[Federal Register Volume 61, Number 184 (Friday, September 20, 1996)]
[Proposed Rules]
[Pages 49420-49425]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-24083]


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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 61, No. 184 / Friday, September 20, 1996 / 
Proposed Rules  

[[Page 49420]]



FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 338

RIN 3064-AB72


Fair Housing

AGENCY: Federal Deposit Insurance Corporation.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The FDIC is proposing to amend its fair housing regulation by 
clarifying certain nondiscriminatory advertising requirements with 
regard to placement and display of the Equal Housing Lender poster. The 
FDIC also proposes to offer insured state nonmember banks the option of 
displaying the Equal Housing Opportunity poster required by regulations 
of the U.S. Department of Housing and Urban Development and/or using 
the advertising slogan ``Equal Opportunity Lender.'' The agency further 
proposes to remove its fair housing recordkeeping requirements that 
serve as a substitute monitoring program permitted by the Federal 
Reserve Board's Regulation B, which implements the Equal Credit 
Opportunity Act, and its requirement that insured state nonmember banks 
maintain and report a home loan application register in accordance with 
Regulation C, which implements the Home Mortgage Disclosure Act. 
Instead, the FDIC will simply cross-reference Regulations B and C and 
require recordation and reporting of loan denial reasons.
    This action is being taken in accordance with section 303 of the 
Riegle Community Development and Regulatory Improvement Act of 1994, 
which requires the federal bank and thrift regulatory agencies to 
review and streamline their regulations and policies in order to 
improve efficiency, reduce unnecessary costs, eliminate unwarranted 
constraints on credit availability, and remove inconsistencies and 
outmoded and duplicative requirements. The intended effect of these 
amendments is to reduce burden on insured state nonmember banks and to 
conform the FDIC's fair housing regulation with those of the other 
federal bank and thrift regulatory agencies.

DATES: Comments must be received on or before November 19, 1996.

ADDRESSES: Written comments should be addressed to the Office of the 
Executive Secretary, FDIC, 550 17th Street, NW., Washington, DC 20429. 
Comments also may be hand delivered to Room 402, 1776 F Street, NW., 
Washington, DC between 8:30 a.m. and 5:00 p.m. on business days, or 
sent by facsimile transmission (202-898-3838) or by Internet 
([email protected]). Comments received will be available for public 
inspection and photocopying at the FDIC Public Information Center, Room 
100, 801 17th Street, NW., Washington, DC between 9 a.m. and 4:30 p.m. 
on business days.

FOR FURTHER INFORMATION CONTACT: Michael R. Evans, Fair Lending 
Analyst, Fair Lending Section, Division of Compliance and Consumer 
Affairs, (202) 942-3091; or Lori J. Sommerfeld, Attorney, Regulation 
and Legislation Section, Legal Division, (202) 898-8515; Federal 
Deposit Insurance Corporation, 550 17th Street, NW., Washington, DC 
20429.

SUPPLEMENTARY INFORMATION:

