[Federal Register Volume 63, Number 37 (Wednesday, February 25, 1998)]
[Proposed Rules]
[Pages 9453-9459]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-4609]


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FEDERAL RESERVE SYSTEM

12 CFR Part 203

[Regulation C; Docket No. R-0999]


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 public comment proposed amendments 
to Regulation C (Home Mortgage Disclosure). The proposed amendments: 
modify the Loan Application Register to prepare for ``year 2000'' data 
systems conversion; delete the requirement to enter the reporting 
institution's parent company on the Transmittal Sheet; and make certain 
other technical changes to the regulation and reporting forms.

DATES: Comments must be received on or before April 27, 1998.

ADDRESSES: Comments should refer to Docket No. R-0999, 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: Pamela C. Blumenthal, Staff Attorney, 
or John C. Wood, Senior Attorney, Division of Consumer and Community 
Affairs, Board of Governors of the Federal Reserve System, Washington, 
DC 20551, at (202) 452-2412 or (202) 452-3667; for users of 
Telecommunications Device for the Deaf (TDD) only, contact Diane 
Jenkins at (202) 452-3544.

SUPPLEMENTARY INFORMATION:

I. Background

    The Board's Regulation C (12 CFR Part 203) implements the Home 
Mortgage Disclosure Act (HMDA) (12 U.S.C. 2801 et seq.). The regulation 
requires most mortgage lenders located in metropolitan statistical 
areas (MSAs) to report annually to federal supervisory agencies, and 
disclose to the public, information about their home mortgage and home 
improvement lending activity.

II. Discussion of Amendments

A. Year 2000 Changes

    Among items reported on the HMDA Loan Application Register (HMDA-
LAR), institutions are required to enter the date of application and 
the date action was taken. Currently, these dates are to be entered 
using two digits for the year, in the form MM/DD/YY. As part of the 
interagency Year 2000--Century Date Change program, the Board, on 
behalf of the agencies responsible for HMDA compliance, has begun 
modifying software to avoid the confusion of a date in the 21st century 
with a date in the 20th century--by adding two digits to represent the 
century. For example, January 15, 2002, would be reflected as 01/15/
2002 rather than 01/15/02. Accordingly, the Board proposes to revise 
the HMDA-LAR form and the instructions (Appendix A to Regulation C) to 
require the date of application and date of action taken to be entered 
in the form MM/DD/CCYY.
    The paper version of the HMDA-LAR model form in Appendix A shows 
sample transactions, the first an originated loan and the second a 
denied application. In both examples, the ``date application received'' 
and ``date action taken'' fields contain dates from 1992. Similarly, 
the instructions relating to these two fields contain references to 
1992 dates. To update these examples and instructions, as well as to 
remind reporting institutions of the change to a four-character year in 
the date fields, the proposed amendments replace ``92'' with ``1999'' 
in the examples and instructions.

B. Deletion of Parent Company Information

    The Transmittal Sheet (TS) that accompanies the HMDA-LAR currently 
calls for the name and address of the parent company, if any, of the 
institution submitting HMDA data. The Board proposes to amend the TS by 
deleting the requirement to enter the name and address of the 
submitting institution's parent company, given that in most cases this 
information is available from the bank structure information already 
collected by the agencies.

C. Reassignment of Functions of Farmers Home Administration

    One of the items of information reported on the HMDA-LAR about a 
loan or application is the type of loan. Similarly, for loans sold, the 
lender reports the type of purchaser of the loan. The code sheet lists 
the Farmers Home Administration (FmHA) as one of the categories (as an 
insurer or purchaser of loans).
    Reorganization within the Department of Agriculture has resulted in 
the functions of the FmHA being reassigned to two new units, the Farm 
Service Agency and the Rural Housing Service. For ``type of loan,'' the 
Board proposes to replace the references to the Farmers Home 
Administration or FmHA (in the code sheet for the HMDA-LAR form and in 
the instructions regarding type of loan) with a reference to ``Farm 
Service Agency or Rural Housing Service'' (or ``FSA/RHS''). With regard 
to ``type of

