[Federal Register Volume 68, Number 248 (Monday, December 29, 2003)]
[Rules and Regulations]
[Pages 74829-74833]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-31694]



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  Federal Register / Vol. 68, No. 248 / Monday, December 29, 2003 / 
Rules and Regulations  

[[Page 74829]]



FEDERAL RESERVE SYSTEM

12 CFR Part 203

[Regulation C; Docket No. R-1178]


Home Mortgage Disclosure

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Final rule; staff commentary.

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

SUMMARY: The Board is publishing a final rule amending Regulation C 
(Home Mortgage Disclosure) and the staff commentary that interprets the 
requirements of Regulation C. The regulation and staff commentary are 
amended to conform them to changes in the Standards for Defining 
Metropolitan and Micropolitan Statistical Areas published by the U.S. 
Office of Management and Budget (OMB) in December 2000. The staff 
commentary also is amended to increase the asset-size exemption 
threshold for depository institutions based on the annual percentage 
change in the Consumer Price Index for Urban Wage Earners and Clerical 
Workers. The adjustment from $32 million to $33 million reflects the 
increase of that index by 2.30 percent during the twelve-month period 
ending in November 2003. Thus, depository institutions with assets of 
$33 million or less as of December 31, 2003, are exempt from data 
collection in 2004.

DATES: Effective January 1, 2004.

FOR FURTHER INFORMATION CONTACT: John C. Wood or Kathleen C. Ryan, 
Counsels, or Dan S. Sokolov, Senior Attorney, Division of Consumer and 
Community Affairs, at (202) 452-3667; for users of Telecommunications 
Device for the Deaf (TDD) only, contact (202) 263-4869.

SUPPLEMENTARY INFORMATION: The Home Mortgage Disclosure Act (HMDA; 12 
U.S.C. 2801 et seq.) requires most mortgage lenders located in 
metropolitan areas to collect data about their housing-related lending 
activity. Annually, lenders must report that data to their federal 
supervisory agencies and make the data available to the public. The 
Board's Regulation C (12 CFR part 203) implements HMDA.

Metropolitan Statistical Areas

    The Board is making revisions to Regulation C to conform it to 
OMB's Standards for Defining Metropolitan and Micropolitan Areas issued 
in December 2000 under the Metropolitan Area program (the 2000 
Standards). 65 FR 82228 (December 27, 2000). The purpose of the 
Metropolitan Area program is to provide nationally consistent 
definitions for the federal government to use in collecting, 
tabulating, and publishing statistics for a set of geographic areas.
    Regulation C has incorporated OMB's definitions of a Metropolitan 
Statistical Area (MSA) and a Primary Metropolitan Statistical Area 
(PMSA) for determining coverage under HMDA, reporting property 
location, providing disclosures and reports of lending activity, and 
posting notices about the availability of HMDA data. OMB's 1990 
standards defined an MSA as an urbanized area with at least 50,000 
population. See, e.g., 63 FR 70526, 70531 (December 21, 1998). Large 
MSAs of 1 million or more population were called Consolidated 
Metropolitan Statistical Areas (CMSAs); CMSAs were subdivided into two 
or more PMSAs (generally a county or group of counties with at least 
100,000 population). Regulation C provided that the relevant geographic 
unit was the PMSA; if the lender or the property was located in an MSA 
that was not large enough to be a CMSA, then the MSA was the applicable 
geographic unit. CMSAs were not used under HMDA.
    The 2000 standards supersede OMB's 1990 standards, necessitating a 
change to Regulation C. Although the 2000 standards retain the concept 
of an MSA as an urbanized area of 50,000 or more population, the 
standards no longer designate areas as CMSAs and PMSAs. Instead, the 
2000 standards provide that a large MSA (with a population of at least 
2.5 million) is divided into ``Metropolitan Divisions.'' Each 
Metropolitan Division consists of one or more counties that represent 
an employment center within an MSA.
    In June 2003, OMB released the list of MSAs and Metropolitan 
Divisions, Micropolitan Statistical Areas, and Combined Statistical 
Areas, based on the application of the 2000 standards to data from the 
2000 Census. Each MSA and Metropolitan Division is assigned a 5-digit 
number (previously, all MSAs and PMSAs were assigned 4-digit numbers). 
OMB Bulletin No. 03-04, June 6, 2003. In July 2003, the FFIEC 
instructed lenders to use the newly released MSAs and Metropolitan 
Divisions for collecting and reporting HMDA data beginning January 1, 
2004. See http://www.ffiec.gov/hmda/pdf/spec2004.pdf. Regulation C 
refers to the MSA and the PMSA for determining coverage under HMDA, 
reporting property location, providing disclosures and reports of 
lending activity, and posting notices about the availability of HMDA 
data. The MSA, and in the case of large MSAs, the Metropolitan 
Division, are the geographic units most analogous to MSAs and PMSAs 
under the 1990 standards. Thus, their use minimizes any disruption in 
HMDA data caused by the changes to OMB standards.
    The revisions to Regulation C formalize the FFIEC's July 2003 
guidance. The regulation, Appendix A, and the staff commentary are 
amended to use the terms ``MSA'' and ``Metropolitan Division.'' 
Additionally, references to obsolete Census materials have been deleted 
from Appendix A.

