[Federal Register Volume 76, Number 243 (Monday, December 19, 2011)]
[Rules and Regulations]
[Pages 78465-78483]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-31712]



 ========================================================================
 Rules and Regulations
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains regulatory documents 
 having general applicability and legal effect, most of which are keyed 
 to and codified in the Code of Federal Regulations, which is published 
 under 50 titles pursuant to 44 U.S.C. 1510.
 
 The Code of Federal Regulations is sold by the Superintendent of Documents. 
 Prices of new books are listed in the first FEDERAL REGISTER issue of each 
 week.
 
 ========================================================================
 

  Federal Register / Vol. 76, No. 243 / Monday, December 19, 2011 / 
Rules and Regulations  

[[Page 78465]]



BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Part 1003

[Docket No. CFPB-2011-0020]
RIN 3170-AA06


Home Mortgage Disclosure (Regulation C)

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Interim final rule with request for public comment.

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

SUMMARY: Title X of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (Dodd-Frank Act) transferred rulemaking authority for a 
number of consumer financial protection laws from seven Federal 
agencies to the Bureau of Consumer Financial Protection (Bureau) as of 
July 21, 2011. The Bureau is in the process of republishing the 
regulations implementing those laws with technical and conforming 
changes to reflect the transfer of authority and certain other changes 
made by the Dodd-Frank Act. In light of the transfer to the Bureau of 
the Board of Governors of the Federal Reserve System's (Board's) 
rulemaking authority for the Home Mortgage Disclosure Act of 1975 
(HMDA), as amended, the Bureau is publishing for public comment an 
interim final rule establishing a new Regulation C (Home Mortgage 
Disclosure). This interim final rule does not impose any new 
substantive obligations on persons subject to the existing Regulation 
C, previously published by the Board.

DATES: This interim final rule is effective on December 30, 2011. 
Comments must be received on or before February 17, 2012.

ADDRESSES: You may submit comments, identified by Docket No. CFPB-2011-
0020 or RIN 3170-AA06, by any of the following methods:
     Electronic: http://www.regulations.gov. Follow the 
instructions for submitting comments.
     Mail: Monica Jackson, Office of the Executive Secretary, 
Bureau of Consumer Financial Protection, 1500 Pennsylvania Avenue NW., 
(Attn: 1801 L Street), Washington, DC 20220.
     Hand Delivery/Courier in Lieu of Mail: Monica Jackson, 
Office of the Executive Secretary, Bureau of Consumer Financial 
Protection, 1700 G Street NW., Washington, DC 20006.
    All submissions must include the agency name and docket number or 
Regulatory Information Number (RIN) for this rulemaking. In general, 
all comments received will be posted without change to  http://www.regulations.gov. In addition, comments will be available for public 
inspection and copying at 1700 G Street NW., Washington, DC 20006, on 
official business days between the hours of 10 a.m. and 5 p.m. Eastern 
Time. You can make an appointment to inspect the documents by 
telephoning (202) 435-7275.
    All comments, including attachments and other supporting materials, 
will become part of the public record and subject to public disclosure. 
Sensitive personal information, such as account numbers or social 
security numbers, should not be included. Comments will not be edited 
to remove any identifying or contact information.

FOR FURTHER INFORMATION CONTACT: Mitchell E. Hochberg or Gregory Evans, 
Office of Regulations, at (202) 435-7700.

SUPPLEMENTARY INFORMATION: 

I. Background

    The Home Mortgage Disclosure Act of 1975, as amended (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 those data to the appropriate 
Federal agencies and make the data available to the public. 
Historically, HMDA has been implemented by Regulation C of the Board of 
Governors of the Federal Reserve System (Board), 12 CFR Part 203.
    The Dodd-Frank Wall Street Reform and Consumer Protection Act 
(Dodd-Frank Act) \1\ amended a number of consumer financial protection 
laws, including HMDA. In addition to various substantive amendments, 
the Dodd-Frank Act transferred rulemaking authority for HMDA to the 
Bureau of Consumer Financial Protection (Bureau), effective July 21, 
2011. See sections 1061 and 1094 of the Dodd-Frank Act. Pursuant to the 
Dodd-Frank Act and HMDA, as amended, the Bureau is publishing for 
public comment an interim final rule establishing a new Regulation C 
(Home Mortgage Disclosure), 12 CFR Part 1003, implementing HMDA.
---------------------------------------------------------------------------

    \1\ Pub. L. 111-203,124 Stat. 1376 (2010).
---------------------------------------------------------------------------

II. Summary of the Interim Final Rule

A. General

    The interim final rule substantially duplicates the Board's 
Regulation C as the Bureau's new Regulation C, 12 CFR Part 1003, making 
only certain non-substantive, technical, formatting, and stylistic 
changes. To minimize any potential confusion, the Bureau is preserving 
the past numbering of the Board's Regulation C, other than the new part 
number and the enumeration of the individual definitions in Sec.  
1003.2. While this interim final rule generally incorporates the 
Board's existing regulatory text, appendices (including model forms and 
clauses), and supplements, the rule has been edited as necessary to 
reflect nomenclature and other technical amendments required by the 
Dodd-Frank Act. Notably, this interim final rule does not impose any 
new substantive obligations on regulated entities. In future 
rulemakings, the Bureau expects to amend Regulation C to implement 
certain changes to HMDA made by the Dodd-Frank Act.

B. Specific Changes

    The rule has been changed to effect technical, non-substantive 
changes to the Board's existing regulatory text of Regulation C. 
References to the Board and its administrative structure have been 
replaced with references to the Bureau. Conforming edits have been made 
to internal cross-references and addresses for filing documentation. 
Paragraph lettering for definitions has been removed. Conforming edits 
have been made to reflect the scope of the Bureau's authority pursuant 
to HMDA, as amended by the Dodd-Frank Act. Historical references that 
are no longer applicable, and references to effective

[[Page 78466]]

dates that have passed, have been removed.
    Conforming edits have also been made to reflect new Office of 
Management and Budget (OMB) control numbers issued for information 
collections required by Regulation C. Specifically, Form FR HMDA-LAR, 
the Loan/Application Register Transmittal Sheet, has been edited to add 
OMB control numbers for the Bureau of Consumer Financial Protection and 
the National Credit Union Administration and to remove the control 
number formerly used by the Office of Thrift Supervision.
    This interim final rule modifies the current regulatory text by 
including the Bureau of Consumer Financial Protection as an appropriate 
Federal agency for receiving reports and removes the Office of Thrift 
Supervision as an entity to whom financial institutions may be required 
to report data under HMDA. The Bureau is issuing guidance concurrently 
with the issuance of this interim rule regarding the appropriate 
Federal agency to which each financial institution should report 2011 
data pursuant to HMDA.
    The Dodd-Frank Act amended HMDA to require covered financial 
institutions to report data with respect to, among other things, the 
age of mortgagors and mortgage applicants, points and fees payable at 
origination in connection with a mortgage, the difference between the 
annual percentage rate associated with a loan and a benchmark rates or 
rates for all loans, the term in months of any prepayment penalty or 
other fee or charge payable on repayment of some portion of principal 
or the entire principal in advance of scheduled payment, the value of 
the real property pledged or proposed to be pledged as collateral, the 
actual or proposed term in months of any introductory period after 
which the rates of interest may change for a loan, the presence of 
contractual terms or proposed contract terms that would allow the 
mortgagor or applicant to make payments other than fully amortizing 
payments during any portion of the loan term, the actual or proposed 
term in months of the mortgage, the channel through which the mortgage 
application was made, and the credit score of mortgage applicants and 
mortgagors.\2\ A change to the regulatory text to require collection of 
additional data pursuant to the Dodd-Frank Act is a substantive change 
that is beyond the scope of this interim final rule. Therefore, the 
Bureau will address those substantive amendments to the HMDA data 
elements in a future rulemaking.
---------------------------------------------------------------------------

    \2\ Public Law 111-203, section 1094(3)(A).
---------------------------------------------------------------------------

    Institutions are not required to report additional data required by 
section 304(b)(5) and (6) of HMDA, as amended, ``before the first 
January 1 that occurs after the end of the 9-month period beginning on 
the date on which regulations are issued by the Bureau in final form 
with respect to such disclosures.'' \3\ Further, financial institutions 
are unable to comply with the obligation to report data regarding the 
age of mortgagors and mortgage applicants, which is required pursuant 
to section 304(b)(4) of HMDA, until the Bureau provides the necessary 
guidance on the manner of such reporting, including modification of the 
HMDA Loan/Application Register (HMDA-LAR) form to accommodate the 
reporting of age data. Therefore, the Bureau believes that the 
requirements to report all of the new data elements under HMDA section 
304(b)(4)-(6) cannot be effective until the Bureau completes a future 
rulemaking with respect to the reporting of such data.
---------------------------------------------------------------------------

    \3\ Public Law 111-203, section 1094(3)(F).
---------------------------------------------------------------------------

III. Legal Authority

A. Rulemaking Authority

    The Bureau is issuing this interim final rule pursuant to its 
authority under HMDA and the Dodd-Frank Act. Effective July 21, 2011, 
section 1061 of the Dodd-Frank Act transferred to the Bureau the 
``consumer financial protection functions'' previously vested in 
certain other Federal agencies. The term ``consumer financial 
protection function'' is defined to include ``all authority to 
prescribe rules or issue orders or guidelines pursuant to any Federal 
consumer financial law, including performing appropriate functions to 
promulgate and review such rules, orders, and guidelines.'' \4\ The 
HMDA is a Federal consumer financial law.\5\ Accordingly, effective 
July 21, 2011, the authority of the Board to issue regulations pursuant 
to HMDA transferred to the Bureau.\6\
---------------------------------------------------------------------------

    \4\ Public Law 111-203, section 1061(a)(1). Effective on the 
designated transfer date, July 21, 2011, the Bureau was also granted 
``all powers and duties'' vested in each of the Federal agencies, 
relating to the consumer financial protection functions, on the day 
before the designated transfer date. Until this and other interim 
final rules take effect, existing regulations for which rulemaking 
authority transferred to the Bureau continue to govern persons 
covered by this rule. See 76 FR 43569 (July 21, 2011).
    \5\ Public Law 111-203, section 1002(14) (defining ``Federal 
consumer financial law'' to include the ``enumerated consumer 
laws''); id. section 1002(12) (defining ``enumerated consumer laws'' 
to include HMDA).
    \6\ section 1066 of the Dodd-Frank Act grants the Secretary of 
the Treasury interim authority to perform certain functions of the 
Bureau. Pursuant to that authority, Treasury is publishing this 
interim final rule on behalf of the Bureau.
---------------------------------------------------------------------------

