[Federal Register Volume 61, Number 250 (Friday, December 27, 1996)]
[Proposed Rules]
[Pages 68168-68172]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-32305]


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FEDERAL RESERVE SYSTEM

12 CFR Part 203

[Regulation C; Docket No. R-0951]


Home Mortgage Disclosure

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Proposed rule.

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SUMMARY: The Board is publishing for comment proposed revisions to 
Regulation C (Home Mortgage Disclosure). The revisions would implement 
the amendments to the Home Mortgage Disclosure Act included in the 
Economic Growth and Regulatory Paperwork Reduction Act of 1996. Those 
amendments increase the exemption threshold for depository institutions 
and modify certain

[[Page 68169]]

disclosure requirements. The Board also proposes to extend the 
information collection authority under the Paperwork Reduction Act for 
another three years, and to make technical amendments to the 
transmittal sheet accompanying the loan/application register.

DATES: Comments must be received on or before February 25, 1997.

ADDRESSES: Comments should refer to Docket No. R-0951, and may be 
mailed to William W. Wiles, Secretary, Board of Governors of the 
Federal Reserve System, 20th Street and Constitution Avenue, N.W., 
Washington, D.C. 20551. Comments also may be delivered to Room B-2222 
of the Eccles Building between 8:45 a.m. and 5:15 p.m. weekdays, or to 
the guard station in the Eccles Building courtyard on 20th Street, N.W. 
(between Constitution Avenue and C Street) at any time. Comments 
received will be available for inspection in Room MP-500 of the Martin 
Building between 9:00 a.m. and 5:00 p.m. weekdays, except as provided 
in 12 CFR 261.8 of the Board's rules regarding availability of 
information.

FOR FURTHER INFORMATION CONTACT: Jane Jensen Gell or Manley Williams, 
Staff Attorneys, Division of Consumer and Community Affairs, Board of 
Governors of the Federal Reserve System, at (202) 452-3667 or (202) 
452-2412; for the hearing impaired only, Dorothea Thompson, 
Telecommunications Device for the Deaf, at (202) 452-3544.

SUPPLEMENTARY INFORMATION:

I. Background

    On September 30, the President signed into law the Economic Growth 
and Regulatory Paperwork Reduction Act of 1996 (the 1996 Act) (Pub. L. 
104-208, 110 Stat. 3009) . The 1996 Act, in part, amends the Home 
Mortgage Disclosure Act of 1975 (HMDA) (12 U.S.C. 2801 et seq.). HMDA 
requires most mortgage lenders located in metropolitan areas to collect 
data about their housing-related lending activity. Annually, lenders 
must file reports with their federal supervisory agencies and make 
disclosures available to the public. The Board's Regulation C (12 CFR 
Part 203) implements HMDA.