Asset Threshold

    Provisions of the Economic Growth and Regulatory Paperwork 
Reduction Act of 1996 (codified at 12 U.S.C. 2808(b)) amended HMDA to 
expand the exemption for small depository institutions. Prior to 1997, 
HMDA exempted depository institutions with assets totaling $10 million 
or less, as of the preceding year-end. The statutory amendment 
increased the asset-size exemption threshold by requiring a one-time 
adjustment of the $10 million figure based on the percentage by which 
the Consumer Price Index for Urban Wage Earners and Clerical Workers 
(CPIW) for 1996 exceeded the CPIW for 1975, and provided for annual 
adjustments thereafter based on the annual percentage increase in the 
CPIW. The one-time adjustment increased the exemption threshold to $28 
million for 1997 data collection.
    Section 203.2(e)(1)(i) of Regulation C provides that the Board will 
adjust the threshold based on the year-to-year change in the average of 
the CPIW, not

[[Page 74830]]

seasonally adjusted, for each twelve-month period ending in November, 
rounded to the nearest million. Pursuant to this section, the Board 
raised the threshold to $29 million for 1998 data collection, raised it 
to $30 million for 1999 data collection, and kept it at that level for 
data collection in 2000. The Board raised the threshold to $31 million 
for data collection in 2001 and to $32 million for data collection in 
2002; the Board kept the threshold at $32 million in 2003.
    During the period ending November 2003, the CPIW increased by 2.30 
percent. As a result, the exemption threshold is raised to $33 million. 
Thus, depository institutions with assets of $33 million or less as of 
December 31, 2003, are exempt from data collection in 2004. An 
institution's exemption from collecting data in 2004 does not affect 
its responsibility to report the data it was required to collect in 
2003.

Final Rule

    Under the Administrative Procedure Act, notice and opportunity for 
public comment are not required if the Board finds that notice and 
public comment are unnecessary. 5 U.S.C. 553(b)(3)(B). The amendments 
in this notice are technical. The Board is amending various provisions 
of the regulation and commentary to conform them to the current OMB 
standards that are analogous to standards used previously under HMDA. 
Comment 2(e)-2 to section 203.2 of the regulation is amended to 
implement the increase in the exemption threshold. This amendment 
merely applies the formula established by Regulation C for determining 
adjustments to the exemption threshold. For these reasons, the Board 
has determined that publishing a notice of proposed rulemaking and 
providing opportunity for public comment are unnecessary. Therefore, 
the amendments are adopted in final form.

List of Subjects in 12 CFR Part 203

    Banks, Banking, Federal Reserve System, Mortgages, Reporting and 
recordkeeping requirements.