I. Background

    The FDIC's fair housing regulation, 12 CFR part 338, contains two 
parts: nondiscriminatory advertising requirements (subpart A) and 
recordkeeping requirements (subpart B). Subpart A prohibits insured 
state nonmember banks from discriminating in home loan advertising and 
sets forth the text of the Equal Housing Lender poster that must be 
displayed on bank premises. The intent of subpart A is to prevent 
discrimination in connection with any residential real estate-related 
transaction on the basis of race, color, sex, religion, national 
origin, familial status or handicap. The regulation specifies that this 
requirement may be satisfied by including in written and visual 
advertisements a copy of the logotype with the Equal Housing Lender 
legend contained in the Equal Housing Lender poster or, in oral 
advertisements, by including a statement that the bank is an ``Equal 
Housing Lender.'' The advertising requirements enforce section 805 of 
Title VIII of the Civil Rights Act of 1968 (the Fair Housing Act), as 
amended by the Fair Housing Amendments Act of 1988 (Pub. L. 100-430, 
102 Stat. 1636).
    The purpose of subpart B (recordkeeping requirements) is two-fold. 
First, it requires certain insured state nonmember banks to request and 
retain information regarding the race, national origin, sex, marital 
status and age of applicants for a home purchase loan. The purpose of 
collecting and retaining this information is to monitor an 
institution's compliance with the Equal Credit Opportunity Act of 1974 
(ECOA) (15 U.S.C. 1691-91f). Subpart B also serves as a substitute 
monitoring program permitted by Regulation B of the Federal Reserve 
System. See 12 CFR 202.13(d). However, the data collection and 
retention requirements of subpart B go beyond the requirements of 
Regulation B. For example, insured state nonmember banks that have no 
office located in a primary metropolitan statistical area (PMSA) or a 
metropolitan statistical area (MSA), or that have total assets of $10 
million or less, are also required to request and retain information on 
the location (street address, city, state, and zip code) of the 
property to be purchased. Further, insured state nonmember banks that 
have an office located in a PMSA or an MSA and that have total assets 
exceeding $10 million are required to request and retain essentially 
all of the information listed on the model Residential Loan Application 
Form contained in appendix B of Regulation B (see 12 CFR part 202, 
appendix B). This includes such data as employment history of the 
applicant, number of dependents, assets and liabilities, detailed 
characteristics of the subject property, and the loan request. Appendix 
B specifies that institutions may delete any information requested on 
the model form provided that appropriate notices concerning optional 
use of titles and disclosure of certain income information and 
limitations concerning marital status requests are provided. Thus, the 
other information on the model form is not required by Regulation B.
    Second, subpart B notifies insured state nonmember banks of their 
duty to maintain and report a register of home loan applications, and 
to update the register on a timely basis, in accordance

[[Page 49421]]

with the Federal Reserve Board's Regulation C (12 CFR part 203), which 
implements the Home Mortgage Disclosure Act (HMDA). Institutions are 
subject to HMDA and Regulation C if their assets exceed $10 million and 
they have offices located in a PMSA or MSA. Information collected under 
the provisions of this subpart must include the type of loan requested, 
the purpose of the loan, whether the loan was approved or denied 
(including an option for collecting denial reasons for disapproved 
loans), and information on the purchaser, if the loan was sold. This 
information is consistent with Regulation C.
    Subpart B, however, goes beyond the data reporting requirements of 
Regulation C. Regulation C requires the collection and reporting of 
race, sex and income of applicants for home loans only for institutions 
with assets of $30 million or more that have offices located in a PMSA 
or MSA. Additionally, Regulation C specifies that the loan register 
must be current within 30 calendar days after the end of each calendar 
quarter in which final action is taken. Subpart B extends the 
collection and reporting of the race, sex, and income of applicants for 
home loans to institution with assets between $10 million and $30 
million and requires that an institution enter all required data onto 
the register within 30 calendar days after final disposition of the 
loan application.
    On September 23, 1994, Congress passed the Riegle Community 
Development and Regulatory Improvement Act (Pub. L. 103-325, 108 Stat. 
2160) (CDRIA). Section 303 of CDRIA requires the federal bank and 
thrift regulatory agencies to: (1) review and streamline their 
regulations and written policies in order to improve efficiency, reduce 
unnecessary cost, eliminate unwarranted constraints on credit 
availability and remove inconsistencies and outmoded and duplicative 
requirements; (2) work jointly with other federal banking regulators to 
make uniform all regulations and guidelines implementing common 
statutory or supervisory policies; and (3) submit a joint progress 
report to Congress, due two years from the date the legislation was 
enacted.
    In response to the mandate of section 303 of CDRIA, the FDIC began 
a systematic review of its regulations and written policies. On 
December 6, 1995, the FDIC solicited public comment to assist the 
agency in identifying ways in which its regulations and written 
policies could be streamlined and made consistent with those of the 
other federal bank and thrift regulatory agencies. See 60 FR 62345. As 
a result of the agency's internal review and public comments received, 
the FDIC has determined that it is appropriate to revise 12 CFR part 
338 to clarify or eliminate certain provisions in order to reduce 
burden on insured state nonmember banks and to make the FDIC's fair 
housing regulation consistent with those of the other federal bank and 
thrift regulators.