B. Authority To Issue an Interim Final Rule Without Prior Notice and 
Comment

    The Administrative Procedure Act (APA) \7\ generally requires 
public notice and an opportunity to comment before promulgation of 
regulations.\8\ The APA provides exceptions to notice-and-comment 
procedures, however, where an agency for good cause finds that such 
procedures are impracticable, unnecessary, or contrary to the public 
interest or when a rulemaking relates to agency organization, 
procedure, and practice.\9\ The Bureau finds that there is good cause 
to conclude that providing notice and opportunity for comment would be 
unnecessary and contrary to the public interest under these 
circumstances. In addition, substantially all the changes made by this 
interim final rule, which were necessitated by the Dodd-Frank Act's 
transfer of HMDA authority from the Board to the Bureau, relate to 
agency organization, procedure, and practice and are thus exempt from 
the APA's notice-and-comment requirements.
---------------------------------------------------------------------------

    \7\ 5 U.S.C. 551 et seq.
    \8\ 5 U.S.C. 553(b), (c).
    \9\ 5 U.S.C. 553(b)(3)(A), (B).
---------------------------------------------------------------------------

    The Bureau's good cause findings are based on the following 
considerations. As an initial matter, the Board's existing regulation 
was a result of notice-and-comment rulemaking to the extent required. 
Moreover, the interim final rule published today does not impose any 
new, substantive obligations on regulated entities. Rather, the interim 
final rule makes only non-substantive, technical changes to the 
existing text of the regulation, such as renumbering, changing internal 
cross-references, replacing appropriate nomenclature to reflect the 
transfer of authority to the Bureau, and changing the addresses for 
filing applications and notices. Given the technical nature of these 
changes, and the fact that the interim final rule does not impose any 
additional substantive requirements on covered entities, an opportunity 
for prior public comment is unnecessary. In addition, recodifying the 
Board's regulations to reflect the transfer of authority to the Bureau 
will help facilitate compliance with HMDA and its implementing 
regulations, and the new regulations will help reduce uncertainty 
regarding the applicable regulatory framework. Using notice-and-comment 
procedures would delay this process and thus be contrary to the public 
interest.
    The APA generally requires that rules be published not less than 30 
days

[[Page 78467]]

before their effective dates. See 5 U.S.C. 553(d). As with the notice 
and comment requirement, however, the APA allows an exception when 
``otherwise provided by the agency for good cause found and published 
with the rule.'' 5 U.S.C. 553(d)(3). The Bureau finds that there is 
good cause for providing less than 30 days notice here. A delayed 
effective date would harm consumers and regulated entities by 
needlessly perpetuating discrepancies between the amended statutory 
text and the implementing regulation, thereby hindering compliance and 
prolonging uncertainty regarding the applicable regulatory 
framework.\10\
---------------------------------------------------------------------------

    \10\ This interim final rule is one of 14 companion rulemakings 
that together restate and recodify the implementing regulations 
under 14 existing consumer financial laws (part III.C, below, lists 
the 14 laws involved). In the interest of proper coordination of 
this overall regulatory framework, which includes numerous cross-
references among some of the regulations, the Bureau is establishing 
the same effective date of December 30, 2011 for those rules 
published on or before that date and making those published 
thereafter (if any) effective immediately.
---------------------------------------------------------------------------

    In addition, delaying the effective date of the interim final rule 
for 30 days would provide no practical benefit to regulated entities in 
this context and in fact could operate to their detriment. As discussed 
above, the interim final rule published today does not impose any new, 
substantive obligations on regulated entities. Instead, the rule makes 
only non-substantive, technical changes to the existing text of the 
regulation. Thus, regulated entities that are already in compliance 
with the existing rules will not need to modify business practices as a 
result of this rule. To the extent that one-time modifications to forms 
are required, the Bureau has provided an ample implementation period to 
allow appropriate advance notice and facilitate compliance without 
suspending the benefits of the interim final rule during the 
intervening period.

C. Section 1022(b)(2) of the Dodd-Frank Act

    In developing the interim final rule, the Bureau has conducted an 
analysis of potential benefits, costs, and impacts.\11\ The Bureau 
believes that the interim final rule will benefit consumers and covered 
persons by updating and recodifying Regulation C to reflect the 
transfer of authority to the Bureau and certain other changes mandated 
by the Dodd-Frank Act. This will help facilitate compliance with HMDA 
and its implementing regulations and help reduce any uncertainty 
regarding the applicable regulatory framework. The interim final rule 
will not impose any new substantive obligations on consumers or covered 
persons and is not expected to have any impact on consumers' access to 
consumer financial products and services.
---------------------------------------------------------------------------

    \11\ Section 1022(b)(2)(A) of the Dodd-Frank Act addresses the 
consideration of the potential benefits and costs of regulation to 
consumers and covered persons, including the potential reduction of 
access by consumers to consumer financial products or services; the 
impact on depository institutions and credit unions with $10 billion 
or less in total assets as described in section 1026 of the Dodd-
Frank Act; and the impact on consumers in rural areas. Section 
1022(b)(2)(B) requires that the Bureau ``consult with the 
appropriate prudential regulators or other Federal agencies prior to 
proposing a rule and during the comment process regarding 
consistency with prudential, market, or systemic objectives 
administered by such agencies.'' The manner and extent to which 
these provisions apply to interim final rules and to benefits, 
costs, and impacts that are compelled by statutory changes rather 
than discretionary Bureau action is unclear. Nevertheless, to inform 
this rulemaking more fully, the Bureau performed the described 
analyses and consultations.
---------------------------------------------------------------------------

    Although not required by the interim final rule, financial 
institutions may incur some costs in updating compliance manuals and 
related materials to reflect the new numbering and other technical 
changes reflected in the new Regulation C. The Bureau has worked to 
reduce any such burden by preserving the existing numbering to the 
extent possible and believes that such costs will likely be minimal. 
These changes could be handled in the short term by providing a short, 
standalone summary alerting users to the changes and in the long term 
could be combined with other updates at the creditor's convenience. The 
Bureau intends to continue investigating the possible costs to affected 
entities of updating manuals and related materials to reflect these 
changes and solicits comments on this and other issues discussed in 
this section.
    The interim final rule will have no unique impact on depository 
institutions or credit unions with $10 billion or less in assets as 
described in section 1026(a) of the Dodd-Frank Act. Also, the interim 
final rule will have no unique impact on rural consumers.
    In undertaking the process of recodifying Regulation C, as well as 
regulations implementing thirteen other existing consumer financial 
laws,\12\ the Bureau consulted the Federal Deposit Insurance 
Corporation, the Office of the Comptroller of the Currency, the 
National Credit Union Administration, the Board of Governors of the 
Federal Reserve System, the Federal Trade Commission, and the 
Department of Housing and Urban Development, including with respect to 
consistency with any prudential, market, or systemic objectives that 
may be administered by such agencies.\13\ The Bureau also has consulted 
with the Office of Management and Budget for technical assistance. The 
Bureau expects to have further consultations with the appropriate 
Federal agencies during the comment period.
---------------------------------------------------------------------------

    \12\ The fourteen laws implemented by this and its companion 
rulemakings are: the Consumer Leasing Act, the Electronic Fund 
Transfer Act (except with respect to section 920 of that Act), the 
Equal Credit Opportunity Act, the Fair Credit Reporting Act (except 
with respect to sections 615(e) and 628 of that act), the Fair Debt 
Collection Practices Act, Subsections (b) through (f) of section 43 
of the Federal Deposit Insurance Act, sections 502 through 509 of 
the Gramm-Leach-Bliley Act (except for section 505 as it applies to 
section 501(b)), the Home Mortgage Disclosure Act, the Real Estate 
Settlement Procedures Act, the S.A.F.E. Mortgage Licensing Act, the 
Truth in Lending Act, the Truth in Savings Act, section 626 of the 
Omnibus Appropriations Act, 2009, and the Interstate Land Sales Full 
Disclosure Act.
    \13\ In light of the technical but voluminous nature of this 
recodification project, the Bureau focused the consultation process 
on a representative sample of the recodified regulations, while 
making information on the other regulations available. The Bureau 
expects to conduct differently its future consultations regarding 
substantive rulemakings.
---------------------------------------------------------------------------

IV. Request for Comment

    Although notice and comment rulemaking procedures are not required, 
the Bureau invites comments on this notice. Commenters are specifically 
encouraged to identify any technical issues raised by the rule. The 
Bureau is also seeking comment in response to a notice published at 76 
FR 75825 (Dec. 5, 2011) concerning its efforts to identify priorities 
for streamlining regulations that it has inherited from other Federal 
agencies to address provisions that are outdated, unduly burdensome, or 
unnecessary.

V. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA), as amended by the Small 
Business Regulatory Enforcement Fairness Act of 1996, requires each 
agency to consider the potential impact of its regulations on small 
entities including small businesses, small governmental units, and 
small not-for-profit organizations.\14\ The RFA generally requires an 
agency to conduct an initial regulatory flexibility analysis (IRFA) and 
a final regulatory flexibility analysis (FRFA) of any rule subject to 
notice-and-comment rulemaking requirements, unless the agency certifies 
that the rule will not have a significant economic impact on a 
substantial number of small entities.\15\ The Bureau also is subject to 
certain additional procedures under the RFA involving the convening of 
a panel to consult with small business

[[Page 78468]]

representatives regarding any rule for which an IRFA is required.\16\
---------------------------------------------------------------------------

    \14\ 5 U.S.C. 601 et seq.
    \15\ 5 U.S.C. 603; 5 U.S.C. 604; 5 U.S.C. 605(b).
    \16\ 5 U.S.C. 603(d).
---------------------------------------------------------------------------

    The IRFA and FRFA requirements described above apply only where a 
notice of proposed rulemaking is required,\17\ and the panel 
requirement applies only when a rulemaking requires an IRFA.\18\ As 
discussed above in Part III, a notice of proposed rulemaking is not 
required for this rulemaking.
---------------------------------------------------------------------------

    \17\ 5 U.S.C. 603(a), 604(a); 5 U.S.C. 553(b)(B).
    \18\ 5 U.S.C. 609(b).
---------------------------------------------------------------------------

    In addition, as discussed above, this interim final rule has only a 
minor impact on entities subject to Regulation C. The rule imposes no 
new, substantive obligations on covered entities. Accordingly, the 
undersigned certifies that this interim final rule will not have a 
significant economic impact on a substantial number of small entities.

VI. Paperwork Reduction Act

    The Bureau may not conduct or sponsor, and a respondent is not 
required to respond to, an information collection unless it displays a 
currently valid Office of Management and Budget (OMB) control number. 
This rule contains information collection requirements under the 
Paperwork Reduction Act (PRA), which have been previously approved by 
OMB, and the ongoing PRA burden for which is unchanged by this rule. 
There are no new information collection requirements in this interim 
final rule. The Bureau's OMB control number for this information 
collection is: 3170-0008.

List of Subjects in 12 CFR Part 1003

    Banks, Banking, Credit unions, Mortgages, National banks, Savings 
associations, Reporting and recordkeeping requirements.