II. Proposed Revisions

A. Increasing the Exemption Based on Asset Size

    Currently, depository institutions with assets of $10 million or 
less are exempt from HMDA. The 1996 Act increases this exemption for 
depository institutions by adjusting the $10 million figure by the 
change since 1975 in the Consumer Price Index for Urban Wage Earners 
and Clerical Workers (CPIW)--rounded to the nearest million. The Board 
proposes to revise Sec. 203.3(a)(1)(ii) of Regulation C to implement 
this amendment to section 309 of HMDA (12 U.S.C. 2808).
    The Bureau of Labor Statistics calculates the CPIW monthly and 
publishes the data with a lag of a few weeks. The seasonally adjusted 
figures are available with a longer lag. Accordingly, the Board 
proposes to use the ``not seasonally-adjusted'' figure. The 1996 Act 
calls for an initial adjustment based on the percentage by which the 
CPIW for 1996 exceeds the CPIW for 1975. To ensure that the public is 
informed of the new threshold promptly, the Board intends to publish a 
notice with the adjusted threshold as soon as the December 1996 data 
become available in early January. Based on the increase in the CPIW 
from December 1975 to October 1996, the adjusted figure would be $27.9 
million, rounded to an exemption threshold of $28 million. Thus, 
institutions with assets of $28 million or less would be exempt from 
data collection in 1997.
    Institutions covered during 1996 but exempt subsequently because of 
the new threshold (for example, institutions with assets of $17 
million) are required to collect data for all of 1996, and to submit 
those data by March 1, 1997. Such institutions will not be subject to 
the data collection requirements for 1997.
    The 1996 Act provides that the exemption is to be adjusted annually 
to reflect future changes in the CPIW. The Board could make the 
adjustment using December data or, if it wanted to announce the new 
threshold by year-end, using November data. To make the year-to-year 
adjustments consistent with the initial adjustment, the Board proposes 
to base the adjustments on December data and publish the results in the 
Federal Register as soon as those data become available in January. If 
the adjustment uses December data the threshold might be higher, but 
some institutions that are actually exempt might have to collect the 
data in the early weeks of the year because of the uncertainty as to 
the threshold. For example, one year the threshold could be $29 million 
based on November data and $30 million based on December data. An 
institution with assets of $28.5 million as of that December 31 might 
want the Board to use the November data and publish the threshold in 
December so it could cease data collection beginning January 1. An 
institution with assets of $29.5 million might want the Board to use 
the December data so that it would qualify for exemption, even though 
the institution would have collected data for the first few weeks of 
January before the new threshold was published. The Board requests 
comment on whether earlier notice based on November data is preferable 
to a potentially higher exemption threshold using December data.
    Conforming amendments relative to the asset exemption would be made 
in several sections of Appendix A--Form and Instructions for Completion 
of HMDA Loan/Application Register, and in Sec. 203.3 of Supplement I--
Staff Commentary.
    Section 309 of HMDA (12 U.S.C. 2808), as amended in 1991, requires 
the Board, in consultation with the Secretary of the Department of 
Housing and Urban Development, to establish an exemption for 
nondepository institutions comparable to the exemption for depository 
institutions. The 1996 Act amends section 309 by adding a parenthetical 
stating that the comparable exemption shall be ``determined without 
regard to the adjustment made by subsection (b) [the CPIW 
adjustments].'' Currently, a nondepository institution with offices in 
an MSA is exempt from HMDA if it had assets of $10 million or less as 
of the preceding December 31 and originated fewer than 100 home-
purchase loans in the preceding calendar year. In 1996, depository 
institutions with assets of $28 million or less, on average, reported 
about 50 HMDA loan/application register entries apiece. Accordingly, 
the Board, in consultation with the Secretary, has determined that no 
change to the existing coverage of nondepository institutions is 
appropriate at this time.

B. Elimination of the Branch Disclosure Requirement

    Currently, HMDA provides that within ten business days of receiving 
the disclosure statement from the Federal Financial Institutions 
Examination Council (FFIEC), an institution must make a copy of the 
statement available to the public for inspection and copying in at 
least one branch office in each additional MSA where the institution 
has offices. The institution must also make the disclosure statement 
available at its home office. Regulation C added the requirement that 
an institution must post a general notice concerning the availability 
of HMDA data at the institution's home office and at each physical 
branch in an MSA.
    The 1996 Act amends section 304 of HMDA (12 U.S.C. 2803) to specify 
that

[[Page 68170]]

an institution need not make the information available at branch 
offices if the institution posts a notice and makes the information 
available upon a written request sent to the home office. The proposal 
amends Sec. 203.5(b) concerning the public disclosure of an 
institution's mortgage loan disclosure statement accordingly.
    For an institution choosing to make the HMDA data available upon 
written request, the 1996 Act requires a notice stating that the 
information is available from the home office upon written request. 
Currently, Sec. 203.5(e) requires an institution to post--at the home 
office and at each branch office--a general notice about the 
availability of its HMDA data. Upon request, the institution must 
promptly provide the location where the data is available, and at its 
option may include the location in the notice. The Board believes the 
current provisions provide adequate notice and that requiring more 
detailed notices would not produce sufficient additional benefit to the 
public to justify the burden of preparing the new notices.
    A literal reading of the 1996 Act could suggest that a request for 
HMDA data must be sent to the home office. The Board believes that 
specifying the home office as the location where requests are sent 
would not improve the public availability of this information. 
Accordingly, the revised Sec. 203.5(e) would allow an institution to 
specify whatever address it wishes. The institution could either 
provide the address promptly upon request, or include the address in 
its notice.
    Technical amendments to paragraphs (b) and (c) of Sec. 203.5 
clarify that an institution may continue to provide the data on an MSA-
by-MSA basis. For example, if a person requests the disclosure 
statement for a particular branch location, the institution may provide 
just the statement for the MSA in which that branch is located.
    Conforming amendments would be made in several sections in Appendix 
A--Form and Instructions for Completion of HMDA Loan/Application 
Register.

C. Disclosure Formats

    Currently, Appendix A to Regulation C provides that an institution 
may make the public disclosures available in paper or automated form (a 
computer diskette, for example). The 1996 Act amends section 304 of 
HMDA (12 U.S.C. 2803) to provide that an institution may not make the 
information available in automated form (in place of paper) unless the 
person requesting the information agrees to receiving the data in that 
format. Appendix A, Section III.F. would be revised accordingly.