II. The Proposed Rule

A. General

    The FDIC is proposing to revise its fair housing regulation, 12 CFR 
part 338, by clarifying certain nondiscriminatory advertising 
requirements with regard to placement and display of the Equal Housing 
Lender poster. The FDIC also proposes to offer insured state nonmember 
banks the option of displaying the Equal Housing Opportunity poster 
required by the U. S. Department of Housing and Urban Development (HUD) 
and/or using the slogan ``Equal Opportunity Lender.'' The agency 
further proposes to remove its fair housing recordkeeping requirements 
that serve as a substitute monitoring program permitted by the Federal 
Reserve Board's Regulation B, which implements ECOA. Finally, the 
agency proposes to remove its requirement that insured state nonmember 
banks maintain a home loan application register consistent with that 
required to be maintained by the Federal Reserve Board's Regulation C, 
which implements HMDA, and a requirement that those institutions report 
race, sex and income of applicants. Instead, the FDIC will simply 
cross-reference Regulations B and C and require recordation and 
reporting of loan denial reasons.

B. Subpart A--Nondiscriminatory Advertising

    The FDIC proposes to revise subpart A to clarify certain 
nondiscriminatory advertising requirements that currently reference 
HUD's regulations, to allow the FDIC's Equal Housing Lender poster or 
HUD's Equal Housing Opportunity poster to be displayed by insured state 
nonmember institutions, as well as to allow the option of using either 
the slogan ``Equal Housing Lender'' or ``Equal Opportunity Lender'' in 
oral advertisements, and to clarify the display of the Equal Housing 
Lender poster.
    As a result of HUD's regulatory review in accordance with President 
Clinton's March 4, 1995, executive memorandum directing all federal 
agencies to simplify their regulations, HUD recently removed part 109 
(Fair Housing Advertising) from its regulations (24 CFR part 109) and 
intends to relegate the information contained in the former part 109 to 
other non-codified guidance. See 61 FR 14378 (April 1, 1996). 
Accordingly, the FDIC is proposing to revise Sec. 338.1 to eliminate a 
reference to part 109. Section 338.1 is also proposed to be revised to 
reflect the proposed changes to Secs. 338.3 and 338.4 discussed below. 
The FDIC proposes to add a new section to Sec. 338.3 advising all 
insured state nonmember banks to refer to HUD for further guidance 
concerning fair housing advertising beyond that set forth in 
Sec. 338.3. No changes are proposed for Sec. 338.2, Definitions.
    The FDIC proposes to revise the nondiscriminatory advertising 
requirements set forth in Sec. 338.3. Currently, insured state 
nonmember banks are required to include in all written and visual 
advertisements a copy of the Equal Housing Lender logotype and legend 
contained in the Equal Housing Lender poster prescribed in Sec. 338.4, 
or, with respect to oral advertisements, a statement that the bank is 
an ``Equal Housing Lender.'' Under the proposed revision to Sec. 338.3, 
insured state nonmember banks will have the option of using a copy of 
the Equal Housing Opportunity logotype and legend contained in the 
Equal Housing Opportunity poster as prescribed in Sec. 110.25(a) of 
HUD's rules and regulations (24 CFR 110.25(a)) in written and visual 
advertisements. With respect to oral advertisements, insured state 
nonmember banks will also have the option of using the slogan ``Equal 
Opportunity Lender'' in lieu of the slogan ``Equal Housing Lender.'' 
The optional use of either poster or slogan is designed to provide 
flexibility for institutions that offer a broader array of loan 
products than mortgage loans (e.g., auto, consumer, and credit card 
extensions of credit). Comments from a trade organization, which were 
received in response to the FDIC's December 6, 1995, solicitation of 
comments, also suggest that the use of ``Equal Opportunity Lender'' is 
more understandable within the banking industry.
    The FDIC considered eliminating its Equal Housing Lender poster. 
However, eliminating the FDIC's poster requirement would result in all 
insured state nonmember banks having to replace existing FDIC posters 
and display instead the Equal Housing Opportunity poster prescribed by 
HUD. Pursuant to Sec. 110.10(c) of HUD's regulations (24 CFR 
110.10(c)), lenders that engage in residential real estate-