Authority and Issuance

    For the reasons set forth above, the Bureau of Consumer Financial 
Protection adds Part 1003 to Chapter X in Title 12 of the Code of 
Federal Regulations to read as follows:

PART 1003--HOME MORTGAGE DISCLOSURE (REGULATION C)

Sec.
1003.1 Authority, purpose, and scope.
1003.2 Definitions.
1003.3 Exempt institutions.
1003.4 Compilation of loan data.
1003.5 Disclosure and reporting.
1003.6 Enforcement.
Appendix A to Part 1003--Form and Instructions for Completion of 
HMDA Loan/Application Register
Appendix B to Part 1003--Form and Instructions for Data Collection 
on Ethnicity, Race, and Sex
Supplement I to Part 1003--Staff Commentary

    Authority:  12 U.S.C. 2803, 2804, 2805, 5512, 5581.


Sec.  1003.1  Authority, purpose, and scope.

    (a) Authority. This part, known as Regulation C, is issued by the 
Bureau of Consumer Financial Protection (Bureau) pursuant to the Home 
Mortgage Disclosure Act (HMDA) (12 U.S.C. 2801 et seq.), as amended. 
The information-collection requirements have been approved by the U.S. 
Office of Management and Budget (OMB) under 44 U.S.C. 3501 et seq. and 
have been assigned OMB numbers for institutions reporting data to the 
Office of the Comptroller of the Currency (1557-0159), the Federal 
Deposit Insurance Corporation (3064-0046), the Federal Reserve System 
(7100-0247), the Department of Housing and Urban Development (HUD) 
(2502-0529), the National Credit Union Administration (3133-0166), and 
the Bureau of Consumer Financial Protection (3170-0008).
    (b) Purpose. (1) This part implements the Home Mortgage Disclosure 
Act, which is intended to provide the public with loan data that can be 
used:
    (i) To help determine whether financial institutions are serving 
the housing needs of their communities;
    (ii) To assist public officials in distributing public-sector 
investment so as to attract private investment to areas where it is 
needed; and
    (iii) To assist in identifying possible discriminatory lending 
patterns and enforcing antidiscrimination statutes.
    (2) Neither the act nor this part is intended to encourage unsound 
lending practices or the allocation of credit.
    (c) Scope. This part applies to certain financial institutions, 
including banks, savings associations, credit unions, and other 
mortgage lending institutions, as defined in Sec.  1003.2. The 
regulation requires an institution to report data to the appropriate 
Federal agency about home purchase loans, home improvement loans, and 
refinancings that it originates or purchases, or for which it receives 
applications; and to disclose certain data to the public.


Sec.  1003.2  Definitions.

    In this part:
    Act means the Home Mortgage Disclosure Act (HMDA) (12 U.S.C. 2801 
et seq.), as amended.
    Application.--(1) In general. Application means an oral or written 
request for a home purchase loan, a home improvement loan, or a 
refinancing that is made in accordance with procedures used by a 
financial institution for the type of credit requested.
    (2) Preapproval programs. A request for preapproval for a home 
purchase loan is an application under this section if the request is 
reviewed under a program in which the financial institution, after a 
comprehensive analysis 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. The 
written commitment may not be subject to conditions other than:
    (i) Conditions that require the identification of a suitable 
property;
    (ii) Conditions that require that no material change has occurred 
in the applicant's financial condition or creditworthiness prior to 
closing; and
    (iii) Limited conditions that are not related to the financial 
condition or creditworthiness of the applicant that the lender 
ordinarily attaches to a traditional home mortgage application (such as 
certification of a clear termite inspection).
    Branch office means:
    (1) Any office of a bank, savings association, or credit union that 
is approved as a branch by a Federal or state supervisory agency, but 
excludes free-standing electronic terminals such as automated teller 
machines; and
    (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.
    Dwelling means a residential structure (whether or not attached to 
real property) located in a state of the United States of America, the 
District of Columbia, or the Commonwealth of Puerto Rico. The term 
includes an individual condominium unit, cooperative unit, or mobile or 
manufactured home.
    Financial institution means:
    (1) A bank, savings association, or credit union that:
    (i) On the preceding December 31 had assets in excess of the asset 
threshold established and published annually by

[[Page 78469]]

the Bureau for coverage by the act, based on the year-to-year change in 
the average of the Consumer Price Index for Urban Wage Earners and 
Clerical Workers, not seasonally adjusted, for each twelve month period 
ending in November, with rounding to the nearest million;
    (ii) On the preceding December 31, had a home or branch office in 
an MSA;
    (iii) In the preceding calendar year, originated at least one home 
purchase loan (excluding temporary financing such as a construction 
loan) or refinancing of a home purchase loan, secured by a first lien 
on a one-to four-family dwelling; and
    (iv) Meets one or more of the following three criteria:
    (A) The institution is Federally insured or regulated;
    (B) The mortgage loan referred to in paragraph (1)(iii) of this 
definition was insured, guaranteed, or supplemented by a Federal 
agency; or
    (C) The mortgage loan referred to in paragraph (1)(iii) of this 
definition was intended by the institution for sale to Fannie Mae or 
Freddie Mac; and
    (2) A for-profit mortgage-lending institution (other than a bank, 
savings association, or credit union) that:
    (i) In the preceding calendar year, either:
    (A) Originated home purchase loans, including refinancings of home 
purchase loans, that equaled at least 10 percent of its loan-
origination volume, measured in dollars; or
    (B) Originated home purchase loans, including refinancings of home 
purchase loans, that equaled at least $25 million; and
    (ii) On the preceding December 31, had a home or branch office in 
an MSA; and
    (iii) Either:
    (A) On the preceding December 31, had total assets of more than $10 
million, counting the assets of any parent corporation; or
    (B) In the preceding calendar year, originated at least 100 home 
purchase loans, including refinancings of home purchase loans.
    Home-equity line of credit means an open-end credit plan secured by 
a dwelling as defined in Regulation Z (Truth in Lending), 12 CFR part 
1026.
    Home improvement loan means:
    (1) A loan secured by a lien on a dwelling that is 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; and
    (2) A non-dwelling secured loan that is 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, and that is 
classified by the financial institution as a home improvement loan.
    Home purchase loan means a loan secured by and made for the purpose 
of purchasing a dwelling.
    Manufactured home means any residential structure as defined under 
regulations of the Department of Housing and Urban Development 
establishing manufactured home construction and safety standards (24 
CFR 3280.2).
    Metropolitan Statistical Area or MSA and Metropolitan Division or 
MD. (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.
    Refinancing means a new obligation that satisfies and replaces an 
existing obligation by the same borrower, in which:
    (1) For coverage purposes, the existing obligation is a home 
purchase loan (as determined by the lender, for example, by reference 
to available documents; or as stated by the applicant), and both the 
existing obligation and the new obligation are secured by first liens 
on dwellings; and
    (2) For reporting purposes, both the existing obligation and the 
new obligation are secured by liens on dwellings.


Sec.  1003.3  Exempt institutions.

    (a) Exemption based on state law. (1) A state-chartered or state-
licensed financial institution is exempt from the requirements of this 
part if the Bureau determines that the institution is subject to a 
state disclosure law that contains requirements substantially similar 
to those imposed by this part and that contains adequate provisions for 
enforcement.
    (2) Any state, state-chartered or state-licensed financial 
institution, or association of such institutions, may apply to the 
Bureau for an exemption under paragraph (a) of this section.
    (3) An institution that is exempt under paragraph (a) of this 
section shall use the disclosure form required by its state law and 
shall submit the data required by that law to its state supervisory 
agency for purposes of aggregation.
    (b) Loss of exemption. An institution losing a state-law exemption 
under paragraph (a) of this section shall comply with this part 
beginning with the calendar year following the year for which it last 
reported loan data under the state disclosure law.


Sec.  1003.4  Compilation of loan data.

    (a) Data format and itemization. A financial institution shall 
collect data regarding applications for, and originations and purchases 
of, home purchase loans, home improvement loans, and refinancings for 
each calendar year. An institution is required to collect data 
regarding requests under a preapproval program (as defined in Sec.  
1003.2) only if the preapproval request is denied or results in the 
origination of a home purchase loan. All reportable transactions shall 
be recorded, within thirty calendar days after the end of the calendar 
quarter in which final action is taken (such as origination or purchase 
of a loan, or denial or withdrawal of an application), on a register in 
the format prescribed in Appendix A of this part. The data recorded 
shall include the following items:
    (1) An identifying number for the loan or loan application, and the 
date the application was received.
    (2) The type of loan or application.
    (3) The purpose of the loan or application.
    (4) Whether the application is a request for preapproval and 
whether it resulted in a denial or in an origination.
    (5) The property type to which the loan or application relates.
    (6) The owner-occupancy status of the property to which the loan or 
application relates.
    (7) The amount of the loan or the amount applied for.
    (8) The type of action taken, and the date.
    (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.
    (10) The ethnicity, race, and sex of the applicant or borrower, and 
the gross annual income relied on in processing the application.
    (11) The type of entity purchasing a loan that the institution 
originates or purchases and then sells within the same calendar year 
(this information need not be included in quarterly updates).
    (12)(i) For originated loans subject to Regulation Z, 12 CFR part 
1026, the difference between the loan's annual percentage rate (APR) 
and the average prime offer rate for a comparable transaction as of the 
date the interest rate is set, if that difference is equal to or 
greater than 1.5 percentage points for loans secured by a first lien on 
a

[[Page 78470]]

dwelling, or equal to or greater than 3.5 percentage points for loans 
secured by a subordinate lien on a dwelling.
    (ii) ``Average prime offer rate'' means an annual percentage rate 
that is derived from average interest rates, points, and other loan 
pricing terms currently offered to consumers by a representative sample 
of creditors for mortgage loans that have low-risk pricing 
characteristics. The Bureau publishes average prime offer rates for a 
broad range of types of transactions in tables updated at least weekly, 
as well as the methodology the Bureau uses to derive these rates.
    (13) Whether the loan is subject to the Home Ownership and Equity 
Protection Act of 1994, as implemented in Regulation Z (12 CFR 
1026.32).
    (14) The lien status of the loan or application (first lien, 
subordinate lien, or not secured by a lien on a dwelling).
    (b) Collection of data on ethnicity, race, sex, and income. (1) A 
financial institution shall collect data about the ethnicity, race, and 
sex of the applicant or borrower as prescribed in Appendix B of this 
part.
    (2) Ethnicity, race, sex, and income data may but need not be 
collected for loans purchased by the financial institution.
    (c) Optional data. A financial institution may report:
    (1) The reasons it denied a loan application;
    (2) Requests for preapproval that are approved by the institution 
but not accepted by the applicant; and
    (3) Home-equity lines of credit made in whole or in part for the 
purpose of home improvement or home purchase.
    (d) Excluded data. A financial institution shall not report:
    (1) Loans originated or purchased by the financial institution 
acting in a fiduciary capacity (such as trustee);
    (2) Loans on unimproved land;
    (3) Temporary financing (such as bridge or construction loans);
    (4) The purchase of an interest in a pool of loans (such as 
mortgage-participation certificates, mortgage-backed securities, or 
real estate mortgage investment conduits);
    (5) The purchase solely of the right to service loans; or
    (6) Loans acquired as part of a merger or acquisition, or as part 
of the acquisition of all of the assets and liabilities of a branch 
office as defined in Sec.  1003.2.
    (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.