D. Revisions to the HMDA Loan/Application Register

    The Board proposes to make three minor revisions to the HMDA loan/
application register. To comply with the requirements of the Paperwork 
Reduction Act of 1995 (44 U.S.C. ch. 3506; 5 CFR 1320 Appendix A.1), 
the following text would be added: ``An agency may not conduct or 
sponsor, and an organization is not required to respond to, a 
collection of information unless it displays a currently valid OMB 
control number. The OMB control number for the HMDA-LAR is 7100-0247.'' 
In addition, to facilitate prompt communication with a respondent, a 
blank for the respondent's facsimile number would be added to the 
transmittal sheet. To reduce burden, the Board proposes to modify the 
transmittal sheet so that a respondent will no longer have to enter the 
name and address of its supervisory agency.

III. Form of Comment Letters

    Comment letters should refer to Docket No. R-0951. The Board 
requests that, when possible, comments be prepared using a standard 
courier typeface with a type size of 10 or 12 characters per inch. This 
will enable the Board to convert the text into machine-readable form 
through electronic scanning, and will facilitate automated retrieval of 
comments for review. Comments may also be submitted on computer 
diskettes, using either the 3.5'' or 5.25'' size, in any IBM-compatible 
DOS-based format. Comments on computer diskettes must be accompanied by 
a paper version.

IV. Regulatory Flexibility Analysis

    In accordance with section 3(a) of the Regulatory Flexibility Act 
(5 U.S.C. 603), the Board's Office of the Secretary has reviewed the 
proposed amendments to Regulation C. Overall, the amendments are 
expected to reduce the burden on small entities. The proposed 
regulatory revisions implement the 1996 Act which, in part, increases 
the exemption threshold for depository institutions. The 1996 Act also 
creates an alternative means for making branch disclosures available. A 
final regulatory flexibility analysis will be prepared after 
consideration of comments received during the comment period.

V. Paperwork Reduction Act

A. Paperwork Burden

    The proposed revisions to the information collection requirements 
are found in 12 CFR 203.3, 203.5 and Appendix A to Part 203 and 
implement the data collection and reporting requirements established by 
the Home Mortgage Disclosure Act. The respondents are mortgage lenders 
in metropolitan statistical areas. Under the act, each respondent must 
make its loan/application register available to the public for three 
years; and must provide for five years the disclosure statement that 
the FFIEC prepares from the data submitted by the respondent. Local 
public officials use the data to help identify target areas for 
residential redevelopment and rehabilitations. Members of the public 
use the data to help evaluate the extent to which mortgage lenders are 
serving local community and housing needs.
    The amendments that the Board has proposed for public comment would 
decrease the number of respondents and ease compliance with the public 
disclosure requirements of the regulation. Small businesses are 
directly affected by the proposed amendments: many would no longer be 
required to collect, report, or disclose the information.
    Regulation C applies to all types of financial institutions and 
other mortgage-lending institutions that meet the coverage tests. Under 
the Paperwork Reduction Act, however, the Board accounts for the 
paperwork burden associated with Regulation C only for state member 
banks, their subsidiaries, subsidiaries of bank holding companies, and 
other entities regulated by the Federal Reserve. Any estimates of 
paperwork burden for other respondents are provided by the federal 
agency or agencies that supervise them.
    The Board estimates that the amendments' impact on the burden per 
response is negligible. The estimated burden per response varies from 
10 to 10,000 hours, depending on individual circumstances, with 
estimated averages of 202 hours for state member banks and 160 hours 
for mortgage banking subsidiaries.
    It is estimated that of the 565 state member banks that are 
currently covered because they exceed the $10 million asset threshold, 
39 will be exempt as a result of the higher threshold. The 93 mortgage 
banking subsidiaries reporting HMDA data to the Federal Reserve are and 
would remain covered. The total amount of annual burden is estimated to 
decrease from 129,168 hours to 121,368 (a change of approximately 6 
percent) as a consequence of the higher exemption threshold. The Board 
estimates that there would be no capital or start up cost associated 
with these amendments,

[[Page 68171]]

and that there is no annual cost burden beyond the estimated burden 
hours.

B. OMB Control Number

    Under the Paperwork Reduction Act, an agency may not conduct or 
sponsor, and an organization is not required to respond to, a 
collection of information unless it displays a currently valid OMB 
control number. The OMB control number applicable to the HMDA-LAR data 
collection is 7100-0247.

