[Federal Register Volume 75, Number 118 (Monday, June 21, 2010)]
[Notices]
[Pages 35030-35033]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-14904]


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FEDERAL RESERVE SYSTEM

[Docket No. OP-1388]
RIN 7100-AD51


 Home Mortgage Disclosure Act; Notice of Hearings

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Notice of public hearings; request for comment.

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SUMMARY: The Federal Reserve Board will conduct four public hearings on 
potential revisions to the Board's Regulation C, which implements the 
Home Mortgage Disclosure Act (HMDA). HMDA requires mortgage lenders to 
provide detailed information about their mortgage lending activity to 
federal agencies and the public. Consumers, consumer advocacy 
organizations, mortgage lenders, and other interested parties will be 
invited to participate in the hearings. The Board also invites members 
of the public to attend the hearings and to comment on the issues that 
will be the focus of the hearings. Additional information about the 
hearings will be posted to the Board's Web site at http://www.federalreserve.gov.

DATES: The hearings are scheduled as follows.

    Thursday, July 15, 2010: Federal Reserve Bank of Atlanta, 1000 
Peachtree Street, NE., Atlanta, GA 30309, 8 a.m. to 1 p.m.

    Thursday, August 5, 2010: Federal Reserve Bank of San Francisco, 
101 Market Street, San Francisco, CA 94105, 8 a.m. to 1 p.m.

    Thursday, September 16, 2010: Federal Reserve Bank of Chicago, 230 
South LaSalle St., Chicago, IL 60604, 8 a.m. to 1 p.m.

    Friday, September 24, 2010: Federal Reserve Board, 20th Street and 
Constitution Avenue, NW., Washington, DC 20551, 8 a.m. to 3:30 p.m.

    Comments from persons unable to attend the hearings or otherwise 
wishing to submit written views on the issues raised in this notice 
must be received by August 20, 2010.

ADDRESSES: You may submit comments, identified by Docket No. OP-1388, 
by any of the following methods:
     Agency Web Site: http://www.federalreserve.gov. Follow the 
instructions for submitting comments at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.

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     E-mail: [email protected]. Include the 
docket number in the subject line of the message.
     Fax: (202) 452-3819 or (202) 452-3102.
     Mail: Address to Jennifer J. Johnson, Secretary, Board of 
Governors of the Federal Reserve System, 20th Street and Constitution 
Avenue, NW., Washington, DC 20551.
    All public comments will be made available on the Board's Web site 
at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as 
submitted, unless modified for technical reasons. Accordingly, comments 
will not be edited to remove any identifying or contact information. 
Public comments may also be viewed electronically or in paper form in 
Room MP-500 of the Board's Martin Building (20th and C Streets, NW.) 
between 9 a.m. and 5 p.m. on weekdays.

FOR FURTHER INFORMATION CONTACT: Jennifer S. Benson, Jamie Z. Goodson, 
or Maureen C. Yap, Attorneys, Paul Mondor, Senior Attorney, or John C. 
Wood, Counsel, 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 (202) 263-4869.

SUPPLEMENTARY INFORMATION: 

I. Background

A. HMDA and Regulation C

    The Home Mortgage Disclosure Act (HMDA), 12 U.S.C. 2801 et seq., 
enacted in 1975, requires depository institutions and certain for-
profit, nondepository institutions to collect, report to federal 
agencies, and disclose to the public data about originations and 
purchases of home mortgage loans (home purchase and refinancing) and 
home improvement loans, as well as loan applications that do not result 
in originations (for example, applications that are denied or 
withdrawn). HMDA has three purposes. First, HMDA data can be used to 
help determine whether institutions are serving the housing needs of 
their communities. Second, HMDA data can help public officials target 
public investment to attract private investment where it is needed. 
Third, HMDA data can assist in identifying possible discriminatory 
lending patterns and enforcing antidiscrimination statutes.
    The Board's Regulation C implements HMDA. See 12 CFR Part 203. The 
information reported under Regulation C includes, among other items: 
Application date; loan type, purpose, and amount; property location and 
type; race, ethnicity, sex, and annual income of the loan applicant; 
action taken on the loan application (approved, denied, withdrawn, 
etc.), and date of that action; whether the loan is covered by the Home 
Ownership and Equity Protection Act (HOEPA); lien status (first lien, 
subordinate lien, or unsecured); and certain loan price information.
    Institutions report HMDA data to their supervisory agencies on an 
application-by-application basis using a register format. Institutions 
must make their loan/application registers available to the public, 
with certain fields redacted to preserve applicants' privacy. The 
Federal Financial Institutions Examination Council, on behalf of the 
supervisory agencies, compiles the reported data and prepares an 
individual disclosure statement for each institution, aggregate reports 
for all covered institutions in each metropolitan area, and other 
reports. These disclosure statements and reports are also available to 
the public.