[[Page 49422]]

related transactions must post and maintain a fair housing poster at 
all of their places of business which participate in covered 
activities. Failure to display a fair housing poster is deemed prima 
facie evidence of a discriminatory housing practice under Sec. 110.30 
of HUD's regulations (24 CFR 110.30). To eliminate the FDIC's poster 
would place an undue burden on those institutions that currently 
display the FDIC poster since they would be required to replace those 
posters with the HUD poster. Consequently, the FDIC believes that the 
most prudent and least burdensome course of action is to offer insured 
state nonmember banks the option of displaying either fair housing 
poster. However, the FDIC seeks comments on this issue.
    The proposed rule would also clarify display of the poster. 
Currently, Sec. 338.4 requires the poster to be conspicuously 
displayed, ``* * * in any public lobby and area within the bank where 
deposits are received or where such loans are made in a manner clearly 
visible to the general public entering such areas.'' This has created 
some confusion regarding whether multiple posters must be displayed and 
whether the posters should be displayed only in the lobby or public 
area in the vicinity of where loans are made or also in the individual 
office of the loan officer. In order to create consistency and 
eliminate confusion among insured state nonmember banks, the proposed 
revision to Sec. 338.4 will allow either poster, as discussed above, to 
be displayed in a single central location within the bank where 
deposits are received or where such home loans are made. Regardless of 
which poster a bank chooses to display, the poster must be displayed in 
a manner clearly visible to the general public entering the area, 
either where deposits are received or where home loans are made, where 
the poster is displayed.