C. Confidentiality

    The Board has previously determined that the HMDA loan/application 
register is required by law (12 U.S.C. 2801-2810; 12 CFR Part 203) and 
completion of the register, submission to the appropriate federal 
supervisory agency, and disclosure to the public on request are 
mandatory. The data, as modified according to Appendix A of the 
regulation (paragraph III.E.), are made publicly available and are not 
considered confidential. Information that might identify individual 
borrowers or applicants is given confidential treatment under exemption 
6 of the Freedom of Information Act (5 U.S.C. 552(b)(6)).

D. Extension of Authority

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3506; 5 CFR 1320 Appendix A.1), the Board has reviewed Regulation C 
under the authority delegated to the Board by the Office of Management 
and Budget. The Board proposes to extend the authority to collect the 
HMDA loan/application register for three years through March 31, 2000.

E. Comments

    In keeping with OMB regulations, comments are invited on: (a) 
Whether the proposed collection of information is necessary for the 
proper performance of the Federal Reserve's functions; including 
whether the information has practical utility; (b) the accuracy of the 
Federal Reserve's estimate of the burden of the proposed information 
collection, including the cost of compliance; (c) ways to enhance the 
quality, utility, and clarity of the information to be collected; and 
(d) ways to minimize the burden of information collection on 
respondents, including through the use of automated collection 
techniques or other forms of information technology. Comments on the 
collection of information may be sent to the Office of Management and 
Budget, Paperwork Reduction Project (7100-0247), Washington, D.C. 
20503, with copies to Mary M. McLaughlin, Chief, Financial Reports 
Section, Division of Research and Statistics, Mail Stop 97, Board of 
Governors of the Federal Reserve System, Washington, D.C. 20551.

List of Subjects in 12 CFR Part 203

    Banks, banking, Consumer protection, Federal Reserve System, 
Mortgages, Reporting and recordkeeping requirements.

Text of Proposed Revisions

    Certain conventions have been used to highlight the proposed 
revisions to the regulation. New language is shown inside bold-faced 
arrows, while language that would be deleted is set off with bold-faced 
brackets.

    For the reasons set forth in the preamble, the Board proposes to 
amend 12 CFR part 203 as follows:

PART 203--HOME MORTGAGE DISCLOSURE (REGULATION C)

    1. The authority citation for part 203 continues to read as 
follows:

    Authority: 12 U.S.C. 2801-2810.

    2. Section 203.3 would be amended by revising paragraph (a)(1)(ii) 
to read as follows:


Sec. 203.3  Exempt institutions.

    (a) Exemption based on location, asset size, or number of home 
purchase loans. (1) * * *
    (ii) The institution's total assets were [$10 million or less] 
at or below the asset threshold established by the Board. 
For 1997 data collection, the asset threshold is $28 million as of 
December 31, 1996. For subsequent years, the Board will adjust the 
threshold based on the year-to-year change in the Consumer Price Index 
for Urban Wage Earners and Clerical Workers, not seasonally adjusted, 
as of the month of December, with rounding to the nearest million. The 
Board will publish the adjusted asset figure in January.
* * * * *
    3. Section 203.5 would be amended as follows:
    a. Under paragraph (b), the first sentence would be designated as 
paragraph (b)(1), sentences two and three of the newly designated 
paragraph (b)(1) would be removed, and a new paragraph (b)(2) would be 
added;
    b. Under paragraph (c), the last sentence would be revised; and
    c. Under paragraph (e), the last two sentences would be revised.
    The revisions and additions would read as follows:


Sec. 203.5  Disclosure and reporting.

* * * * *
    (b) Public disclosure of statement. (1) A 
financial institution shall make its mortgage loan disclosure statement 
(to be prepared by the Federal Financial Institutions Examination 
Council) available to the public at its home office no later than three 
business days after receiving it from the Examination Council. [A 
financial institution shall also make its disclosure statement 
available to the public within ten business days in at least one branch 
office in each additional MSA where the institution has offices. The 
disclosure statement at a branch office need only contain data relating 
to properties in the MSA where the branch office is located.]
    (2) In addition, a financial institution shall either:
    (i) Make its disclosure statement available to the public within 
ten business days of receiving it from the Examination Council in at 
least one branch office in each additional MSA where it has offices 
(the disclosure statement need only contain data relating to properties 
in the MSA where the branch office is located); or
    (ii) Mail or deliver a copy of its disclosure statement to any 
person requesting it, within 15 calendar days of receiving a written 
request (the disclosure statement need only contain data relating to 
properties in the MSA for which the request is made).
    (c) Public disclosure of loan application register. * * * [The 
modified register made available at a branch office need only contain 
data relating to properties in the MSA where the branch office is 
located.] The modified register need only contain data 
relating to the MSA for which the request is made.
* * * * *
    (e) Notice of availability. * * * Upon request, it shall promptly 
provide the location of the institution's offices where the statement 
is available for inspection and the address where a written 
request may be sent for a copy of the data. At its option, 
an institution may include [the locations] this 
information in its notice.
    4. Appendix A to Part 203 would be amended as follows:
    a. Paragraph I.A. would be amended by redesignating the 
introductory text, paragraph 1., and 2. as paragraph 1., paragraph 
1.a., and paragraph 1.b., respectively;
    b. Newly designated paragraph 1.a. would be revised;
    c. A new paragraph 2. would be added; and
    d. The undesignated paragraph EXAMPLE, would be designated as