0
For the reasons set forth in the preamble, the Board amends 12 CFR part 
203 as follows:

PART 203--HOME MORTGAGE DISCLOSURE (REGULATION C)

0
1. The authority citation for part 203 continues to read as follows:

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


0
2. Section 203.2 is amended by revising paragraphs (c)(2), (e)(1)(ii), 
(e)(2)(ii), and (j).


Sec.  203.2  Definitions.

* * * * *
    (c) * * *
* * * * *
    (2) Any office of a for-profit mortgage-lending institution (other 
than a bank, savings association, or credit union) that takes 
applications from the public for home purchase loans, home improvement 
loans, or refinancings. A for-profit mortgage-lending institution is 
also deemed to have a branch office in an MSA or in a Metropolitan 
Division, if, in the preceding calendar year, it received applications 
for, originated, or purchased five or more home purchase loans, home 
improvement loans, or refinancings related to property located in that 
MSA or Metropolitan Division, respectively.
* * * * *
    (e) * * *
    (1) * * *
    (ii) On the preceding December 31, had a home or branch office in 
an MSA;
* * * * *
    (2) a for-profit mortgage-lending institution (other than a bank, 
savings association, or credit union) that:
* * * * *
    (ii) On the preceding December 31, had a home or branch office in 
an MSA; and
* * * * *
    (j)(1) Metropolitan Statistical Area or MSA means a metropolitan 
statistical area as defined by the U.S. Office of Management and 
Budget.
    (2) Metropolitan Division or MD means a metropolitan division of an 
MSA, as defined by the U.S. Office of Management and Budget.
* * * * *

0
3. Section 203.4 is amended by revising paragraphs (a)(9) and (e).


Sec.  203.4  Compilation of loan data.

    (a) * * *
    (9) The location of the property to which the loan or application 
relates, by MSA or by Metropolitan Division, by state, by county, and 
by census tract, if the institution has a home or branch office in that 
MSA or Metropolitan Division.
* * * * *
    (e) Data reporting for banks and savings associations that are 
required to report data on small business, small farm, and community 
development lending under CRA. Banks and savings associations that are 
required to report data on small business, small farm, and community 
development lending under regulations that implement the Community 
Reinvestment Act of 1977 (12 U.S.C. 2901 et seq.) shall also collect 
the location of property located outside MSAs and Metropolitan 
Divisions in which the institution has a home or branch office, or 
outside any MSA.

0
4. Section 203.5 is amended by revising paragraphs (b)(3)(i) and (ii), 
(c), (e), and (f):


Sec.  203.5  Disclosure and reporting.

* * * * *
    (b) * * *
    (3) In addition, an institution shall either:
    (i) Make its disclosure statement available to the public, within 
ten business days of receiving it, in at least one branch office in 
each other MSA and each other Metropolitan Division where the 
institution has offices (the disclosure statement need only contain 
data relating to the MSA or Metropolitan Division where the branch is 
located); or
    (ii) Post the address for sending written requests in the lobby of 
each branch office in other MSAs and Metropolitan Divisions where the 
institution has offices; and mail or deliver a copy of the disclosure 
statement within fifteen calendar days of receiving a written request 
(the disclosure statement need only contain data relating to the MSA or 
Metropolitan Division for which the request is made). Including the 
address in the general notice required under paragraph (e) of this 
section satisfies this requirement.
* * * * *
    (c) Public disclosure of modified loan/application register. A 
financial institution shall make its loan/application register 
available to the public after removing the following information 
regarding each entry: the application or loan number, the date that the 
application was received, and the date action was taken. An institution 
shall make its modified register available following the calendar year 
for which the data are compiled, by March 31 for a request received on 
or before March 1, and within thirty calendar days for a request 
received after March 1. The modified register need only contain data 
relating to the MSA or Metropolitan Division for which the request is 
made.
* * * * *
    (e) Notice of availability. A financial institution shall post a 
general notice about the availability of its HMDA data in the lobby of 
its home office and of each branch office located in an MSA and 
Metropolitan Division. An institution shall provide promptly upon 
request the location of the institution's offices where the statement 
is available