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purchaser,'' the successor agencies to FmHA do not purchase loans. A 
secondary market entity that does purchase loans, the Federal 
Agricultural Mortgage Corporation, is not currently included in the 
list. Accordingly, the Board proposes to revise the references to FmHA, 
as a purchaser of loans, to refer instead to the Federal Agricultural 
Mortgage Corporation or FAMC.
    In the collection and reporting of 1998 data, institutions should 
use the existing codes for FmHA to refer to loans guaranteed by FSA or 
RHS, or to loans that have been sold to FAMC, as applicable.

D. Paperwork Reduction Act Requirements

    Regulations issued by the Office of Management and Budget (OMB) to 
implement the Paperwork Reduction Act (5 CFR Part 1320) contemplate 
that regulations imposing data collection requirements include control 
numbers assigned by OMB. Currently, Regulation C, the instructions for 
the HMDA-LAR and TS, and the TS form itself contain an OMB control 
number (7100-0247) assigned to the Federal Reserve in connection with 
HMDA reporting requirements. The Board is making a technical amendment 
to the regulation, the instructions, and the TS form--adding the 
control numbers assigned to the Office of the Comptroller of the 
Currency (1557-0159), the Federal Deposit Insurance Corporation (3064-
0046), and the Office of Thrift Supervision (1550-0021). The National 
Credit Union Administration and the Department of Housing and Urban 
Development are in the process of obtaining OMB control numbers; these 
numbers will be added at a later time. The amendment also includes a 
number of other minor technical changes in the instructions and the TS 
form.

E. Clarification Regarding Coverage of Nondepository Lending 
Institutions

    The Board proposes a technical amendment to clarify the coverage of 
nondepository institutions. The definition of ``financial institution'' 
under Regulation C includes nondepository lending institutions that, in 
the preceding calendar year, originated home purchase loans or 
refinancings of home purchase loans in an amount of 10 percent or more 
of the institution's total loan origination volume, measured in 
dollars. The definition is stated in Sec. 203.2(e)(2) and in paragraph 
I.D. of Appendix A to the regulation. Even if a nondepository 
institution meets the definition of ``financial institution,'' however, 
it is not covered by Regulation C unless the institution either had 
assets over $10 million or originated 100 or more home purchase loans, 
including refinancings of home purchase loans, during the preceding 
calendar year. The instructions (see paragraph I.C. of Appendix A) 
refer expressly to refinancings, but Sec. 203.3(a)(2)(ii) does not. 
Some institutions have suggested to the Board that including a 
reference to refinancings in Sec. 203.3 would be useful.
    The Board's notice at the time the 100-loan test was added to 
Regulation C made clear that refinancings of home purchase loans are 
included in calculating whether the coverage threshold was reached. 
(See 57 FR 56963, December 2, 1992.) Accordingly, the Board proposes 
adding a reference to refinancings of home purchase loans to 
Sec. 203.3(a)(2)(ii), to conform to paragraph I.C. of Appendix A.

F. Adjustment in Exemption Threshold for Depository Institutions

    The Board is required to adjust the exemption threshold for 
depository institutions annually based on the annual percentage change 
in the Consumer Price Index. In December 1997, the Board amended the 
Regulation C staff commentary, adjusting the exemption threshold for 
depository institutions for 1998 data collection to $29 million (62 FR 
66259, December 18, 1997). (The figure for 1997 data collection was $28 
million.) Thus, depository institutions with assets of $29 million or 
less as of December 31, 1997, are exempt from data collection in 1998. 
The Board is amending the regulation and the instructions for the HMDA-
LAR to conform.