C. Subpart B--Recordkeeping Requirements

    The FDIC is proposing to revise subpart B to reduce data collection 
and reporting burden on insured state nonmember banks and to make the 
FDIC's recordkeeping and reporting requirements consistent with those 
of the other federal bank and thrift regulatory agencies. Specifically, 
the proposed revision will eliminate all recordkeeping and reporting 
requirements that exceed the recordkeeping and reporting requirements 
of Regulations B and C. However, the proposal will require that insured 
state nonmember banks and other lenders that are required to report 
HMDA data to the FDIC pursuant to Regulation C also report reasons for 
denial of home loan applications. This data is currently optional under 
Regulation C.
    Section 338.6 currently contains five definitions relevant to 
subpart B: ``application'', ``bank'', ``dwelling'', ``home improvement 
loan'', and ``home purchase loan''. The FDIC proposes to revise 
Sec. 338.6 by eliminating the definitions for application, dwelling, 
home improvement loan, and home purchase loan. These definitions have 
created some confusion within the industry since Regulations B and C 
contain similar, but not always identical, definitions. For example, 
the term dwelling as defined in Sec. 338.6 includes, but is not limited 
to, an individual condominium, cooperative unit, or mobile or 
manufactured home. However, the term dwelling as defined in Regulation 
B further limits the term to a structure containing one to four units. 
Another example is the definition of home improvement loan. Section 
338.6 states, in part, that the borrower must state that the loan is to 
be used ``for the purpose of repairing, rehabilitating, or remodeling a 
dwelling'', while Regulation C requires the borrower to use the loan 
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.'' A statement by the borrower is not a determining factor 
under Regulation C. Eliminating the definitions in part 338 will 
automatically subject insured state nonmember banks to the relevant 
definitions in Regulations B and C and create consistency.
    The FDIC also proposes to revise Sec. 338.6 to include a definition 
for controlled entity, a term that is found in Sec. 338.9. Although 
part 338 contained a definition for ``controlled entity'' when the 
regulation was first promulgated in 1978, the definition was 
inadvertently dropped when part 338 was last amended in 1991. That 
definition, which is ``a corporation, partnership, association, or 
other business entity with respect to which a bank possesses, directly 
or indirectly, the power to direct or cause the direction of management 
and policies, whether through the ownership of voting securities, by 
contract, or otherwise,'' is being reinstated.
    Under the current provisions of Sec. 338.7, all insured state 
nonmember banks are required to collect data on the race or national 
origin, sex, age, and marital status of applicants for a home purchase 
loan in order to monitor an institution's compliance with the ECOA. 
However, the data collection and retention requirements of Sec. 338.7 
go beyond the requirements of Regulation B. For example, institutions 
that have no office located in a PMSA or MSA, or which have total 
assets of $10 million or less, are also required to request and retain 
information on the location (street address, city, state, and zip code) 
of the property to be purchased. Further, insured state nonmember banks 
that have an office located in a PMSA or MSA and that have total assets 
exceeding $10 million are required to request and retain essentially 
all of the information listed on the model Residential Loan Application 
Form contained in Appendix B of Regulation B (See 12 CFR part 202, 
appendix B). This includes such data as employment history of the 
applicant, number of dependents, assets and liabilities, detailed 
characteristics of the subject property, and the loan request. Appendix 
B of Regulation B provides that creditors may delete any of the 
information requested provided the appropriate notices concerning the 
optional use of courtesy titles, disclosure of certain income, and 
limitations concerning marital status are included.
    Comments received from the community bankers in response to the 
FDIC's December 6, 1995, general solicitation of comments indicate that 
the most difficult problems with the documentation come from the 
additional data required by the current provisions of Sec. 338.7. The 
proposed revisions to Sec. 338.7 would require all insured state 
nonmember banks to collect only the fair housing data (age, sex, 
marital status and race or national origin) that is already required by 
Regulation B. The mandatory collection of the additional data currently 
required by Sec. 338.7 is considered unnecessary as collection of 
these, or similar data, is standard industry practice. Under the 
proposal, the burden of collecting the required additional information 
will be eliminated. The FDIC considered the complete removal of 
Sec. 338.7 because, absent a specific requirement by the FDIC in part 
338, all insured state nonmember banks would still be required by 
Regulation B to collect information about the applicant's race and 
other personal characteristics in applications for certain dwelling-
related loans even without this section. However, the FDIC has opted in 
this proposal to provide a cross-reference to put insured state 
nonmember banks on notice of the need to comply with the Regulation B 
requirements. The FDIC

[[Page 49423]]

solicits comments on the necessity and usefulness of this cross-
reference.
    Section 338.8 currently requires insured state nonmember banks with 
assets exceeding $10 million that have offices located in a PMSA or an 
MSA to collect data regarding applications for, and originations and 
purchases of, home purchase loans and home improvement loans for each 
calendar year. Section 338.8 also requires insured state nonmember 
banks to update the HMDA home loan application register within 30 days 
of final action on each application. Further, Sec. 338.8 requires that 
all institutions subject to Regulation C report data on the sex, race 
or national origin, and income of applicants. Such data are optional 
under Regulation C for institutions with assets between $10 million and 
$30 million.
    The FDIC proposes to revise Sec. 338.8 to require institutions to 
comply only with the provisions of the Federal Reserve Board's 
Regulation C. For calendar year 1995, the FDIC had 3,052 institutions 
report data pursuant to Sec. 338.8. This revision would eliminate the 
requirement for reporting data on the sex, race or national origin, and 
income of applicants for approximately 500 institutions that have 
assets between $10 million and $30 million.
    The FDIC is also proposing to revise Sec. 338.8 to require those 
institutions that are subject to Regulation C to collect and report the 
reasons for denial of each loan application. The reporting of denial 
reasons is currently optional under Regulation C. By requiring this 
data to be mandatory, Sec. 338.8 would impact all of the 3,052 
institutions that currently report HMDA data to the FDIC. However, a 
review of the 1995 HMDA data indicates that, while these data are 
optional, 2,171 of the FDIC's 3,052 reporting institutions opted to 
report denial reasons on at least some of their applications for 1995. 
Requiring the reporting of the denial reasons will make the FDIC's 
reporting requirements consistent with the Office of the Thrift 
Supervision and the Office of the Comptroller of the Currency, which 
also requires the reporting of the denial reasons.
    See 12 CFR 528.6 and 12 CFR 27.3(a)(1). While the mandatory 
reporting of denial reasons is a new requirement for insured state 
nonmember banks, the FDIC believes the burden is offset by the amount 
of required data being eliminated under the revised provisions of 
Sec. 338.7 and elimination of the reporting requirement of sex, race or 
national origin, and income of home loan applicants for institutions 
having assets between $10 million and $30 million that are subject to 
Regulation C. We further believe that the reporting of denial reasons 
are data that are extremely useful in preventing and detecting unlawful 
discriminatory lending practices.
    By requiring institutions to follow only Regulation C, the proposed 
revision will require the loan application register to be updated 
within 30 days of the end of each quarter in which final action is 
taken. This will also make the FDIC consistent with the regulations of 
the Office of Thrift Supervision and the Office of the Comptroller of 
the Currency.
    The FDIC also proposes to revise Sec. 338.5, which describes the 
purpose of subpart B, to reflect the changes to Secs. 338.6, 338.7, 
338.8 and 338.9.