B. Prior Revisions to Regulation C

    HMDA and Regulation C have been amended numerous times since they 
were adopted in 1975. The Board last conducted a comprehensive review 
of Regulation C in 2002. See 67 FR 7222, February 15, 2002; 67 FR 
30771, May 8, 2002; and 67 FR 43218, June 27, 2002. The 2002 revisions 
to Regulation C were intended to facilitate fair lending analysis and 
enhance understanding of the home mortgage market generally and the 
subprime market in particular. In adopting changes to Regulation C, the 
Board carefully considered changes that had occurred in the home 
mortgage market, including the growth of subprime lending.
    Among other things, the 2002 revisions to Regulation C:
     Required lenders to report pricing information for higher-
priced mortgage loans;
     Required lenders to identify loans subject to HOEPA;
     Required lenders to report denials of applications 
received through certain preapproval programs and permitted lenders to 
report requests for preapproval that are approved but not accepted;
     Expanded the coverage of nondepository lenders by adding a 
loan origination dollar-volume threshold of $25 million;
     Required lenders to report whether a loan involves a 
manufactured home; and
     Required lenders to ask applicants their ethnicity, race, 
and sex in applications taken by telephone.
    In 2008, the Board amended Regulation C to revise the rules for 
reporting price information on higher-priced mortgage loans. See 73 FR 
63329, October 24, 2008. These revisions conformed Regulation C 
requirements to the definition of ``higher-priced mortgage loan'' 
adopted by the Board under Regulation Z (Truth in Lending) in July 
2008. The Regulation C revisions required lenders to report the spread 
between a loan's annual percentage rate and a survey-based estimate of 
annual percentage rates currently offered on prime mortgage loans of a 
comparable type if the spread is equal to or greater than 1.5 
percentage points for a first-lien loan or 3.5 percentage points for a 
subordinate-lien loan.

II. Information About the Hearings

    The hearings are open to the public. Seating will be limited, 
however. Visitors will be required to register in advance for security 
purposes.
    All hearings will include panel discussions by invited speakers. 
Other members of the public may deliver oral statements of five minutes 
or less during an ``open-mike'' period. Written statements of any 
length may be submitted for the record by submitting comments in 
accordance with the instructions above.
    Information on registration to attend the hearings, registration to 
deliver an oral statement, and other information about the hearings, as 
it becomes available, will be posted on the Board's Web site at http://www.federalreserve.gov.

III. Hearings Topics and Request for Comment

    The hearings will serve three objectives. First, the Board will 
gather information to evaluate the effectiveness of the 2002 revisions 
to Regulation C in providing useful and accurate information about the 
mortgage market. Second, the hearings will provide information that 
will assist the Board in its pending review of Regulation C and help 
assess the need for additional data. Third, the hearings will help 
identify emerging issues in the mortgage market that may warrant 
additional research.
    The hearings' panel discussions will focus on, and the Board 
solicits public comment on, the matters described below. The Board asks 
that commenters address the importance or utility of particular 
information in light of the purposes of HMDA and the burdens and 
possible privacy risks associated with

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collecting and reporting that information.

A. Data Elements

    As part of its review of Regulation C, the Board is seeking to 
identify ways to improve the quality and usefulness of HMDA data. The 
Board therefore is considering whether any data elements should be 
added, modified, or deleted.
    For example, Regulation C currently does not require lenders to 
submit information on several factors lenders routinely use to make 
credit decisions and set loan prices. These factors include information 
about the borrower's creditworthiness and loan-to-value and debt-to-
income ratios. Regulation C also currently does not require lenders to 
submit other information that some HMDA data users and others have 
identified as potentially useful, such as an applicant's age and a 
loan's originator channel (i.e., whether a loan is originated directly 
by the lender or through a third party originator such as a mortgage 
broker or correspondent). In addition, Regulation C currently requires 
lenders to report rate spread data only for higher-priced mortgage 
loans.
    Some HMDA data users and others believe that collecting additional 
information would improve the usefulness of HMDA data in identifying 
possible discriminatory lending patterns and enforcing 
antidiscrimination statutes. On the other hand, the Board recognizes 
that requiring institutions to report additional data elements would 
increase reporters' compliance burden and costs and could pose risks to 
consumers' privacy.
    In addition, Regulation C currently requires lenders to report only 
the amount of an applicant's income relied on in processing the 
application. Because lenders report only income they relied on in 
considering an application, HMDA data users cannot distinguish low- or 
moderate-income applicants from higher-income applicants who rely on 
only a portion of their income for purposes of their loan applications. 
Some HMDA data users and others have suggested that HMDA data would be 
more useful for determining whether institutions serve the housing 
needs of low- and moderate-income individuals if lenders were required 
to collect and report each applicant's total income, rather than just 
that relied on.
    The Board recognizes, however, that it may be difficult to measure 
total income in a way that generates consistent, meaningful data 
because lenders may not collect information on applicants' total income 
in all cases. For example, an applicant may qualify for a particular 
loan on the basis of salary alone, and therefore may not provide the 
lender with information on other sources of income, such as an annual 
bonus, investment income, or alimony. Income sources that are included 
on an application would be easier for lenders to report but would not 
necessarily provide reliable information. To the extent lenders do not 
rely on such income they likely would not have verified it, possibly 
rendering such data of only questionable utility. Requiring lenders to 
collect and report total income information would increase reporters' 
compliance burden and costs.
    The Board requests comment on the following questions:
     What, if any, additional data should be collected? What 
are the benefits, costs, and privacy issues associated with requiring 
lenders to report, for example: (i) Wnderwriting data such as 
borrower's credit score, loan-to-value ratio, combined loan-to-value 
ratio (i.e., including both the reported loan and other debts), and 
borrower's debt-to-income ratio; (ii) borrower's age; (iii) loan 
originator channel; and (iv) rate spreads for all loans, instead of 
only for higher-priced loans?
     Should any existing data elements be modified? If so, how? 
For example, what are the benefits, costs, and privacy issues 
associated with requiring lenders to report total income, rather than 
income relied on by the lender?
     Should any existing data elements be eliminated? Why?