Sec.  1003.5  Disclosure and reporting.

    (a) Reporting to agency. (1) By March 1 following the calendar year 
for which the loan data are compiled, a financial institution shall 
send its complete loan/application register to the agency office 
specified in Appendix A of this part. The institution shall retain a 
copy for its records for at least three years.
    (2) A subsidiary of a bank or savings association shall complete a 
separate loan/application register. The subsidiary shall submit the 
register, directly or through its parent, to the same agency as its 
parent.
    (b) Public disclosure of statement. (1) The Federal Financial 
Institutions Examination Council (FFIEC) will prepare a disclosure 
statement from the data each financial institution submits.
    (2) An institution shall make its disclosure statement (prepared by 
the FFIEC) available to the public at the institution's home office no 
later than three business days after receiving the disclosure statement 
from the FFIEC.
    (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.
    (d) Availability of data. A financial institution shall make its 
modified register available to the public for a period of three years 
and its disclosure statement available for a period of five years. An 
institution shall make the data available for inspection and copying 
during the hours the office is normally open to the public for 
business. It may impose a reasonable fee for any cost incurred in 
providing or reproducing the data.
    (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 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 Division, 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.


Sec.  1003.6  Enforcement.

    (a) Administrative enforcement. A violation of the Act or this part 
is subject to administrative sanctions as provided in section 305 of 
the Act, including the imposition of civil money penalties, where 
applicable. Compliance is enforced by the agencies listed in section 
305 of the Act (12 U.S.C. 2804).
    (b) Bona fide errors. (1) An error in compiling or recording loan 
data is not a violation of the act or this part if the error was 
unintentional and occurred despite the maintenance of procedures 
reasonably adapted to avoid such errors.

[[Page 78471]]

    (2) An incorrect entry for a census tract number is deemed a bona 
fide error, and is not a violation of the act or this part, provided 
that the institution maintains procedures reasonably adapted to avoid 
such errors.
    (3) If an institution makes a good-faith effort to record all data 
concerning covered transactions fully and accurately within thirty 
calendar days after the end of each calendar quarter, and some data are 
nevertheless inaccurate or incomplete, the error or omission is not a 
violation of the act or this part provided that the institution 
corrects or completes the information prior to submitting the loan/
application register to its regulatory agency.

Appendix A to Part 1003--Form and Instructions for Completion of HMDA 
Loan/Application Register

Paperwork Reduction Act Notice

    This report is required by law (12 U.S.C. 2801-2810 and 12 CFR 
1003). An agency may not conduct or sponsor, and an organization is 
not required to respond to, a collection of information unless it 
displays a valid Office of Management and Budget (OMB) Control 
Number. See 12 CFR 1003.1(a) for the valid OMB Control Numbers 
applicable to this information collection. Send comments regarding 
this burden estimate or any other aspect of this collection of 
information, including suggestions for reducing the burden, to the 
respective agencies and to OMB, Office of Information and Regulatory 
Affairs, Paperwork Reduction Project, Washington, DC 20503. Be sure 
to reference the applicable agency and the OMB Control Number, as 
found in 12 CFR 1003.1(a), when submitting comments to OMB.

I. Instructions for Completion of Loan/Application Register

A. Application or Loan Information

    1. Application or Loan Number. Enter an identifying loan number 
that can be used later to retrieve the loan or application file. It 
can be any number of your institution's choosing (not exceeding 25 
characters). You may use letters, numerals, or a combination of 
both.
    2. Date Application Received. Enter the date the loan 
application was received by your institution by month, day, and 
year. If your institution normally records the date shown on the 
application form you may use that date instead. Enter ``NA'' for 
loans purchased by your institution. For paper submissions only, use 
numerals in the form MM/DD/YYYY (for example, 01/15/2003). For 
submissions in electronic form, the proper format is YYYYMMDD.
    3. Type of Loan or Application. Indicate the type of loan or 
application by entering the applicable Code from the following:

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

    4. Property Type. Indicate the property type by entering the 
applicable Code from the following:

Code 1--One-to four-family dwelling (other than manufactured 
housing)
Code 2--Manufactured housing
Code 3--Multifamily dwelling

    a. Use Code 1, not Code 3, for loans on individual condominium 
or cooperative units.
    b. If you cannot determine (despite reasonable efforts to find 
out) whether the loan or application relates to a manufactured home, 
use Code 1.
    5. Purpose of Loan or Application. Indicate the purpose of the 
loan or application by entering the applicable Code from the 
following:

Code 1--Home purchase
Code 2--Home improvement
Code 3--Refinancing

    a. Do not report a refinancing if, under the loan agreement, you 
were unconditionally obligated to refinance the obligation, or you 
were obligated to refinance the obligation subject to conditions 
within the borrower's control.
    6. Owner Occupancy. Indicate whether the property to which the 
loan or loan application relates is to be owner-occupied as a 
principal residence by entering the applicable Code from the 
following:

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

    a. For purchased loans, use Code 1 unless the loan documents or 
application indicate that the property will not be owner-occupied as 
a principal residence.
    b. Use Code 2 for second homes or vacation homes, as well as for 
rental properties.
    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.
    7. Loan Amount. Enter the amount of the loan or application. Do 
not report loans below $500. Show the amount in thousands, rounding 
to the nearest thousand (round $500 up to the next $1,000). For 
example, a loan for $167,300 should be entered as 167 and one for 
$15,500 as 16.
    a. For a home purchase loan that you originated, enter the 
principal amount of the loan.
    b. For a home purchase loan that you purchased, enter the unpaid 
principal balance of the loan at the time of purchase.
    c. For a home improvement loan, enter the entire amount of the 
loan--including unpaid finance charges if that is how such loans are 
recorded on your books--even if only a part of the proceeds is 
intended for home improvement.
    d. If you opt to report home-equity lines of credit, report only 
the portion of the line intended for home improvement or home 
purchase.
    e. For a refinancing, indicate the total amount of the 
refinancing, including both the amount outstanding on the original 
loan and any amount of ``new money.''
    f. For a loan application that was denied or withdrawn, enter 
the amount for which the applicant applied.
    8. Request for Preapproval of a Home Purchase Loan. Indicate 
whether the application or loan involved a request for preapproval 
of a home purchase loan by entering the applicable Code from the 
following:

Code 1--Preapproval requested
Code 2--Preapproval not requested
Code 3--Not applicable

    a. Enter Code 2 if your institution has a covered preapproval 
program but the applicant does not request a preapproval.
    b. Enter Code 3 if your institution does not have a preapproval 
program as defined in Sec.  1003.2.
    c. Enter Code 3 for applications or loans for home improvement 
or refinancing, and for purchased loans.

B. Action Taken

    1. Type of Action. Indicate the type of action taken on the 
application or loan by using one of the following Codes.

Code 1--Loan originated
Code 2--Application approved but not accepted
Code 3--Application denied
Code 4--Application withdrawn
Code 5--File closed for incompleteness
Code 6--Loan purchased by your institution
Code 7--Preapproval request denied
Code 8--Preapproval request approved but not accepted (optional 
reporting)

    a. Use Code 1 for a loan that is originated, including one 
resulting from a request for preapproval.
    b. For a counteroffer (your offer to the applicant to make the 
loan on different terms or in a different amount from the terms or 
amount applied for), use Code 1 if the applicant accepts. Use Code 3 
if the applicant turns down the counteroffer or does not respond.
    c. Use Code 2 when the application is approved but the applicant 
(or the loan broker or correspondent) fails to respond to your 
notification of approval or your commitment letter within the 
specified time. Do not use this Code for a preapproval request.
    d. Use Code 4 only when the application is expressly withdrawn 
by the applicant before a credit decision is made. Do not use Code 4 
if a request for preapproval is withdrawn; preapproval requests that 
are withdrawn are not reported under HMDA.
    e. Use Code 5 if you sent a written notice of incompleteness 
under Sec.  1002.9(c)(2) of Regulation B (Equal Credit Opportunity) 
and the applicant did not respond to your request for additional 
information within the period of time specified in your notice. Do 
not use this Code for requests for preapproval that are incomplete; 
these preapproval requests are not reported under HMDA.
    2. Date of Action. For paper submissions only, enter the date by 
month, day, and year,

[[Page 78472]]

using numerals in the form MM/DD/YYYY (for example, 02/22/2003). For 
submissions in electronic form, the proper format is YYYYMMDD.
    a. For loans originated, enter the settlement or closing date.
    b. For loans purchased, enter the date of purchase by your 
institution.
    c. For applications and preapprovals denied, applications and 
preapprovals approved but not accepted by the applicant, and files 
closed for incompleteness, enter the date that the action was taken 
by your institution or the date the notice was sent to the 
applicant.
    d. For applications withdrawn, enter the date you received the 
applicant's express withdrawal, or enter the date shown on the 
notification from the applicant, in the case of a written 
withdrawal.
    e. For preapprovals that lead to a loan origination, enter the 
date of the origination.

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 
the appropriate Federal agency to which you report data or the 
FFIEC.
    2. State and County. Use the Federal Information Processing 
Standard (FIPS) two-digit numerical code for the state and the 
three-digit numerical code for the county. These codes are available 
from the appropriate Federal agency to which you report data 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, the institution 
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.
    7. Requests for Preapproval. Notwithstanding paragraphs 1 
through 6, if the application is a request for preapproval that is 
denied or that is approved but not accepted by the applicant, you 
may enter ``NA'' in all four columns.

D. Applicant Information--Ethnicity, Race, Sex, and Income

    Appendix B contains instructions for the collection of data on 
ethnicity, race, and sex, and also contains a sample form for data 
collection.
    1. Applicability. Report this information for loans that you 
originate as well as for applications that do not result in an 
origination.
    a. You need not collect or report this information for loans 
purchased. If you choose not to report this information, use the 
Codes for ``not applicable.''
    b. If the borrower or applicant is not a natural person (a 
corporation or partnership, for example), use the Codes for ``not 
applicable.''
    2. Mail, Internet, or Telephone Applications.--All loan 
applications, including applications taken by mail, internet, or 
telephone must use a collection form similar to that shown in 
Appendix B regarding ethnicity, race, and sex. For applications 
taken by telephone, the information in the collection form must be 
stated orally by the lender, except for information that pertains 
uniquely to applications taken in writing. If the applicant does not 
provide these data in an application taken by mail or telephone or 
on the internet, enter the Code for ``information not provided by 
applicant in mail, internet, or telephone application'' specified in 
paragraphs I.D.3., 4., and 5. of this appendix. (See Appendix B for 
complete information on the collection of these data in mail, 
Internet, or telephone applications.)
    3. Ethnicity of Borrower or Applicant. Use the following Codes 
to indicate the ethnicity of the applicant or borrower under column 
``A'' and of any co-applicant or co-borrower under column ``CA.''