[[Page 68172]]

paragraph 3. and would be revised. The addition and revisions would 
read as follows:

Appendix A to Part 203--Form and Instructions For Completion of HMDA 
Loan/Application Register

* * * * *

I. Who Must File a Report

    A. Depository Institutions.
    1. * * *
    [1.]a. Had assets of more than [$10 
million] the asset threshold for coverage as published by 
the Board each year in January, and
    [2.]b. * * *
    2. For 1997 data collection, the asset threshold is 
$28 million in total assets as of December 31, 1996.
    3. Example. If on December 31 you had a 
home or branch office in an MSA and your assets exceeded [$10 
million] the asset threshold, you must 
complete a register that lists the home-purchase and home-
improvement loans that you originate or purchase (and also lists 
applications that did not result in an origination) beginning 
January 1.
* * * * *
    5. Paragraph III. of Appendix A to Part 203 would be amended as 
follows:
    a. Under paragraph D. the fourth sentence would be removed and a 
new sentence and new paragraphs 1. and 2. would be added at the end;
    b. Under paragraph F. the first paragraph following the heading 
would be designated as paragraph 1. and revised, and the second 
paragraph would be designated as paragraph 2.; and
    c. Under paragraph G. the first paragraph following the heading 
would be designated as paragraph 1. and a new heading would be added to 
the newly designated paragraph 1., and paragraph 2. would be added 
after the Home Mortgage Disclosure Act Notice.
    The revisions and additions would read as follows:
* * * * *

III. Submission of HMDA-LAR and Public Release of Data

* * * * *
    D. Availability of disclosure statement. * * * [You also must 
make the disclosure statement available, within ten business days 
after receiving it from the FFIEC, in at least one branch office in 
each additional MSA where you have physical offices.] For these 
purposes a business day is any calendar day other than a Saturday, 
Sunday, or legal public holiday. You also must either:
    1. Make your disclosure statement available to the public, 
within ten business days of receiving it from the FFIEC, in at least 
one branch office in each additional MSA where you have offices (the 
disclosure statement need only contain data relating to properties 
in the MSA where the branch office is located); or
    2. Mail or deliver a copy of your disclosure statement to any 
person requesting it, within 15 calendar days of receiving a written 
request (the disclosure statement need only contain data relating to 
the MSA for which the request is made).
* * * * *
    F. Location and format of disclosed data. 
1. A financial institution must make a 
complete copy of its disclosure statement and modified register 
available to the public at its home office. Institutions may make 
these data available in [hard copy or] paper form or, if 
the person requesting the data agrees, in automated form 
(such as by floppy disk or computer tape). [If you have physical 
branch offices in other MSAs, you must make available, in at least 
one branch office in each of those MSAs, either a complete copy of 
the disclosure statement or the portion of it that relates to 
properties in that MSA. Similarly, a modified register at a branch 
office need only reflect data concerning properties within the MSA 
where the branch is located.] A modified register need 
only reflect data relating to the MSA for which the request is 
made.
    2. * * *
    G. Posters.
    1. Suggested language.  * * *
    2. Optional information. At your option, you may 
include the location where the disclosed data are available for 
inspection and the address to be used for making a written 
request.
* * * * *
    6. Supplement I to Part 203, under Section 203.3--Exempt 
Institutions, under 3(a) Exemption based on location, asset size, or 
number of home-purchase loans, the second sentence of Paragraph 1. 
General would be revised to read as follows:

Supplement I to Part 203--Staff Commentary

* * * * *

Section 203.3--Exempt Institutions

    3(a) Exemption based on location, asset size, or number of home-
purchase loans.
    1. General. * * * For example, a bank whose assets [drop to $10 
million or less] are at or below the threshold 
on December 31 of a given year reports data for that full calendar 
year, in which it was covered, but does not report data for the 
succeeding calendar year. * * *
* * * * *
    By order of the Board of Governors of the Federal Reserve 
System, December 16, 1996.
William W. Wiles,
Secretary of the Board.
[FR Doc. 96-32305 Filed 12-26-96; 8:45 am]
BILLING CODE 6210-01-P