[Federal Register Volume 83, Number 69 (Tuesday, April 10, 2018)]
[Rules and Regulations]
[Pages 15298-15301]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-06963]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Parts 25 and 195

[Docket ID OCC-2017-0008]
RIN 1557-AE15

FEDERAL RESERVE SYSTEM

12 CFR Part 228

[Docket No. R-1574]
RIN 7100-AE84

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 345

RIN 3064-AE58


Community Reinvestment Act Regulations; Correction

AGENCY: Office of the Comptroller of the Currency, Treasury (OCC); 
Board of Governors of the Federal Reserve System (Board); and Federal 
Deposit Insurance Corporation (FDIC).

ACTION: Final rule; correction.

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SUMMARY: This document supplements and corrects the preamble of the 
final rule that was published in the Federal Register on November 24, 
2017, entitled ``Community Reinvestment Act Regulations.''

DATES: Effective April 10, 2018 and applicable beginning January 1, 
2018.

FOR FURTHER INFORMATION CONTACT: 
    OCC: Emily R. Boyes, Attorney, Community and Consumer Law Division, 
(202) 649-6350; Allison Hester-Haddad, Counsel, Legislative and 
Regulatory Activities Division, (202) 649-5490; for persons who are 
deaf or hearing impaired, TTY, (202) 649-5597; or Vonda J. Eanes, 
Director for CRA and Fair Lending Policy, Compliance Risk Policy 
Division, (202) 649-5470, Office of the Comptroller of the Currency, 
400 7th Street SW, Washington, DC 20219.
    Board: Amal S. Patel, Senior Supervisory Consumer Financial 
Services Analyst, Division of Consumer and Community Affairs, (202) 
912-7879; Cathy Gates, Senior Project Manager, Division of Consumer and 
Community Affairs, (202) 452-2099, Board of Governors of the Federal

[[Page 15299]]

Reserve System, 20th Street and Constitution Avenue NW, Washington, DC 
20551.
    FDIC: Patience R. Singleton, Senior Policy Analyst, Supervisory 
Policy Branch, Division of Depositor and Consumer Protection, (202) 
898-6859; Sharon B. Vejvoda, Senior Examination Specialist, Examination 
Branch, Division of Depositor and Consumer Protection, (202) 898-3881; 
Richard M. Schwartz, Counsel, Legal Division, (202) 898-7424; or Sherry 
Ann Betancourt, Counsel, Legal Division, (202) 898-6560, Federal 
Deposit Insurance Corporation, 550 17th Street NW, Washington, DC 
20429.

SUPPLEMENTARY INFORMATION: 

I. Background

    This document supplements and corrects the SUPPLEMENTARY 
INFORMATION section of the final rule entitled ``Community Reinvestment 
Act Regulations'' (the CRA final rule), published on November 24, 2017, 
Federal Register Document 2017-25330 (82 FR 55734), by the OCC, the 
Board, and the FDIC (collectively, the Agencies), by addressing two 
additional comments that were timely submitted but inadvertently not 
included in the rulemaking record of the CRA final rule. The sections 
of this correction document are effective as if they had been included 
in the SUPPLEMENTARY INFORMATION section of the CRA final rule, 
effective January 1, 2018.