B. Coverage and Scope

Coverage
    Regulation C currently requires depository institutions (i.e., 
banks, savings associations, and credit unions) and for-profit mortgage 
lenders to submit HMDA data if they meet criteria set forth in the 
rule. Whether a depository institution or other mortgage lender is 
required to report depends on its size, the extent of its business in a 
metropolitan statistical area, and the extent to which it engages in 
residential mortgage lending. Some HMDA data users and others believe 
that other types of institutions, such as mortgage brokers and non-
lender loan purchasers, also should be required to collect and report 
HMDA data. The Board requests comment on the following questions:
     Should mortgage brokers and non-lender loan purchasers be 
required to report HMDA data? Should other types of institutions be 
required to report? If so, which types?
     Should any types of institutions be exempt from reporting?
     Should the rules governing who must collect and report 
HMDA data be revised in other ways? If so, how?
Scope
    Regulation C currently requires lenders to report information about 
home purchase loans, home improvement loans, and refinancings of home 
purchase loans. The Board requests comment on the following questions:
     Should any other types of mortgage loans be reported?
     Should any types of mortgage loans be excluded from 
reporting?
     Should the rules governing which mortgage loans are 
subject to reporting be revised in other ways? If so, how?

C. Preapproval Programs

    Regulation C currently requires lenders to collect and report data 
regarding requests under a preapproval program if the preapproval 
request is denied; preapproval requests that are approved but not 
accepted may be reported at the lender's option. Regulation C defines a 
preapproval program as a program in which a lender, after a 
comprehensive review of the creditworthiness of the applicant, issues a 
written commitment to the applicant valid for a designated period of 
time to extend a home purchase loan up to a specified amount. Questions 
have been raised regarding whether lenders use preapproval programs as 
defined by Regulation C and whether there is a clear benefit to 
requiring lenders to report on these programs. The Board also is aware 
that some lenders may have difficulty applying the definition of 
preapproval program and determining when this requirement applies. In 
addition, lenders that do understand the definition may evade the 
reporting requirements, such as by communicating preapproval decisions 
orally.
    The Board requests comment on the following questions:
     Do lenders use preapproval programs as defined by 
Regulation C?
     Is there a benefit to requiring lenders to report on these 
programs?
     How could the definition of preapproval program be 
modified to be easier to apply and to make reporting more useful?

D. Compliance and Technical Issues

    The Board among other things seeks to clarify and simplify 
Regulation C in order to facilitate compliance and resolve technical 
issues. The Board requests comment on the following questions:

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     What are the most common compliance issues institutions 
face under HMDA and Regulation C?
     What parts of Regulation C would benefit from 
clarification or additional guidance?
     Are there technical issues regarding Regulation C that 
should be resolved?

E. Other Issues

    As part of its review of Regulation C, the Board is seeking to 
identify emerging issues in the mortgage market that may warrant 
additional research, respond to technological and other developments, 
reduce undue regulatory burden on industry, and delete obsolete 
provisions. The Board therefore requests comment on any emerging issues 
likely to affect the usefulness and accuracy of HMDA data and on any 
other changes to Regulation C the Board should consider.

    By order of the Board of Governors of the Federal Reserve 
System, June 15, 2010.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 2010-14904 Filed 6-18-10; 8:45 am]
BILLING CODE 6210-01-P