G. Effective Date of Amendments

    The Board proposes to make the final amendments effective for data 
collected in calendar year 1998, which will be submitted to supervisory 
agencies by March 1, 1999. The personal computer data entry software 
available from the supervisory agencies for 1998 data collection 
already reflects the amendments relating to four-digit year and the 
deletion of parent company information. The Board believes that private 
sector software vendors (and institutions that have developed their own 
software) have modified their HMDA data entry software in a similar 
manner, or are in the process of doing so. Accordingly, the Board 
believes that making these amendments effective for 1998 data will not 
be burdensome to reporting institutions. However, the Board requests 
comment from any institutions that may have a problem in complying.
    Other amendments in this proposal make changes to Regulation C that 
are technical or that merely clarify existing rules; the Board does not 
believe any of these changes would impose compliance burdens on 
reporting institutions.
    These proposed amendments do not affect the reporting of calendar 
year 1997 data, which are due no later than March 1, 1998; the 
requirements for data collected in 1997 remain unchanged.

III. Regulatory Flexibility Analysis

    In accordance with section 3(a) of the Regulatory Flexibility Act 
(5 U.S.C. 604), the Board's Office of the Secretary has reviewed the 
proposed amendments to Regulation C. Overall, the amendments are not 
expected to have a significant impact on small entities. A final 
regulatory flexibility analysis will be conducted after consideration 
of comments received during the public comment period.

IV. Paperwork Reduction Act

A. Paperwork Burden

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3506), the Board has reviewed the proposed rule under authority 
delegated to the Board by the Office of Management and Budget. 5 CFR 
1320 Appendix A.1.
    The proposed revisions to the information collection requirements 
are found in 12 CFR 203.1, 203.3, and Appendix A to Part 203 and 
implement the data collection and reporting requirements established by 
the Home Mortgage Disclosure Act. The proposed amendments would make 
several technical changes in the reporting requirements of Regulation 
C; these changes are expected to have no impact on reporting burden. 
The proposed amendments would also clarify existing requirements of the 
regulation; these amendments would have no impact on reporting burden.
    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 effect of the amendments on the burden 
per response is negligible. The estimated burden per response varies 
from 10 to

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10,000 hours, depending on individual circumstances, with estimated 
averages of 202 hours for state member banks and 160 hours for mortgage 
banking subsidiaries. The Board expects to receive HMDA-LARs covering 
1997 data from 515 state member banks and 106 mortgage banking 
subsidiaries. Therefore, the total hour burden for institutions the 
Federal Reserve supervises is 120,990. Since asset data for December 
31, 1997 is not yet available, the Board cannot yet estimate the number 
of respondents who will submit 1998 data or the total annual burden for 
1998.

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 numbers applicable to the HMDA-LAR data 
collection are as follows: Office of the Comptroller of the Currency, 
1557-0159 (approval expires September 30, 1998); Federal Deposit 
Insurance Corporation, 3064-0046 (approval expires July 31, 2000); 
Office of Thrift Supervision, 1550-0021 (approval expires December 31, 
1999); and Federal Reserve System, 7100-0247 (approval expires May 31, 
2000). OMB control numbers and expiration dates for the National Credit 
Union Administration and the Department of Housing and Urban 
Development are pending.

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 
changes to Regulation C. New language is shown inside bold-faced 
arrows, while language that would be removed is set off with brackets.
    Pursuant to the authority granted in section 305(a) of the Home 
Mortgage Disclosure Act, 12 U.S.C. 2804(a), and for the reasons set 
forth in the preamble, the Board proposes to amend 12 CFR part 203 as 
set forth below:

PART 203--HOME MORTGAGE DISCLOSURE (REGULATION C)

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

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

    2. Sec. 203.1 would be amended by revising the last sentence of 
paragraph (a) to read as follows:


Sec. 203.1  Authority, purpose, and scope.