II. Waiver of Proposed Rulemaking and Waiver of 30-day Delayed 
Effective Date

    The Agencies ordinarily publish a notice of proposed rulemaking in 
the Federal Register to provide a period for public comment before the 
provisions of a rule take effect in accordance with section 553(b) of 
the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). Nevertheless, 
an agency can waive this notice and comment procedure if it finds, for 
good cause, that the notice and comment process is impracticable, 
unnecessary, or contrary to the public interest and incorporates a 
statement of its findings and reasons in the notice.
    Section 553(d) of the APA ordinarily requires a 30-day delay in the 
effective date of a final rule after the date of its publication in the 
Federal Register. This 30-day delay in effective date can be waived, 
however, if an agency finds for good cause that the delay is 
impracticable, unnecessary, or contrary to the public interest, and the 
agency incorporates a statement of the findings and its reasons in the 
rule issued.
    The Agencies do not believe that this correction document 
constitutes a rule that would be subject to APA notice and comment or 
delayed effective date requirements. The document corrects and 
supplements the Agencies' discussion of public comments in the 
SUPPLEMENTARY INFORMATION section of the CRA final rule and does not 
make any changes to the regulatory text in the CRA final rule or 
otherwise alter the CRA final rule's effect. As a result, this 
correction document is intended to ensure that the CRA final rule's 
SUPPLEMENTARY INFORMATION section accurately reflects the record of 
comments received and the Agencies' responses.
    Moreover, even if the notice and comment and delayed effective date 
requirements applied to this rule, the Agencies find that there is good 
cause to waive those requirements because they are unnecessary as the 
CRA final rule had been previously subjected to the notice and comment 
procedures. As noted above, the Agencies are merely supplementing and 
correcting a discussion of public comments in the SUPPLEMENTARY 
INFORMATION section through this correction document. The Agencies are 
not making any changes to the regulatory text in the CRA final rule. 
Therefore, the Agencies find it unnecessary to undertake further notice 
and comment procedures with respect to this correction document.

III. Summary of Errors

    In the SUPPLEMENTARY INFORMATION section of the CRA final rule, the 
Agencies discussed amendments to their Community Reinvestment Act (CRA) 
regulations. The Agencies referenced two public comments received in 
response to the Notice of Proposed Rulemaking for those amendments \1\ 
and provided responses to those comments. However, due to an 
inadvertent clerical error, the Agencies did not become aware of two 
additional comment letters that were timely submitted until after the 
Agencies had finalized and issued the amendments.
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    \1\ 82 FR 43910 (Sept. 20, 2017).
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    After analyzing the two additional comment letters, the Agencies 
have determined that no changes to the regulatory text in the CRA final 
rule are necessary. However, the Agencies are revising the 
administrative record to include the correct number of public comments 
received, the analysis of all comments received, and the Agencies' 
responses to the comments.

IV. Correction of Errors

    1. On page 55734, the third full paragraph in the third column is 
revised to read as follows:
    ``Together, the Agencies received four comment letters on the 
proposed amendments. One comment was from a community organization, two 
comment letters were from industry trade associations, and one comment 
was from a financial institution. Commenters generally supported the 
changes proposed by the Agencies, although each also raised concerns 
regarding certain aspects of the proposed rule and made other 
suggestions not related to the proposal. As explained below, the 
Agencies are finalizing the amendments as proposed.''
    2. On page 55735, the second full paragraph in the third column 
(continued in the first column on page 55736) and the first full 
paragraph in the first column on page 55736 are revised, and one 
paragraph is added following them to read as follows:
    ``The Agencies received three comment letters addressing this 
proposed revision. Two of the commenters supported the Agencies' 
efforts to conform the definition of ``home mortgage loan'' in the 
Agencies' CRA regulations to the scope of reportable transactions in 
Regulation C; one commenter opposed it. Of the two commenters 
supporting the proposed amendments, a community organization noted that 
some banks expressed concern that including home equity products 
(closed-end home equity loans and open-end home equity lines of credit) 
in CRA evaluations could have the effect of lowering the overall 
percentage of home mortgage loans made to low- and moderate-income 
borrowers and suggested that the Agencies consider evaluating home 
equity lending separately from other types of home lending. This 
commenter also urged the Agencies to consider loan purchases separately 
from originations during the CRA evaluation. A trade association 
opposed the proposed amendment to the ``home mortgage loan'' 
definition. This commenter recommended that data related to home equity 
products not be included in the CRA reports provided to the Agencies 
and the Agencies' analysis of home mortgage loans for purposes of the 
CRA evaluation. The commenter suggested that the Agencies only consider 
home equity-related data at the option of the financial institution. 
The commenter stated that treating home equity products in the same 
manner as purchase money mortgages or other real estate-secured lending 
fails to address the significant differences in the availability and 
use of these products across different geographies and income.