Code 1--Hispanic or Latino
Code 2--Not Hispanic or Latino
Code 3--Information not provided by applicant in mail, internet, or 
telephone application
Code 4--Not applicable
Code 5--No co-applicant

    4. Race of Borrower or Applicant. Use the following Codes to 
indicate the race of the applicant or borrower under column ``A'' 
and of any co-applicant or co-borrower under column ``CA.''

Code 1--American Indian or Alaska Native
Code 2--Asian
Code 3--Black or African American
Code 4--Native Hawaiian or Other Pacific Islander
Code 5--White
Code 6--Information not provided by applicant in mail, internet, or 
telephone application
Code 7--Not applicable
Code 8--No co-applicant

    a. If an applicant selects more than one racial designation, 
enter all Codes corresponding to the applicant's selections.
    b. Use Code 4 (for ethnicity) and Code 7 (for race) for ``not 
applicable'' only when the applicant or co-applicant is not a 
natural person or when applicant or co-applicant information is 
unavailable because the loan has been purchased by your institution.
    c. If there is more than one co-applicant, provide the required 
information only for the first co-applicant listed on the 
application form. If there are no co-applicants or co-borrowers, use 
Code 5 (for ethnicity) and Code 8 (for race) for ``no co-applicant'' 
in the co-applicant column.
    5. Sex of Borrower or Applicant. Use the following Codes to 
indicate the sex of the applicant or borrower under column ``A'' and 
of any co-applicant or co-borrower under column ``CA.''

Code 1--Male
Code 2--Female
Code 3--Information not provided by applicant in mail, internet, or 
telephone application
Code 4--Not applicable
Code 5--No co-applicant or co-borrower

    a. Use Code 4 for ``not applicable'' only when the applicant or 
co-applicant is not a natural person or when applicant or co-
applicant information is unavailable because the loan has been 
purchased by your institution.
    b. If there is more than one co-applicant, provide the required 
information only for the first co-applicant listed on the 
application form. If there are no co-applicants or co-borrowers, use 
Code 5 for ``no co-applicant'' in the co-applicant column.
    6. Income. Enter the gross annual income that your institution 
relied on in making the credit decision.
    a. Round all dollar amounts to the nearest thousand (round $500 
up to the next $1,000), and show in thousands. For example, report 
$35,500 as 36.
    b. For loans on multifamily dwellings, enter ``NA.''
    c. If no income information is asked for or relied on in the 
credit decision, enter ``NA.''
    d. If the applicant or co-applicant is not a natural person or 
the applicant or co-applicant information is unavailable because the 
loan has been purchased by your institution, enter ``NA.''

E. Type of Purchaser

    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:


[[Page 78473]]


Code 0--Loan was not originated or was not sold in calendar year 
covered by register
Code 1--Fannie Mae
Code 2--Ginnie Mae
Code 3--Freddie Mac
Code 4--Farmer Mac
Code 5--Private securitization
Code 6--Commercial bank, savings bank, or savings association
Code 7--Life insurance company, credit union, mortgage bank, or 
finance company
Code 8--Affiliate institution
Code 9--Other type of purchaser

    a. Use Code 0 for applications that were denied, withdrawn, or 
approved but not accepted by the applicant; and for files closed for 
incompleteness.
    b. Use Code 0 if you originated or purchased a loan and did not 
sell it during that same calendar year. If you sell the loan in a 
succeeding year, you need not report the sale.
    c. Use Code 2 if you conditionally assign a loan to Ginnie Mae 
in connection with a mortgage-backed security transaction.
    d. Use Code 8 for loans sold to an institution affiliated with 
you, such as your subsidiary or a subsidiary of your parent 
corporation.

F. Reasons for Denial

    1. You may report the reason for denial, and you may indicate up 
to three reasons, using the following Codes. Leave this column blank 
if the ``action taken'' on the application is not a denial. For 
example, do not complete this column if the application was 
withdrawn or the file was closed for incompleteness.

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

    2. If your institution uses the model form for adverse action 
contained in Appendix C to Regulation B (Form C-1, Sample 
Notification Form), use the foregoing Codes as follows:
    a. Code 1 for: Income insufficient for amount of credit 
requested, and Excessive obligations in relation to income.
    b. Code 2 for: Temporary or irregular employment, and Length of 
employment.
    c. Code 3 for: Insufficient number of credit references 
provided; Unacceptable type of credit references provided; No credit 
file; Limited credit experience; Poor credit performance with us; 
Delinquent past or present credit obligations with others; 
Garnishment, attachment, foreclosure, repossession, collection 
action, or judgment; and Bankruptcy.
    d. Code 4 for: Value or type of collateral not sufficient.
    e. Code 6 for: Unable to verify credit references; Unable to 
verify employment; Unable to verify income; and Unable to verify 
residence.
    f. Code 7 for: Credit application incomplete.
    g. Code 9 for: Length of residence; Temporary residence; and 
Other reasons specified on notice.

G. Pricing-Related Data

    1. Rate Spread. a. For a home-purchase loan, a refinancing, or a 
dwelling-secured home improvement loan that you originated, report 
the spread between the annual percentage rate (APR) and the average 
prime offer rate for a comparable transaction if the spread is equal 
to or greater than 1.5 percentage points for first-lien loans or 3.5 
percentage points for subordinate-lien loans. To determine whether 
the rate spread meets this threshold, use the average prime offer 
rate in effect for the type of transaction as of the date the 
interest rate was set, and use the APR for the loan, as calculated 
and disclosed to the consumer under Sec. Sec.  1026.6 or 1026.18, as 
applicable, of Regulation Z (12 CFR part 1026). Current and historic 
average prime offer rates are set forth in the tables published on 
the FFIEC's Web site (http://www.ffiec.gov/hmda) entitled ``Average 
Prime Offer Rates-Fixed'' and ``Average Prime Offer Rates-
Adjustable.'' Use the most recently available average prime offer 
rate. ``Most recently available'' means the average prime offer rate 
set forth in the applicable table with the most recent effective 
date as of the date the interest rate was set. Do not use an average 
prime offer rate before its effective date.
    b. If the loan is not subject to Regulation Z, or is a home 
improvement loan that is not dwelling-secured, or is a loan that you 
purchased, enter ``NA.''
    c. Enter ``NA'' in the case of an application that does not 
result in a loan origination.
    d. Enter the rate spread to two decimal places, and use a 
leading zero. For example, enter 03.29. If the difference between 
the APR and the average prime offer rate is a figure with more than 
two decimal places, round the figure or truncate the digits beyond 
two decimal places.
    e. If the difference between the APR and the average prime offer 
rate is less than 1.5 percentage points for a first-lien loan and 
less than 3.5 percentage points for a subordinate-lien loan, enter 
``NA.''
    2. Date the interest rate was set. The relevant date to use to 
determine the average prime offer rate for a comparable transaction 
is the date on which the loan's interest rate was set by the 
financial institution for the final time before closing. If an 
interest rate is set pursuant to a ``lock-in'' agreement between the 
lender and the borrower, then the date on which the agreement fixes 
the interest rate is the date the rate was set. If a rate is re-set 
after a lock-in agreement is executed (for example, because the 
borrower exercises a float-down option or the agreement expires), 
then the relevant date is the date the rate is re-set for the final 
time before closing. If no lock-in agreement is executed, then the 
relevant date is the date on which the institution sets the rate for 
the final time before closing.
    3. HOEPA Status. a. For a loan that you originated or purchased 
that is subject to the Home Ownership and Equity Protection Act of 
1994 (HOEPA), as implemented in Regulation Z (12 CFR 1026.32), 
because the APR or the points and fees on the loan exceed the HOEPA 
triggers, enter Code 1.
    b. Enter Code 2 in all other cases. For example, enter Code 2 
for a loan that you originated or purchased that is not subject to 
the requirements of HOEPA for any reason; also enter Code 2 in the 
case of an application that does not result in a loan origination.

H. Lien Status

    Use the following Codes for loans that you originate and for 
applications that do not result in an origination:

Code 1--Secured by a first lien.
Code 2--Secured by a subordinate lien.
Code 3--Not secured by a lien.
Code 4--Not applicable (purchased loan).

    a. Use Codes 1 through 3 for loans that you originate, as well 
as for applications that do not result in an origination 
(applications that are approved but not accepted, denied, withdrawn, 
or closed for incompleteness).
    b. Use Code 4 for loans that you purchase.

II. Appropriate Federal Agencies for HMDA Reporting

    A. You are strongly encouraged to submit your loan/application 
register via email. If you elect to use this method of transmission 
and the appropriate Federal agency for your institution is the 
Bureau of Consumer Financial Protection, the Office of the 
Comptroller of the Currency, the Federal Deposit Insurance 
Corporation, or the National Credit Union Administration, then you 
should submit your institution's files to the email address 
dedicated to that purpose by the Bureau, which can be found on the 
Web site of the FFIEC. If one of the foregoing agencies is the 
appropriate Federal agency for your institution and you elect to 
submit your data by regular mail, then use the following address: 
HMDA, Federal Reserve Board, Attention: HMDA Processing, (insert 
name of the appropriate Federal agency for your institution), 20th & 
Constitution Ave NW., MS N502, Washington, DC 20551-0001.
    B. If the Federal Reserve System (but not the Bureau of Consumer 
Financial Protection) is the appropriate Federal agency for your 
institution, you should use the email or regular mail address of 
your district bank indicated on the Web site of the FFIEC. If the 
Department of Housing and Urban Development is the appropriate 
Federal agency for your institution, then you should use the email 
or regular mail address indicated on the Web site of the FFIEC.

BILLING CODE 4810-AM-P

[[Page 78474]]

[GRAPHIC] [TIFF OMITTED] TR19DE11.016


[[Page 78475]]


[GRAPHIC] [TIFF OMITTED] TR19DE11.017


[[Page 78476]]


[GRAPHIC] [TIFF OMITTED] TR19DE11.018

BILLING CODE 4810-AM-C

[[Page 78477]]

Appendix B to Part 1003--Form and Instructions for Data Collection on 
Ethnicity, Race, and Sex

I. Instructions on Collection of Data on Ethnicity, Race, and Sex

    You may list questions regarding the ethnicity, race, and sex of 
the applicant on your loan application form, or on a separate form 
that refers to the application. (See the sample form below for model 
language.)

II. Procedures

    A. You must ask the applicant for this information (but you 
cannot require the applicant to provide it) whether the application 
is taken in person, by mail or telephone, or on the internet. For 
applications taken by telephone, the information in the collection 
form must be stated orally by the lender, except for that 
information which pertains uniquely to applications taken in 
writing.
    B. Inform the applicant that the Federal government requests 
this information in order to monitor compliance with Federal 
statutes that prohibit lenders from discriminating against 
applicants on these bases. Inform the applicant that if the 
information is not provided where the application is taken in 
person, you are required to note the data on the basis of visual 
observation or surname.
    C. You must offer the applicant the option of selecting one or 
more racial designations.
    D. If the applicant chooses not to provide the information for 
an application taken in person, note this fact on the form and then 
note the applicant's ethnicity, race, and sex on the basis of visual 
observation and surname, to the extent possible.
    E. If the applicant declines to answer these questions or fails 
to provide the information on an application taken by mail or 
telephone or on the internet, the data need not be provided. In such 
a case, indicate that the application was received by mail, 
telephone, or Internet, if it is not otherwise evident on the face 
of the application.
BILLING CODE 4810-AM-P

[[Page 78478]]

[GRAPHIC] [TIFF OMITTED] TR19DE11.019


[[Page 78479]]


BILLING CODE 4810-AM-C

Supplement I to Part 1003--Staff Commentary

Introduction

    1. Status. The commentary in this supplement is the vehicle by 
which the Bureau of Consumer Financial Protection issues formal 
staff interpretations of Regulation C (12 CFR part 1003).