Regulatory Flexibility Act

    The Board of Directors, in accordance with the Regulatory 
Flexibility Act (5 U.S.C. 606(b)), has reviewed and approved this 
proposed rule, and in so doing, certifies that this rule will not have 
a significant economic impact on a substantial number of small 
entities. This proposed rule primarily streamlines part 338 by 
clarifying or removing unnecessary provisions. The Board of Directors 
invites comment on this matter.

Paperwork Reduction Act

    The proposed regulation contains two collections of information 
subject to approval by the Office of Management and Budget (OMB) under 
the Paperwork Reduction Act of 1980 (44 U.S.C. 3504(h)).
    The collection of information requirements in this proposed 
regulation are contained in 12 CFR 338.7 and 338.8 and concern 
information on certain home loan applications. This information is 
required in order to monitor institutions compliance with the Equal 
Credit Opportunity Act of 1974 (ECOA) and the Fair Housing Act of 1968, 
as amended by the Fair Housing Act of 1988. The respondents/
recordkeepers are for-profit financial institutions, including small 
businesses.
    The first collection, 12 CFR 338.7, is imposed on insured state 
nonmember banks by the Federal Reserve Board's Regulation B (Equal 
Credit Opportunity). This recordkeeping requirement, found at 
Sec. 338.7, has been approved through October 31, 1998, by the OMB in 
accordance with the Paperwork Reduction Act under control number 3064-
0085.
    As explained in the preamble, subpart B of part 338 currently 
requires insured state nonmember banks to collect information about a 
home loan applicant's race and other personal characteristics in order 
to comply with Regulation B (specifically, 12 CFR 202.13). Section 
338.7 of the FDIC's current regulations serves as a substitute 
monitoring program permitted by Regulation B, which implements ECOA. 
However, the current requirements go beyond those of Regulation B by 
imposing additional data collection requirements upon certain insured 
state nonmember banks. Nevertheless, the proposed revisions will not 
affect the annual burden per respondent/recordkeeper as the required 
data being eliminated are data that are collected, with some variances, 
pursuant to standard industry practice. Accordingly, the estimated 
305,300 approved annual burden hours, which was based on 6500 
respondents, under the current requirements are only reduced because 
fewer insured state nonmember banks are in existence now than at the 
time of the last burden estimate. Thus, the total annual burden hours 
for the current 6500 respondents are estimated to be 279,500 hours or 
43 hours per respondent.
    The second collection, found at Sec. 338.8, has been approved 
through July 31, 1997, by the OMB in accordance with the requirements 
of the Paperwork Reduction Act under control number 3064-0046. The FDIC 
is eliminating in this proposal its requirement that insured state 
nonmember banks (except those that are exempt from HMDA and Regulation 
C) maintain a loan application register identical to that prescribed by 
Regulation C. The proposed rule would eliminate the FDIC's separate 
recordkeeping and reporting requirements contained in Sec. 338.8 and 
rely instead upon Regulation C. However, Regulation C currently makes 
reporting of home loan denial reasons optional. The FDIC would require 
insured state nonmember banks that are subject to HMDA and Regulation C 
to retain and report such data. However, the estimated annual burden 
hours, currently 45.36 hours per respondent or 145,833 annual burden 
hours, are not affected by the proposed changes since optional data are 
included in the estimated annual burden hours. Nevertheless, the 
estimated annual burden hours are affected both by a reduction in 
respondents (currently 3,052 versus the previous 3,215) and a reduction 
in the number of loan entries (currently 1,500,000 versus the previous 
1,750,000). The 3052 institutions currently subject to this collection 
are expected to use the HMDA loan application register to report data 
on 1.5