    (a) Authority. * * * The information-collection requirements have 
been approved by the U.S. Office of Management and Budget under 44 
U.S.C. 3501 et seq. and have been assigned OMB [No.] Numbers 
1557-0159, 3064-0046, 1550-0021, and 7100-0247 
for institutions reporting data to the Office of the Comptroller of the 
Currency, the Federal Deposit Insurance Corporation, the Office of 
Thrift Supervision, and the Federal Reserve System, respectively; 
numbers for the National Credit Union Administration and the Department 
of Housing and Urban Development are pending.
    3. Sec. 203.3 would be amended as follows:
    a. Paragraphs (a)(1) introductory text and (a)(2) introductory text 
are republished;
    b. Paragraph (a)(1)(ii) would be revised; and
    c. Paragraph (a)(2)(ii) would be revised.
    The proposed revisions read as follows:


Sec. 203.3  Exempt institutions.

    (a) Exemption based on location, asset size, or number of home 
purchase loans. (1) A bank, savings association, or credit union is 
exempt from the requirements of this regulation for a given calendar 
year if on the preceding December 31:
    (i) * * *
    (ii) The institution's total assets were at or below the asset 
threshold established by the Board. For data collection in 
[1997]1998, the asset threshold is 
[$28]$29 million as of December 31, 
[1996]1997. * * *
    (2) A for-profit mortgage lending institution (other than a bank, 
savings association, or credit union) is exempt from the requirements 
of this regulation for a given calendar year if:
    (i) * * *
    (ii) The institution's total assets combined with those of any 
parent corporation were $10 million or less on the preceding December 
31, and the institution originated fewer than 100 home purchase loans 
(including refinancings of home purchase loans) 
in the preceding calendar year.
    4. In appendix A to part 203 under the heading PAPERWORK REDUCTION 
ACT NOTICE, the undesignated paragraph would be revised to read as 
follows:

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

* * * * *

Paperwork Reduction Act Notice

    [Public reporting burden for collection of this information is 
estimated to vary from 10 to 10,000 hours per response, with an 
average of 202 hours per response for state member banks and 160 
hours per response for mortgage banking subsidiaries, including time 
to gather and maintain the data needed and to review instructions 
and complete the information collection.] This report is required by 
law (12 USC 2801-2810 and 12 CFR 203). 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] 
Numbers for this information collection [is] 
are 1557-0159, 3064-0046, 1550-0021, and 7100-
0247  for institutions reporting data to the Office of 
the Comptroller of the Currency, the Federal Deposit Insurance 
Corporation, the Office of Thrift Supervision, and the Federal 
Reserve System, respectively; numbers for the National Credit Union 
Administration and the Department of Housing and Urban Development 
are pending. Send comments regarding this burden estimate 
or any other aspect of this collection of information, including 
suggestions for reducing the burden, to [Secretary, Board of 
Governors of the Federal Reserve System, Washington, D.C. 20551;] 
the respective agencies and to the Office of 
Information and Regulatory Affairs, Office of Management and Budget, 
Washington, D.C. 20503.

Appendix A to Part 203--[Amended]

    5. Appendix A to Part 203 would be amended as follows:
    a. Paragraph I.A.2. would be revised;
    b. The first sentence of Paragraph V.A.2. and paragraph V.A.3. 
would be revised;
    c. Paragraph V.B.3. introductory text would be revised; and
    d. Paragraph V.E.1. introductory text is republished and paragraph 
V.E.1.4. would be revised.
    The proposed revisions read as follows:

I. Who Must File a Report

A. Depository institutions

    1. * * *
    2. For data collection in [1997]1998, the 
asset threshold is [$28]$29 million in total 
assets as of December 31, [1996]1997.
* * * * *

V. Instructions for Completion of Loan/Application Register

A. Application or Loan Information

    1. * * *
    2. Date application received. Enter the date the loan 
application was received by your institution by month, day, and 
year, using numerals in the form MM/DD/CCYY 
(for example, 01/15/[92]1999). * * *
    3. Type. Indicate the type of loan or application by entering the 
applicable code from the following:

1--Conventional (any loan other than FHA, VA [or FmHA] , 
FSA, or RHS loans)

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2--FHA-insured (Federal Housing Administration)
3--VA-guaranteed (Veterans Administration)
4--[FmHA-insured (Farmers Home Administration)] FSA/RHS-
guaranteed (Farm Service Agency or Rural Housing Service)
* * * * *

B. Action Taken

* * * * *
    3. Date of action. Enter the date by month, day, and year, using 
numerals in the form MM/DD/CCYY (for example, 
02/22/[92]1999).
* * * * *

E. Type of Purchaser

    1. Enter the applicable code to indicate whether a loan that 
your institution originated or purchased was then sold to a 
secondary market entity within the same calendar year:
* * * * *
4--[FmHA (Farmers Home Administration)]FAMC (Federal Agricultural 
Mortgage Corporation)
* * * * *
    6. In Appendix A, the LOAN/APPLICATION REGISTER Transmittal 
Sheet would be revised to read as follows:

BILLING CODE 6210-01-P
      

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[GRAPHIC] [TIFF OMITTED] TP25FE98.006


    7. In Appendix A, the LOAN/APPLICATION REGISTER would be revised 
to read as follows:

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[GRAPHIC] [TIFF OMITTED] TP25FE98.007


BILLING CODE 6210-01-C

[[Page 9459]]

    8. In Appendix A, the LOAN/APPLICATION REGISTER CODE SHEET would 
be revised to read as follows:

Loan/Application Register Code Sheet

    Use the following codes to complete the Loan/Application Register. 
The instructions to the HMDA-LAR explain the proper use of each code.

Application or Loan Information

    Type:

1--Conventional (any loan other than FHA,VA or FmHA loans)
2--FHA-insured (Federal Housing Administration)
3--VA-guaranteed (Veterans Administration)
4--[FmHA-insured (Farmers Home Administration)] FSA/RHS-
guaranteed (Farm Service Agency or Rural Housing Service)

    Purpose:

1--Home purchase (one-to-four family)
2--Home improvement (one-to-four family)
3--Refinancing (home purchase or home improvement, one-to-four 
family)
4--Multifamily dwelling (home purchase, home improvement, and 
refinancings)
    Owner-Occupancy:

1--Owner-occupied as a principal dwelling
2--Not owner-occupied
3--Not applicable

    Action Taken:

1--Loan originated
2--Application approved but not accepted
3--Application denied by financial institution
4--Application withdrawn by applicant
5--File closed for incompleteness
6--Loan purchased by your institution

Applicant Information

    Race or National Origin:

1--American Indian or Alaskan Native
2--Asian or Pacific Islander
3--Black
4--Hispanic
5--White
6--Other
7--Information not provided by applicant in mail or telephone 
application
8--Not applicable

    Sex:

1--Male
2--Female
3--Information not provided by applicant in mail or telephone 
application
4--Not applicable

Type of Purchaser

0--Loan was not originated or was not sold in calendar year covered 
by register
1--FNMA (Federal National Mortgage Association)
2--GNMA (Government National Mortgage Association)
3--FHLMC (Federal Home Loan Mortgage Corporation)
4--[FmHA (Farmers Home Administration)] FAMC (Federal 
Agricultural Mortgage Corporation)
5--Commercial bank
6--Savings bank or savings association
7--Life insurance company
8--Affiliate institution
9--Other type of purchaser

Reasons for Denial (Optional)

1--Debt-to-income ratio
2--Employment history
3--Credit history
4--Collateral
5--Insufficient cash (downpayment, closing costs)
6--Unverifiable information
7--Credit application incomplete
8--Mortgage insurance denied
9--Other

    By order of the Board of Governors of the Federal Reserve 
System, February 18, 1998.
William W. Wiles,
Secretary of the Board.
[FR Doc. 98-4609 Filed 2-24-98; 8:45 am]
BILLING CODE 6210-01-P