Section 1003.1--Authority, Purpose, and Scope

    1(c) Scope.
    1. General. The comments in this section address issues 
affecting coverage of institutions and exemptions from coverage.
    2. The broker rule and the meaning of ``broker'' and 
``investor.'' For the purposes of the guidance given in this 
commentary, an institution that takes and processes a loan 
application and arranges for another institution to acquire the loan 
at or after closing is acting as a ``broker,'' and an institution 
that acquires a loan from a broker at or after closing is acting as 
an ``investor.'' (The terms used in this commentary may have 
different meanings in certain parts of the mortgage lending 
industry, and other terms may be used in place of these terms, for 
example in the Federal Housing Administration mortgage insurance 
programs.) Depending on the facts, a broker may or may not make a 
credit decision on an application (and thus it may or may not have 
reporting responsibilities). If the broker makes a credit decision, 
it reports that decision; if it does not make a credit decision, it 
does not report. If an investor reviews an application and makes a 
credit decision prior to closing, the investor reports that 
decision. If the investor does not review the application prior to 
closing, it reports only the loans that it purchases; it does not 
report the loans it does not purchase. An institution that makes a 
credit decision on an application prior to closing reports that 
decision regardless of whose name the loan closes in.
    3. Illustrations of the broker rule. Assume that, prior to 
closing, four investors receive the same application from a broker; 
two deny it, one approves it, and one approves it and acquires the 
loan. In these circumstances, the first two report denials, the 
third reports the transaction as approved but not accepted, and the 
fourth reports an origination (whether the loan closes in the name 
of the broker or the investor). Alternatively, assume that the 
broker denies a loan before sending it to an investor; in this 
situation, the broker reports a denial.
    4. Broker's use of investor's underwriting criteria. If a broker 
makes a credit decision based on underwriting criteria set by an 
investor, but without the investor's review prior to closing, the 
broker has made the credit decision. The broker reports as an 
origination a loan that it approves and closes, and reports as a 
denial an application that it turns down (either because the 
application does not meet the investor's underwriting guidelines or 
for some other reason). The investor reports as purchases only those 
loans it purchases.
    5. Insurance and other criteria. If an institution evaluates an 
application based on the criteria or actions of a third party other 
than an investor (such as a government or private insurer or 
guarantor), the institution must report the action taken on the 
application (loan originated, approved but not accepted, or denied, 
for example).
    6. Credit decision of agent is decision of principal. If an 
institution approves loans through the actions of an agent, the 
institution must report the action taken on the application (loan 
originated, approved but not accepted, or denied, for example). 
State law determines whether one party is the agent of another.
    7. Affiliate bank underwriting (250.250 review). If an 
institution makes an independent evaluation of the creditworthiness 
of an applicant (for example, as part of a preclosing review by an 
affiliate bank under 12 CFR 250.250, a regulation of the Board of 
Governors of the Federal Reserve System that interprets section 23A 
of the Federal Reserve Act), the institution is making a credit 
decision. If the institution then acquires the loan, it reports the 
loan as an origination whether the loan closes in the name of the 
institution or its affiliate. An institution that does not acquire 
the loan but takes some other action reports that action.
    8. Participation loan. An institution that originates a loan and 
then sells partial interests to other institutions reports the loan 
as an origination. An institution that acquires only a partial 
interest in such a loan does not report the transaction even if it 
has participated in the underwriting and origination of the loan.
    9. Assumptions. An assumption occurs when an institution enters 
into a written agreement accepting a new borrower as the obligor on 
an existing obligation. An institution reports an assumption (or an 
application for an assumption) as a home purchase loan in the amount 
of the outstanding principal. If a transaction does not involve a 
written agreement between a new borrower and the institution, it is 
not an assumption for HMDA purposes and is not reported.

Section 1003.2--Definitions

    Application.
    1. Consistency With Regulation B. Bureau interpretations that 
appear in the official staff commentary to Regulation B (Equal 
Credit Opportunity, 12 CFR part 1002, Supplement I) are generally 
applicable to the definition of an application under Regulation C. 
However, under Regulation C the definition of an application does 
not include prequalification requests.
    2. Prequalification. A prequalification request is a request by 
a prospective loan applicant (other than a request for preapproval) 
for a preliminary determination on whether the prospective applicant 
would likely qualify for credit under an institution's standards, or 
for a determination on the amount of credit for which the 
prospective applicant would likely qualify. Some institutions 
evaluate prequalification requests through a procedure that is 
separate from the institution's normal loan application process; 
others use the same process. In either case, Regulation C does not 
require an institution to report prequalification requests on the 
HMDA/LAR, even though these requests may constitute applications 
under Regulation B for purposes of adverse action notices.
    3. Requests for preapproval. To be a covered preapproval 
program, the written commitment issued under the program must result 
from a full review of the creditworthiness of the applicant, 
including such verification of income, resources and other matters 
as is typically done by the institution as part of its normal credit 
evaluation program. In addition to conditions involving the 
identification of a suitable property and verification that no 
material change has occurred in the applicant's financial condition 
or creditworthiness, the written commitment may be subject only to 
other conditions (unrelated to the financial condition or 
creditworthiness of the applicant) that the lender ordinarily 
attaches to a traditional home mortgage application approval. These 
conditions are limited to conditions such as requiring an acceptable 
title insurance binder or a certificate indicating clear termite 
inspection, and, in the case where the applicant plans to use the 
proceeds from the sale of the applicant's present home to purchase a 
new home, a settlement statement showing adequate proceeds from the 
sale of the present home.
    Branch office.
    1. Credit union. For purposes of Regulation C, a ``branch'' of a 
credit union is any office where member accounts are established or 
loans are made, whether or not the office has been approved as a 
branch by a Federal or state agency. (See 12 U.S.C. 1752.)
    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.)
    Dwelling.
    1. Coverage. The definition of ``dwelling'' is not limited to 
the principal or other residence of the applicant or borrower, and 
thus includes vacation or second homes and rental properties. A 
dwelling also includes a multifamily structure such as an apartment 
building.
    2. Exclusions. Recreational vehicles such as boats or campers 
are not dwellings for purposes of HMDA. Also excluded are transitory 
residences such as hotels, hospitals, and college dormitories, whose 
occupants have principal residences elsewhere.
    Financial institution.
    1. General. An institution that met the test for coverage under 
HMDA in year 1, and then

[[Page 78480]]

ceases to meet the test (for example, because its assets fall below 
the threshold on December 31 of year 2) stops collecting HMDA data 
beginning with year 3. Similarly, an institution that did not meet 
the coverage test for a given year, and then meets the test in the 
succeeding year, begins collecting HMDA data in the calendar year 
following the year in which it meets the test for coverage. For 
example, a for-profit mortgage lending institution (other than a 
bank, savings association, or credit union) that, in year 1, falls 
below the thresholds specified in the definition of Financial 
institution in Sec.  1003.2, but meets one of them in year 2, need 
not collect data in year 2, but begins collecting data in year 3.
    2. Adjustment of exemption threshold for depository 
institutions. For data collection in 2011, the asset-size exemption 
threshold is $40 million. Depository institutions with assets at or 
below $40 million as of December 31, 2010 are exempt from collecting 
data for 2011.
    3. Coverage after a merger. Several scenarios of data-collection 
responsibilities for the calendar year of a merger are described 
below. Under all the scenarios, if the merger results in a covered 
institution, that institution must begin data collection January 1 
of the following calendar year.
    i. Two institutions are not covered by Regulation C because of 
asset size. The institutions merge. No data collection is required 
for the year of the merger (even if the merger results in a covered 
institution).
    ii. A covered institution and an exempt institution merge. The 
covered institution is the surviving institution. For the year of 
the merger, data collection is required for the covered 
institution's transactions. Data collection is optional for 
transactions handled in offices of the previously exempt 
institution.
    iii. A covered institution and an exempt institution merge. The 
exempt institution is the surviving institution, or a new 
institution is formed. Data collection is required for transactions 
of the covered institution that take place prior to the merger. Data 
collection is optional for transactions taking place after the 
merger date.
    iv. Two covered institutions merge. Data collection is required 
for the entire year. The surviving or resulting institution files 
either a consolidated submission or separate submissions for that 
year.
    4. Originations. HMDA coverage depends in part on whether an 
institution has originated home purchase loans. To determine whether 
activities with respect to a particular loan constitute an 
origination, institutions should consult, among other parts of the 
staff commentary, the discussion of the broker rule under Sec. Sec.  
1003.1(c) and 1003.4(a).
    5. Branches of foreign banks--treated as banks. A Federal branch 
or a state-licensed insured branch of a foreign bank is a ``bank'' 
under section 3(a)(1) of the Federal Deposit Insurance Act (12 
U.S.C. 1813(a)), and is covered by HMDA if it meets the tests for a 
depository institution found in Sec.  1003.2 of Regulation C.
    6. Branches and offices of foreign banks--treated as for-profit 
mortgage lending institutions. Federal agencies, state-licensed 
agencies, state-licensed uninsured branches of foreign banks, 
commercial lending companies owned or controlled by foreign banks, 
and entities operating under section 25 or 25A of the Federal 
Reserve Act, 12 U.S.C. 601 and 611 (Edge Act and agreement 
corporations) are not ``banks'' under the Federal Deposit Insurance 
Act. These entities are nonetheless covered by HMDA if they meet the 
tests for a for-profit nondepository mortgage lending institution 
found in Sec.  1003.2 of Regulation C.
    Home improvement loan.
    1. Classification requirement for loans not secured by a lien on 
a dwelling. An institution has ``classified'' a loan that is not 
secured by a lien on a dwelling as a home improvement loan if it has 
entered the loan on its books as a home improvement loan, or has 
otherwise coded or identified the loan as a home improvement loan. 
For example, an institution that has booked a loan or reported it on 
a ``call report'' as a home improvement loan has classified it as a 
home improvement loan. An institution may also classify loans as 
home improvement loans in other ways (for example, by color-coding 
loan files).
    2. Improvements to real property. Home improvements include 
improvements both to a dwelling and to the real property on which 
the dwelling is located (for example, installation of a swimming 
pool, construction of a garage, or landscaping).
    3. Commercial and other loans. A home improvement loan may 
include a loan originated outside an institution's residential 
mortgage lending division (such as a loan to improve an apartment 
building made through the commercial loan department).
    4. Mixed-use property. A loan to improve property used for 
residential and commercial purposes (for example, a building 
containing apartment units and retail space) is a home improvement 
loan if the loan proceeds are used primarily to improve the 
residential portion of the property. If the loan proceeds are used 
to improve the entire property (for example, to replace the heating 
system), the loan is a home improvement loan if the property itself 
is primarily residential. An institution may use any reasonable 
standard to determine the primary use of the property, such as by 
square footage or by the income generated. An institution may select 
the standard to apply on a case-by-case basis. If the loan is 
unsecured, to report the loan as a home improvement loan the 
institution must also have classified it as such.
    5. Multiple-category loans. If a loan is a home improvement loan 
as well as a refinancing, an institution reports the loan as a home 
improvement loan.
    Home purchase loan.
    1. Multiple properties. A home purchase loan includes a loan 
secured by one dwelling and used to purchase another dwelling.
    2. Mixed-use property. A dwelling-secured loan to purchase 
property used primarily for residential purposes (for example, an 
apartment building containing a convenience store) is a home 
purchase loan. An institution may use any reasonable standard to 
determine the primary use of the property, such as by square footage 
or by the income generated. An institution may select the standard 
to apply on a case-by-case basis.
    3. Farm loan. A loan to purchase property used primarily for 
agricultural purposes is not a home purchase loan even if the 
property includes a dwelling. An institution may use any reasonable 
standard to determine the primary use of the property, such as by 
reference to the exemption from Regulation X (Real Estate Settlement 
Procedures, 12 CFR 1024.5(b)(1)) for a loan on property of 25 acres 
or more. An institution may select the standard to apply on a case-
by-case basis.
    4. Commercial and other loans. A home purchase loan may include 
a loan originated outside an institution's residential mortgage 
lending division (such as a loan for the purchase of an apartment 
building made through the commercial loan department).
    5. Construction and permanent financing. A home purchase loan 
includes both a combined construction/permanent loan and the 
permanent financing that replaces a construction-only loan. It does 
not include a construction-only loan, which is considered 
``temporary financing'' under Regulation C and is not reported.
    6. Second mortgages that finance the downpayments on first 
mortgages. If an institution making a first mortgage loan to a home 
purchaser also makes a second mortgage loan to the same purchaser to 
finance part or all of the home purchaser's downpayment, the 
institution reports each loan separately as a home purchase loan.
    7. Multiple-category loans. If a loan is a home purchase loan as 
well as a home improvement loan, or a refinancing, an institution 
reports the loan as a home purchase loan.
    Manufactured home.
    1. Definition of a manufactured home. The definition in Sec.  
1003.2 refers to the Federal building code for factory-built housing 
established by the Department of Housing and Urban Development 
(HUD). The HUD code requires generally that housing be essentially 
ready for occupancy upon leaving the factory and being transported 
to a building site. Modular homes that meet all of the HUD code 
standards are included in the definition because they are ready for 
occupancy upon leaving the factory. Other factory-built homes, such 
as panelized and pre-cut homes, generally do not meet the HUD code 
because they require a significant amount of construction on site 
before they are ready for occupancy. Loans and applications relating 
to manufactured homes that do not meet the HUD code should not be 
identified as manufactured housing under HMDA.
    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,