[[Page 74831]]

for inspection and copying, or it may include the location in the lobby 
notice.
    (f) Loan aggregation and central data depositories. Using the loan 
data submitted by financial institutions, the FFIEC will produce 
reports for individual institutions and reports of aggregate data for 
each MSA and Metropolitan Divison, showing lending patterns by property 
location, age of housing stock, and income level, sex, ethnicity, and 
race. These reports will be available to the public at central data 
depositories located in each MSA and Metropolitan Division. A listing 
of central data depositories can be obtained from the Federal Financial 
Institutions Examination Council, Washington, DC 20006.

0
5. Appendix A to Part 203 is amended by:
0
a. Revising Paragraph I.A.6.c. introductory text.
0
b. Revising Paragraph I.C
0
c. Revising Paragraphs I.C.1., 3., 4., 5., and 6.
0
d. Revising the Loan/Application Register.

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

    I. * * *
    A. * * *
    6. * * *
* * * * *
Code 3--Not applicable
* * * * *
    c. Use Code 3 if the property to which the loan relates is a 
multifamily dwelling; is not located in an MSA; or is located in an 
MSA or an MD in which your institution has neither a home nor a 
branch office. Alternatively, at your institution's option, you may 
report the actual occupancy status, using Code 1 or 2 as applicable.
* * * * *
    C. Property Location. Except as otherwise provided, enter in 
these columns the applicable codes for the MSA, or the MD if the MSA 
is divided into MDs, state, county, and census tract to indicate the 
location of the property to which a loan relates.
    1. MSA or Metropolitan Division. For each loan or loan 
application, enter the MSA, or the MD number if the MSA is divided 
into MDs. MSA and MD boundaries are defined by OMB; use the 
boundaries that were in effect on January 1 of the calendar year for 
which you are reporting. A listing of MSAs and MDs is available from 
your supervisory agency or the FFIEC.
* * * * *
    3. Census Tract. Indicate the census tract where the property is 
located. Notwithstanding paragraph 6, if the property is located in 
a county with a population of 30,000 or less in the 2000 Census, 
enter ``NA'' (even if the population has increased above 30,000 
since 2000), or enter the census tract number. County population 
data can be obtained from the U.S. Census Bureau.
    4. Census Tract Number. For the census tract number, consult the 
resources provided by the U.S. Census Bureau or the FFIEC.
    5. Property Located Outside MSAs or Metropolitan Divisions. For 
loans on property located outside the MSAs and MDs in which an 
institution has a home or branch office, or for property located 
outside of any MSA or MD, the institution may choose one of the 
following two options. Under option one, the institution may enter 
the MSA or MD, state and county codes and the census tract number; 
and if the property is not located in any MSA or MD, it may enter 
``NA'' in the MSA or MD column. (Codes exist for all states and 
counties and numbers exist for all census tracts.) Under this first 
option, the codes and census tract number must accurately identify 
the property location. Under the second option, which is not 
available if paragraph 6 applies, an institution may enter ``NA'' in 
all four columns, whether or not the codes or numbers exist for the 
property location.
    6. Data Reporting for Banks and Savings Associations Required to 
Report Data on Small Business, Small Farm, and Community Development 
Lending Under the CRA Regulations. If your institution is a bank or 
savings association that is required to report data under the 
regulations that implement the CRA, you must enter the property 
location on your HMDA/LAR even if the property is outside the MSAs 
or MDs in which you have a home or branch office, or is not located 
in any MSA.
* * * * *
BILLING CODE 6210-01-P

[[Page 74832]]

[GRAPHIC] [TIFF OMITTED] TR29DE03.000


[[Page 74833]]


BILLING CODE 6210-01-C
    3. In Supplement I to part 203:
    a. Under section 203.2 Definitions, 2(c) Branch Office, 
paragraphs 2. and 3. are revised.
    b. Under section 203.2 Definitions, 2(e) Financial Institution, 
paragraph 2. is revised.
    c. Under section 203.2 Definitions, a new paragraph title 2(j) 
Metropolitan Statistical Areas and Metropolitan Divisions is added, 
and a new paragraph 1. is added.
    d. Under section 203.4 Compilation of Loan Data, 4(a)(9) 
Property Location, paragraph 3. is revised.
    e. Under section 203.5 Disclosure and Reporting, 5(a) Reporting 
to Agency, paragraphs 4. and 8. are revised.