[[Page 49424]]

million loans and applications annually. It takes five minutes to 
complete an entry on one loan. Thus, the total annual burden is 125,000 
burden hours or 40.96 hours per respondent.
    Comments on the collection of information should be sent to the 
Office of Management and Budget, Paperwork Reduction Project, 
Washington, DC 20503, with copies of such comments to be sent to Steven 
F. Hanft, Office of the Executive Secretary, Room F-453, Federal 
Deposit Insurance Corporation, 550 17th Street, NW., Washington, DC 
20429.

List of Subjects in 12 CFR Part 338

    Advertising, Banks, Banking, Civil rights, Credit, Fair housing, 
Mortgages, Reporting and recordkeeping requirements, Signs and symbols.

    For the reasons explained in the preamble, the Federal Deposit 
Insurance Corporation proposes to amend 12 CFR part 338 as set forth 
below.
    1. The table of contents for part 338 is revised to read as 
follows:

PART 338--FAIR HOUSING

Subpart A--Advertising

Sec.
338.1  Purpose.
338.2  Definitions applicable to subpart A of this part.
338.3  Nondiscriminatory advertising.
338.4  Fair housing poster.

Subpart B--Recordkeeping

338.5  Purpose.
338.6  Definitions applicable to subpart B of this part.
338.7  Recordkeeping requirements.
338.8  Compilation of loan data in register format.
338.9  Mortgage lending of a controlled entity.

    2. The authority citation for part 338 continues to read as 
follows:

    Authority: 12 U.S.C. 1817, 1818, 1819, 1820(b); 12 U.S.C. 2801 
et seq.; 15 U.S.C. 1691 et seq.; 42 U.S.C. 3605, 3608; 12 CFR part 
202; 12 CFR part 203; 24 CFR part 110.

    3. Section 338.1 is revised to read as follows:


Sec. 338.1   Purpose.

    The purpose of this subpart A is to prohibit insured state 
nonmember banks from engaging in discriminatory advertising with regard 
to residential real estate-related transactions. Subpart A also 
requires insured state nonmember banks to publicly display either the 
Equal Housing Lender poster set forth in Sec. 338.4 or the Equal 
Housing Opportunity poster prescribed by part 110 of the rules and 
regulations of the United States Department of Housing and Urban 
Development (HUD) (24 CFR part 110). This subpart A enforces section 
805 of title VIII of the Civil Rights Act of 1968, 42 U.S.C. 3601-19 
(Fair Housing Act), as amended by the Fair Housing Amendments Act of 
1988.
    4. Section 338.3 is amended by revising paragraphs (a)(1) and 
(a)(2) and by adding a new paragraph (c) to read as follows:


Sec. 338.3   Nondiscriminatory advertising.