[[Page 78481]]

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 1003.4--Compilation of Loan Data

    4(a) Data format and itemization.
    1. Reporting requirements. i. An institution reports data on 
loans that it originated and loans that it purchased during the 
calendar year described in the report. An institution reports these 
data even if the loans were subsequently sold by the institution.
    ii. An institution reports the data for loan applications that 
did not result in originations--for example, applications that the 
institution denied or that the applicant withdrew during the 
calendar year covered by the report.
    iii. In the case of brokered loan applications or applications 
forwarded through a correspondent, the institution reports as 
originations the loans that it approved and subsequently acquired 
per a pre-closing arrangement (whether or not they closed in the 
institution's name). Additionally, the institution reports the data 
for all applications that did not result in originations--for 
example, applications that the institution denied or that the 
applicant withdrew during the calendar year covered by the report 
(whether or not they would have closed in the institution's name). 
For all of these loans and applications, the institution reports the 
required data regarding the borrower's or applicant's ethnicity, 
race, sex, and income.
    iv. Loan originations are to be reported only once. If the 
institution is the loan broker or correspondent, it does not report 
as originations the loans that it forwarded to another lender for 
approval prior to closing, and that were approved and subsequently 
acquired by that lender (whether or not they closed in the 
institution's name).
    v. An institution reports applications that were received in the 
previous calendar year but were acted upon during the calendar year 
covered by the current register.
    vi. A financial institution submits all required data to the 
appropriate Federal agency in one package, with the prescribed 
transmittal sheet. An officer of the institution certifies to the 
accuracy of the data.
    vii. The transmittal sheet states the total number of line 
entries contained in the accompanying data transmission.
    2. Updating--agency requirements. Certain state or Federal 
regulations, such as the Federal Deposit Insurance Corporation's 
regulations, may require an institution to update its data more 
frequently than is required under Regulation C.
    3. Form of quarterly updating. An institution may maintain the 
quarterly updates of the HMDA/LAR in electronic or any other format, 
provided the institution can make the information available to its 
regulatory agency in a timely manner upon request.
    Paragraph 4(a)(1).
    1. Application date--consistency. In reporting the date of 
application, an institution reports the date the application was 
received or the date shown on the application. Although an 
institution need not choose the same approach for its entire HMDA 
submission, it should be generally consistent (such as by routinely 
using one approach within a particular division of the institution 
or for a category of loans).
    2. Application date--application forwarded by a broker. For an 
application forwarded by a broker, an institution reports the date 
the application was received by the broker, the date the application 
was received by the institution, or the date shown on the 
application. Although an institution need not choose the same 
approach for its entire HMDA submission, it should be generally 
consistent (such as by routinely using one approach within a 
particular division of the institution or for a category of loans).
    3. Application date--reinstated application. If, within the same 
calendar year, an applicant asks an institution to reinstate a 
counteroffer that the applicant previously did not accept (or asks 
the institution to reconsider an application that was denied, 
withdrawn, or closed for incompleteness), the institution may treat 
that request as the continuation of the earlier transaction or as a 
new transaction. If the institution treats the request for 
reinstatement or reconsideration as a new transaction, it reports 
the date of the request as the application date.
    4. Application or loan number. An institution must ensure that 
each identifying number is unique within the institution. If an 
institution's register contains data for branch offices, for 
example, the institution could use a letter or a numerical code to 
identify the loans or applications of different branches, or could 
assign a certain series of numbers to particular branches to avoid 
duplicate numbers. Institutions are strongly encouraged not to use 
the applicant's or borrower's name or social security number, for 
privacy reasons.
    5. Application--year action taken. An institution must report an 
application in the calendar year in which the institution takes 
final action on the application.
    Paragraph 4(a)(3).
    1. Purpose--statement of applicant. An institution may rely on 
the oral or written statement of an applicant regarding the proposed 
use of loan proceeds. For example, a lender could use a check-box, 
or a purpose line, on a loan application to determine whether or not 
the applicant intends to use loan proceeds for home improvement 
purposes.
    2. Purpose--multiple-purpose loan. If a loan is a home purchase 
loan as well as a home improvement loan, or a refinancing, an 
institution reports the loan as a home purchase loan. If a loan is a 
home improvement loan as well as a refinancing, an institution 
reports the loan as a home improvement loan.
    Paragraph 4(a)(6).
    1. Occupancy--multiple properties. If a loan relates to multiple 
properties, the institution reports the owner occupancy status of 
the property for which property location is being reported. (See the 
comments to paragraph 4(a)(9)).
    Paragraph 4(a)(7).
    1. Loan amount--counteroffer. If an applicant accepts a 
counteroffer for an amount different from the amount initially 
requested, the institution reports the loan amount granted. If an 
applicant does not accept a counteroffer or fails to respond, the 
institution reports the loan amount initially requested.
    2. Loan amount--multiple-purpose loan. Except in the case of a 
home-equity line of credit, an institution reports the entire amount 
of the loan, even if only a part of the proceeds is intended for 
home purchase or home improvement.
    3. Loan amount--home-equity line. An institution that has chosen 
to report home-equity lines of credit reports only the part that is 
intended for home-improvement or home-purchase purposes.
    4. Loan amount--assumption. An institution that enters into a 
written agreement accepting a new party as the obligor on a loan 
reports the amount of the outstanding principal on the assumption as 
the loan amount.
    Paragraph 4(a)(8).
    1. Action taken--counteroffers. If an institution makes a 
counteroffer to lend on terms different from the applicant's initial 
request (for example, for a shorter loan maturity or in a different 
amount) and the applicant does not accept the counteroffer or fails 
to respond, the institution reports the action taken as a denial on 
the original terms requested by the applicant.
    2. Action taken--rescinded transactions. If a borrower rescinds 
a transaction after closing, the institution may report the 
transaction either as an origination or as an application that was 
approved but not accepted.
    3. Action taken--purchased loans. An institution reports the 
loans that it purchased during the calendar year, and does not 
report the loans that it declined to purchase.
    4. Action taken--conditional approvals. If an institution issues 
a loan approval subject to the applicant's meeting underwriting 
conditions (other than customary loan commitment or loan-closing 
conditions, such as a clear-title requirement or an acceptable 
property survey) and the applicant does not meet them, the 
institution reports the action taken as a denial.
    5. Action taken date--approved but not accepted. For a loan 
approved by an institution but not accepted by the applicant, the 
institution reports any reasonable date, such as the approval date, 
the deadline for accepting the offer, or the date the file was 
closed. Although an institution need not choose the same approach 
for its entire HMDA submission, it should be generally consistent 
(such as by routinely using one approach within a particular 
division of the institution or for a category of loans).
    6. Action taken date--originations. For loan originations, an 
institution generally reports the settlement or closing date. For 
loan originations that an institution acquires through a broker, the 
institution reports either the settlement or closing date, or the 
date the institution acquired the loan from the broker. If the 
disbursement of funds takes place on a date later than the 
settlement or closing date, the institution may use the date

