the State or
municipality and to regulatory authorities specified in section 305(b)(1)
of the Act.
3.
as follows:
A new Appendix to Part 203 (Regulation C) would be added,
FORM HMDA-1
Page 1 of 2
(Pursuant to Public Law 94-200)
MORTGAGE LOAN DISCLOSURE STATEMENT
Name of Depository Institution
Relevant SMSA_________________
Reporting Period______________
PART A
Section I
CENSUS TRACT
or
ZIP CODE
Mortgage loan data relating to residential real property located within the relevant SMSA
HOME IMPROVEMENT FHA, FmHA, o r VA
LOANS ON
OTHER MORTGAGE
NON-OCCUPANT
LOANS (except on LOANS (except on LOANS (except on
MULTI-FAMILY
LOANS (except on
multi-family
multi-family
multi-family
DWELLINGS
multi-family
dwellings)
dwellings)
dwellings)
dwellings)
Principal No. of Principal No. of Principal No. of Principal No. of Principal No. of Principal
Amount Loans
Amount Loans
Amount Loans
Amount Loans
Amount Loans
Amount
TOTAL
MORTGAGE
LOAD'S
No. of
joans
ORIGINATIONS
FORM HMDA-1
Page 2 of 2
MORTGAGE LOAN DISCLOSURE STATEMENT (cont.)
PART B
Section I
Mortgage loan data relating to residential real property located within the relevant SMSA
HOME IMPROVEMENT
LOANS (except on
multi-family
dwellings)
Principal No. of Principal
Amount
Amount Loans
TOTAL
MORTGAGE
LOANS
CENSUS TRACT
or
ZIP CODE
No. of
Loans
Section 11
PURCHASED LOANS
FHA, FmHA, or VA
OTHER MORTGAGE
LOANS ON
NON-OCCUPANT
LOANS (except on LOANS (except on
LOANS (except on
MULTI-FAMILY
multi-family
multi-family
multi-family
DWELLINGS
dwellings)
dwel lings)
dwellings)
No. of Principal No. of Principal No. of Principal No. of Principal
Loans
Amount Loans
Amount Loans
Amount Loans
Amount
Mortgage loan data relating to residential real property located outside the relevant SMSA (or SMSAs)
Instructions:
1.
Data may be rounded to nearest thousands of dollars.
2.
If more than one SMSA is involved, the relevant SMSA should be indicated next to the tract number or,
preferably, separate pages should be used.
If the tract number is duplicated within a SMSA, the county, city or town that uniquely identifies
the number should be stated next to the number.
Whenever a ZIP code number is permitted to be used, it should be preceded by the letter "Z".
If the statement is prepared on the basis of the definition of the relevant SMSA that is more recent
than that in effect on the first day of the reporting period, so indicate.
3.
A.
5.
6.
7.
8.
9.
Census tract numbers are those appearing on the inaps in the Bureau
but computer coding is permissible if explained on the statement.
"Multi-family dwellings" means residential dwellings for more than
The column "Total Mortgage Loans" should equal the sum of the next
This statement must be retained and made available for a period of
the reporting period.
of the Census 1970 PHC(l) series,
four families.
four columns (except for rounding).
five years from the last day of
-37-
*
*
*
To aid in the consideration of the proposed regulations, interested
persons are invited to submit relevant data, views, and arguments, regarding
those proposals with which they agree as well as those with which they
disagree. Any such material should be submitted in writing to the Secretary,
Board of Governors of the Federal Reserve System, Washington, D.C.
20551, to be received not later than May 3, 1976. All material submitted
should include the docket number R-0029. Such material will be made
available for public inspection and copying upon request, except as
provided in section 261.6(a) of the Board's Rules Regarding Availability
of Information (12 CFR 261.6(a)).
For the benefit of those who wish to make an oral presentation
regarding the proposals, a hearing will be held before available members of
the Board at the Federal Reserve Building, 20th and C Streets, N.W.,
Washington, D.C., on April 22, 1976, beginning at 10:00 a.m. Any persons
desiring to give testimony, present evidence, or otherwise participate
in the hearing should file with the Secretary of the Board on or before
April 16, 1976, a written request containing the names and identity
of witnesses who propose to appear, the amount of time desired for testi
mony, and a summary of the matters concerning which petitioner wishes to
give testimony or submit evidence.
If possible, prepared statements in
writing should be presented at the time of the hearing.
It is anticipated
that a schedule of witnesses will be announced prior to the date of the
hearing.
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This notice is published pursuant to section 553(b) of Title 5
of the United States Code and section 262.2(a) of the Board's Rules of
Procedure (12 CFR 262.2(a)).
By order of the Board of Governors, March 24, 1976.
(Signed) Theodore E. Allison
Theodore E. Allison
Secretary of the Board
[SEAL]
@FedFRASER