Supplement I to Part 203--Staff Commentary

Section 203.2 Definitions

* * * * *
    2(c) Branch office.
* * * * *
    2. Depository institution. A branch of a depository institution 
does not include a loan-production office, the office of an 
affiliate, or the office of a third party such as a loan broker. 
(But see Appendix A, paragraph I.C.6, which requires certain 
depository institutions to report property location even for 
properties located outside those MSAs or Metropolitan Divisions in 
which the institution has a home or branch office.)
    3. Nondepository institution. For a nondepository institution, 
``branch office'' does not include the office of an affiliate or 
other third party such as a loan broker. (But note that certain 
nondepository institutions must report property location even in 
MSAs or Metropolitan Divisions where they do not have a physical 
location.)
* * * * *

2(e) Financial Institution

* * * * *
    2. Adjustment of exemption threshold for depository 
institutions. For data collection in 2004, the asset-size exemption 
threshold is $33 million. Depository institutions with assets at or 
below $33 million are exempt from collecting data for 2004.
* * * * *

2(j) Metropolitan Statistical Areas and Metropolitan Divisions

    1. Use of terms ``Metropolitan Statistical Area'' and 
``Metropolitan Division.'' The U.S. Office of Management and Budget 
defines Metropolitan Statistical Areas and Metropolitan Divisions to 
provide nationally consistent definitions for collecting, 
tabulating, and publishing Federal statistics for a set of 
geographic areas. OMB divides every Metropolitan Statistical Area 
(MSA) with a population of 2.5 million or more into Metropolitan 
Divisions (MDs); MSAs with populations under 2.5 million population 
are not so divided. 67 FR 82228 (December 27, 2000). For all 
purposes under Regulation C, if an MSA is divided by OMB into MDs, 
the appropriate geographic unit to be used is the MD; if an MSA is 
not so divided by OMB into MDs, the appropriate geographic unit to 
be used is the MSA.
* * * * *

Section 203.4 Compilation of Loan Data

* * * * *
    4(a)(9) Property location.
* * * * *
    3. Property location--loans purchased from another institution. 
The requirement to report the property location by census tract in 
an MSA or Metropolitan Division where the institution has a home or 
branch office applies not only to loan applications and originations 
but also to loans purchased from another institution. This includes 
loans purchased from an institution that did not have a home or 
branch office in that MSA or Metropolitan Division and did not 
collect the property-location information.
* * * * *

Section 203.5 Disclosure and Reporting

5(a) Reporting to Agency

* * * * *
    4. Options for collection. An institution may collect data on 
separate registers at different branches, or on separate registers 
for different loan types (such as for home purchase or home 
improvement loans, or for loans on multifamily dwellings). Entries 
need not be grouped on the register by MSA or Metropolitan Division, 
or chronologically, or by census tract numbers, or in any other 
particular order.
* * * * *
    8. Transmittal sheet--revisions or deletions. If a data 
submission involves revisions or deletions of previously submitted 
data, it must state the total of all line entries contained in that 
submission, including both those representing revisions or deletions 
of previously submitted entries, and those that are being 
resubmitted unchanged or are being submitted for the first time. 
Depository institutions must provide a list of the MSAs or 
Metropolitan Divisions in which they have home or branch offices.
* * * * *

    By order of the Board of Governors of the Federal Reserve 
System, acting through the Director of the Division of Consumer and 
Community Affairs under delegated authority, December 18, 2003.

Jennifer J. Johnson,
 Secretary of the Board.
[FR Doc. 03-31694 Filed 12-24-03; 8:45 am]
BILLING CODE 6210-01-P