[[Page 78482]]

of disbursement. For a construction/permanent loan, the institution 
reports either the settlement or closing date, or the date the loan 
converts to the permanent financing. Although an institution need 
not choose the same approach for its entire HMDA submission, it 
should be generally consistent (such as by routinely using one 
approach within a particular division of the institution or for a 
category of loans). Notwithstanding this flexibility regarding the 
use of the closing date in connection with reporting the date action 
was taken, the year in which an origination goes to closing is the 
year in which the institution must report the origination.
    7. Action taken--pending applications. An institution does not 
report any loan application still pending at the end of the calendar 
year; it reports that application on its register for the year in 
which final action is taken.
    Paragraph 4(a)(9).
    1. Property location--multiple properties (home improvement/
refinance of home improvement). For a home improvement loan, an 
institution reports the property being improved. If more than one 
property is being improved, the institution reports the location of 
one of the properties or reports the loan using multiple entries on 
its HMDA/LAR (with unique identifiers) and allocating the loan 
amount among the properties.
    2. Property location--multiple properties (home purchase/
refinance of home purchase). For a home purchase loan, an 
institution reports the property taken as security. If an 
institution takes more than one property as security, the 
institution reports the location of the property being purchased if 
there is just one. If the loan is to purchase multiple properties 
and is secured by multiple properties, the institution reports the 
location of one of the properties or reports the loan using multiple 
entries on its HMDA/LAR (with unique identifiers) and allocating the 
loan amount among the properties.
    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.
    4. Property location--mobile or manufactured home. If 
information about the potential site of a mobile or manufactured 
home is not available, an institution reports using the Code for 
``not applicable.''
    Paragraph 4(a)(10).
    1. Applicant data--completion by applicant. An institution 
reports the monitoring information as provided by the applicant. For 
example, if an applicant checks the ``Asian'' box the institution 
reports using the ``Asian'' Code.
    2. Applicant data--completion by lender. If an applicant fails 
to provide the requested information for an application taken in 
person, the institution reports the data on the basis of visual 
observation or surname.
    3. Applicant data--application completed in person. When an 
applicant meets in person with a lender to complete an application 
that was begun by mail, internet, or telephone, the institution must 
request the monitoring information. If the meeting occurs after the 
application process is complete, for example, at closing, the 
institution is not required to obtain monitoring information.
    4. Applicant data--joint applicant. A joint applicant may enter 
the government monitoring information on behalf of an absent joint 
applicant. If the information is not provided, the institution 
reports using the Code for ``information not provided by applicant 
in mail, internet, or telephone application.''
    5. Applicant data--video and other electronic-application 
processes. An institution that accepts applications through 
electronic media with a video component treats the applications as 
taken in person and collects the information about the ethnicity, 
race, and sex of applicants. An institution that accepts 
applications through electronic media without a video component (for 
example, the internet or facsimile) treats the applications as 
accepted by mail.
    6. Income data--income relied on. An institution reports the 
gross annual income relied on in evaluating the creditworthiness of 
applicants. For example, if an institution relies on an applicant's 
salary to compute a debt-to-income ratio but also relies on the 
applicant's annual bonus to evaluate creditworthiness, the 
institution reports the salary and the bonus to the extent relied 
upon. Similarly, if an institution relies on the income of a 
cosigner to evaluate creditworthiness, the institution includes this 
income to the extent relied upon. But an institution does not 
include the income of a guarantor who is only secondarily liable.
    7. Income data--co-applicant. If two persons jointly apply for a 
loan and both list income on the application, but the institution 
relies only on the income of one applicant in computing ratios and 
in evaluating creditworthiness, the institution reports only the 
income relied on.
    8. Income data--loan to employee. An institution may report 
``NA'' in the income field for loans to its employees to protect 
their privacy, even though the institution relied on their income in 
making its credit decisions.
    Paragraph 4(a)(11).
    1. Type of purchaser--loan-participation interests sold to more 
than one entity. An institution that originates a loan, and then 
sells it to more than one entity, reports the ``type of purchaser'' 
based on the entity purchasing the greatest interest, if any. If an 
institution retains a majority interest, it does not report the 
sale.
    2. Type of purchaser--swapped loans. Loans ``swapped'' for 
mortgage-backed securities are to be treated as sales; the purchaser 
is the type of entity receiving the loans that are swapped.
    Paragraph 4(a)(12)(ii).
    1. Average prime offer rate. Average prime offer rates are 
annual percentage rates derived from average interest rates, points, 
and other loan pricing terms offered to borrowers by a 
representative sample of lenders for mortgage loans that have low-
risk pricing characteristics. Other pricing terms include commonly 
used indices, margins, and initial fixed-rate periods for variable-
rate transactions. Relevant pricing characteristics include a 
consumer's credit history and transaction characteristics such as 
the loan-to-value ratio, owner-occupant status, and purpose of the 
transaction. To obtain average prime offer rates, the Bureau uses a 
survey of lenders that both meets the criteria of Sec.  
1003.4(a)(12)(ii) and provides pricing terms for at least two types 
of variable-rate transactions and at least two types of non-
variable-rate transactions. An example of such a survey is the 
Freddie Mac Primary Mortgage Market Survey[supreg].
    2. Comparable transaction. The rate spread reporting requirement 
applies to a reportable loan with an annual percentage rate that 
exceeds by the specified margin (or more) the average prime offer 
rate for a comparable transaction as of the date the interest rate 
is set. The tables of average prime offer rates published by the 
Bureau (see comment 4(a)(12)(ii)-3) indicate how to identify the 
comparable transaction.
    3. Bureau tables. The Bureau publishes on the FFIEC's Web site 
(http://www.ffiec.gov/hmda), in table form, average prime offer 
rates for a wide variety of transaction types. The Bureau calculates 
an annual percentage rate, consistent with Regulation Z (see 12 CFR 
1026.22 and Part 1026, Appendix J), for each transaction type for 
which pricing terms are available from the survey described in 
comment 4(a)(12)(ii)-1. The Bureau estimates annual percentage rates 
for other types of transactions for which direct survey data are not 
available based on the loan pricing terms available in the survey 
and other information. The Bureau publishes on the FFIEC's Web site 
the methodology it uses to arrive at these estimates.
    Paragraph 4(a)(14).
    1. Determining lien status for applications and loans 
originated. i. Lenders are required to report lien status for loans 
they originate and applications that do not result in originations. 
Lien status is determined by reference to the best information 
readily available to the lender at the time final action is taken 
and to the lender's own procedures. Thus, lenders may rely on the 
title search they routinely perform as part of their underwriting 
procedures--for example, for home purchase loans. Regulation C does 
not require lenders to perform title searches solely to comply with 
HMDA reporting requirements. Lenders may rely on other information 
that is readily available to them at the time final action is taken 
and that they reasonably believe is accurate, such as the 
applicant's statement on the application or the applicant's credit 
report. For example, where the applicant indicates on the 
application that there is a mortgage on the property or where the 
applicant's credit report shows that the applicant has a mortgage--
and that mortgage is not going to be paid off as part of the 
transaction--the lender may assume that the loan it originates is 
secured by a subordinate lien. If the same application did not 
result in an origination--for example, because the application is 
denied or withdrawn--the lender would

[[Page 78483]]

report the application as an application for a subordinate-lien 
loan.
    ii. Lenders may also consider their established procedures when 
determining lien status for applications that do not result in 
originations. For example, a consumer applies to a lender to 
refinance a $100,000 first mortgage; the consumer also has a home 
equity line of credit for $20,000. If the lender's practice in such 
a case is to ensure that it will have first-lien position--through a 
subordination agreement with the holder of the mortgage on the home 
equity line--then the lender should report the application as an 
application for a first-lien loan.
    Paragraph 4(c)(3).
    1. An institution that opts to report home-equity lines reports 
the disposition of all applications, not just originations.
    4(d) Excluded data.
    1. Mergers, purchases in bulk, and branch acquisitions. If a 
covered institution acquires loans in bulk from another institution 
(for example, from the receiver for a failed institution) but no 
merger or acquisition of the institution, or acquisition of a 
branch, is involved, the institution reports the loans as purchased 
loans.

Section 1003.5(a)--Disclosure and Reporting

    5(a) Reporting to agency.
    1. Submission of data. Institutions submit data to the 
appropriate Federal agencies in an automated, machine-readable form. 
The format must conform to that of the HMDA/LAR. An institution 
should contact the appropriate Federal agency for information 
regarding procedures and technical specifications for automated data 
submission; in some cases, agencies also make software available for 
automated data submission. The data are edited before submission, 
using the edits included in the agency-supplied software or 
equivalent edits in software available from vendors or developed in-
house.
    2. Submission in paper form. Institutions that report twenty-
five or fewer entries on their HMDA/LAR may collect and report the 
data in paper form. An institution that submits its register in non-
automated form sends two copies that are typed or computer printed 
and must use the format of the HMDA/LAR (but need not use the form 
itself). Each page must be numbered along with the total number of 
pages (for example, ``Page 1 of 3'').
    3. Procedures for entering data. The required data are entered 
in the register for each loan origination, each application acted 
on, and each loan purchased during the calendar year. The 
institution should decide on the procedure it wants to follow--for 
example, whether to begin entering the required data, when an 
application is received, or to wait until final action is taken 
(such as when a loan goes to closing or an application is denied).
    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.
    5. Change in appropriate Federal agency. If the appropriate 
Federal agency for a covered institution changes (as a consequence 
of a merger or a change in the institution's charter, for example), 
the institution must report data to the new appropriate Federal 
agency beginning with the year of the change.
    6. Subsidiaries. An institution is a subsidiary of a bank or 
savings association (for purposes of reporting HMDA data to the same 
agency as the parent) if the bank or savings association holds or 
controls an ownership interest that is greater than 50 percent of 
the institution.
    7. Transmittal sheet--additional data submissions. If an 
additional data submission becomes necessary (for example, because 
the institution discovers that data were omitted from the initial 
submission, or because revisions are called for), that submission 
must be accompanied by a transmittal sheet.
    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.
    5(b) Public disclosure of statement.
    1. Business day. For purposes of Sec.  1003.5, a business day is 
any calendar day other than a Saturday, Sunday, or legal public 
holiday.
    2. Format. An institution may make the disclosure statement 
available in paper form or, if the person requesting the data 
agrees, in electronic form.
    5(c) Public disclosure of modified loan/application register.
    1. Format. An institution may make the modified register 
available in paper or electronic form. Although institutions are not 
required to make the modified register available in census tract 
order, they are strongly encouraged to do so in order to enhance its 
utility to users.
    5(e) Notice of availability.
    1. Poster--suggested text. An institution may use any text that 
meets the requirements of the regulation. Some of the Federal 
agencies that receive HMDA data provide HMDA posters that an 
institution can use to inform the public of the availability of its 
HMDA data, or the institution may create its own posters. If an 
institution prints its own, the following language is suggested but 
is not required:

Home Mortgage Disclosure Act Notice

    The HMDA data about our residential mortgage lending are 
available for review. The data show geographic distribution of loans 
and applications; ethnicity, race, sex, and income of applicants and 
borrowers; and information about loan approvals and denials. Inquire 
at this office regarding the locations where HMDA data may be 
inspected.
    2. Additional language for institutions making the disclosure 
statement available on request. An institution that posts a notice 
informing the public of the address to which a request should be 
sent could include the following sentence, for example, in its 
general notice: ``To receive a copy of these data send a written 
request to [address].''

Section 1003.6--Enforcement

    6(b) Bona fide errors.
    1. Bona fide error--information from third parties. An 
institution that obtains the property-location information for 
applications and loans from third parties (such as appraisers or 
vendors of ``geocoding'' services) is responsible for ensuring that 
the information reported on its HMDA/LAR is correct.

    Dated: October 24, 2011.
Alastair M. Fitzpayne,
Deputy Chief of Staff and Executive Secretary, Department of the 
Treasury.
[FR Doc. 2011-31712 Filed 12-20-11; 8:45 am]
BILLING CODE 4810-AM-P