[[Page 15300]]

    ``The Agencies have considered all comments and are finalizing the 
amendment to the ``home mortgage loan'' definition as proposed. First, 
the commenter's suggestion to consider home mortgage loan purchases 
separately from loan originations would require a change to the lending 
test in the CRA regulations (12 CFR 25.22, 195.22, 228.22, and 345.22), 
which is beyond the scope of the proposed amendments. Second, excluding 
home equity loans and home equity lines of credit from the ``home 
mortgage loan'' definition would create an inconsistency between the 
CRA and HMDA regulations and a separate reporting requirement for CRA 
reporters that are also HMDA reporters. The change in the ``home 
mortgage loan'' definition does not require that the Agencies evaluate 
home mortgage loans with different purposes (e.g., home purchase, 
refinance, home improvement) the same during the CRA evaluation. 
Instead, the Agencies note that, as with all aspects of an 
institution's CRA performance evaluation, the Agencies will consider 
the performance context of the financial institution when evaluating 
its performance related to home mortgage lending, including home equity 
products. The Agencies emphasize that performance context may include 
additional information to explain how various loan products may impact 
bank performance. The Agencies believe that the commenters' concerns 
can be addressed effectively through the supervisory process. 
Accordingly, the Agencies are finalizing the revised definition of 
``home mortgage loan'' as proposed.
    ``As we stated in the proposed rule, the Agencies have relied on 
the scope of HMDA-reportable transactions to define ``home mortgage 
loan'' in the CRA regulations, in order to reduce burden on 
institutions by avoiding unnecessary costs and confusion, and have made 
conforming changes when the scope of HMDA-reportable transactions has 
changed, provided that the revised terms continue to meet the statutory 
purposes of the CRA. The Agencies are aware that the Bureau announced 
its intention to open a rulemaking to reconsider various aspects of the 
2015 HMDA Rule in its December 21, 2017, Public Statement on Home 
Mortgage Disclosure Act Compliance, which is available at https://www.consumerfinance.gov/about-us/newsroom/cfpb-issues-public-statement-home-mortgage-disclosure-act-compliance/. The Agencies will continue to 
review and monitor any new developments, including any amendments made 
to the cross-referenced definitions in HMDA and Regulation C that 
impact the CRA regulations, to ensure that such cross-referenced terms 
continue to meet the statutory objectives of the CRA.''
    3. On page 55736, the first and second full paragraphs in the 
second column are revised and two paragraphs are added following them 
to read as follows:
    ``The Agencies received three comments addressing the proposed 
revision. These commenters supported amending the definition of 
``consumer lending'' in the Agencies' CRA regulations to conform to 
changes in the scope of loans reportable under Regulation C, which will 
be effective January 1, 2018, but made additional suggestions, 
including some not related to the proposal. A trade association urged 
the Agencies to consider automatically home improvement loans not 
secured by a dwelling if the financial institution opts to have them 
considered. This commenter also suggested that if the financial 
institution opts not to have such loans considered, then the Agencies 
should not require the institution to produce data on those loans for 
CRA evaluation. A community organization suggested that the Agencies 
should have examiners evaluate consumer lending, including home 
improvement lending not secured by a dwelling, during CRA exams when 
such lending constitutes a ``significant amount'' of the bank's 
business rather than a ``substantial majority,'' as is currently 
required under 12 CFR __.22(a)(1). Another trade association encouraged 
the Agencies to create a fifth category under the ``consumer loan'' 
definition to take the place of the ``home equity loan'' category, 
which the Agencies proposed to remove as a result of home equity loans 
and home equity lines of credit being included in the amended 
definition of ``home mortgage loan.''
    ``The Agencies have considered the comments and are finalizing the 
definition of ``consumer lending'' as proposed. First, the commenters' 