    (a) * * *
    (1) With respect to written and visual advertisements, this 
requirement may be satisfied by including in the advertisement a copy 
of the logotype with the Equal Housing Lender legend contained in the 
Equal Housing Lender poster prescribed in Sec. 338.4(b) or a copy of 
the logotype with the Equal Housing Opportunity legend contained in the 
Equal Housing Opportunity poster prescribed in Sec. 110.25(a) of the 
United States Department of Housing and Urban Development's rules and 
regulations. (24 CFR 110.25(a)).
    (2) With respect to oral advertisements, this requirement may be 
satisfied by a statement, in the spoken text of the advertisement, that 
the bank is an ``Equal Housing Lender'' or an ``Equal Opportunity 
Lender.''
* * * * *
    (c) For further guidance, the United States Department of Housing 
and Urban Development should be consulted. Contact the Deputy Assistant 
Secretary for Enforcement and Investigations, Department of Housing and 
Urban Development, 451 Seventh Street, S.W., Washington, D.C. 20410.
    5. Section 338.4 is amended by revising the section heading and 
paragraph (a) to read as follows:


Sec. 338.4   Fair housing poster.

    (a) Each bank engaged in extending loans for the purpose of 
purchasing, constructing, improving, repairing, or maintaining a 
dwelling or any loan secured by a dwelling shall conspicuously display 
either the Equal Housing Lender poster set forth in Sec. 338.4 or the 
Equal Housing Opportunity poster prescribed by Sec. 110.25(a) of the 
United States Department of Housing and Urban Development's rules and 
regulations (24 CFR 110.25(a)), in a central location within the bank 
where deposits are received or where such loans are made in a manner 
clearly visible to the general public entering the area, where the 
poster is displayed.
* * * * *
    6. Subpart B is amended by revising the subpart heading to read as 
follows:

Subpart B--Recordkeeping

    7. Section 338.5 is revised to read as follows:


Sec. 338.5   Purpose.

    The purpose of this subpart B is two-fold. First, subpart B 
requires all insured state nonmember banks to collect information about 
a home loan applicant's race and other personal characteristics in 
order to monitor an institution's compliance with the Equal Credit 
Opportunity Act of 1974 (15 U.S.C. 1691-91f), as implemented by 
Regulation B of the Board of Governors of the Federal Reserve System 
(12 CFR part 202). Second, subpart B notifies certain insured state 
nonmember banks of their duty to maintain a register of home loan 
applications pursuant to Regulation C of the Board of Governors of the 
Federal Reserve System (12 CFR part 203), which implements the Home 
Mortgage Disclosure Act (12 U.S.C. 2801 et seq.), and to report the 
reasons for denial of any home loan application that would be 
reportable under Regulation C.
    8. Section 338.6 is revised to read as follows:


Sec. 338.6   Definitions applicable to subpart B of this part.

    For purposes of subpart B of this part--
    (a) Bank means an insured state nonmember bank as defined in 
section 3 of the Federal Deposit Insurance Act.
    (b) Controlled entity means a corporation, partnership, 
association, or other business entity with respect to which a bank 
possesses, directly or indirectly, the power to direct or cause the 
direction of management and policies, whether through the ownership of 
voting securities, by contract, or otherwise.
    9. Section 338.7 is revised to read as follows:


Sec. 338.7   Recordkeeping requirements.

    All banks that receive an application for credit primarily for the 
purchase or refinancing of a dwelling occupied or to be occupied by the 
applicant as a principal residence, where the extension of credit will 
be secured by the dwelling, shall request and retain the monitoring 
information required by Regulation B of the Board of Governors of the 
Federal Reserve System (12 CFR part 202).
    10. Section 338.8 is revised to read as follows:


Sec. 338.8   Compilation of loan data in register format.

    Banks and other lenders required to file a Home Mortgage Disclosure 
Act Loan Application Register with the

[[Page 49425]]

Federal Deposit Insurance Corporation in accordance with Regulation C 
of the Board of Governors of the Federal Reserve System (12 CFR part 
203) must enter the reason for denial, using the codes provided in 12 
CFR part 203, with respect to all loan denials.
    11. Appendices A and B to Part 338 are removed.

    By order of the Board of Directors.

    Dated at Washington, D.C., this 10th day of September, 1996.

Federal Deposit Insurance Corporation.
Jerry L. Langley,
Executive Secretary.
[FR Doc. 96-24083 Filed 9-19-96; 8:45 am]
BILLING CODE 6714-01-P