suggestions to defer always to the financial institution on the 
inclusion of unsecured home improvement loans and to change 
``substantial majority'' to ``significant amount'' would require a 
change to the CRA regulations beyond the scope of the proposed 
amendments. Specifically, consumer loans are considered in the large 
bank lending test under 12 CFR __.22(a)(1) under two circumstances: 
``if the bank has collected and maintained [data], as required under 12 
CFR __.42(c)(1), and elects to have those loans considered'' or ``[i]f 
consumer lending constitutes a substantial majority of a bank's 
business.'' 12 CFR __.22(a)(1). Thus, in the case of financial 
institutions evaluated under the large bank lending test, following 
these commenters' recommendations would require a regulatory change in 
the retail lending test under 12 CFR __.22(a)(1), which was not 
proposed.
    ``Further, in regard to the commenter's suggestion to use 
``significant amount'' instead of ``substantial majority,'' loan 
products evaluated in the small and intermediate small bank tests are 
generally based on the financial institution's major product lines, or 
primary products, whichever term applies depending on the supervising 
agency. The categorization of consumer loans by type applies solely to 
financial institutions evaluated using the large bank lending test. The 
selection of major product lines, or primary products, for small and 
intermediate small banks typically involves a review of loan 
originations during the evaluation period, by loan type, along with a 
discussion with bank management to understand the bank's business 
focus. As a result, examiners already may include or exclude home 
improvement loans in evaluating bank performance if they are not a 
major product line, or primary product, as applicable.
    ``Second, the Agencies do not believe that creating a fifth, ``home 
improvement,'' category of consumer loans is warranted given the 
flexibility already provided through the supervisory process. 
Additionally, creating a separate ``home improvement loan'' category of 
consumer loans could result in additional burden for many financial 
institutions, particularly community banks, through the separate 
tracking of loans and could result in a double counting of loans, under 
HMDA and CRA, for home improvement purposes that are secured by a 
dwelling. For these reasons, the Agencies opted to consider home 
improvement loans not secured by a dwelling included in evaluating 
performance under the large bank lending test under the existing 
consumer loan categories of ``other secured'' and ``other unsecured,'' 
rather than to create a new category of consumer loans. Accordingly, 
the Agencies are finalizing the definition of ``consumer lending'' as 
proposed. We note, however, that although the Agencies are not adopting 
changes pursuant to the commenters' recommendations, the Agencies 
regularly review examination policies, procedures, guidance, and the 
CRA

[[Page 15301]]

regulations to better serve the goals of the CRA.''
    4. On page 55736, the first full paragraph in the third column is 
revised to read as follows:
    ``The Agencies received two comments on the proposed changes to the 
CRA public file content requirements. One trade association supported 
the Agencies' efforts to streamline the public file content 
requirements to make it consistent with the new HMDA public disclosure 
requirements. Another trade association suggested that because 
financial institutions will no longer need to provide HMDA Loan 
Application Registers to the public, financial institutions should also 
not be required to produce their CRA Loan Application Registers (CRA 
LARs) so as to reduce regulatory burden. Changing the requirements in 
the CRA public file with respect to CRA LARs would require a regulation 
change that was not proposed by the Agencies and did not have the 
benefit of notice and comment. Accordingly, the Agencies are adopting 
the revisions as proposed.''

    Dated: March 30, 2018.
Joseph M. Otting,
Comptroller of the Currency.
    By order of the Board of Governors of the Federal Reserve 
System, March 13, 2018.
Ann E. Misback,
Secretary of the Board.
    Dated at Washington, DC, this 12th of March, 2018.

    By order of the Board of Directors.

Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2018-06963 Filed 4-9-18; 8:45 am]
 BILLING CODE 4810-33; 6210-01; 6714-01-P