[Federal Register Volume 62, Number 101 (Tuesday, May 27, 1997)]
[Rules and Regulations]
[Pages 28620-28626]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-13593]
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FEDERAL RESERVE SYSTEM
12 CFR Part 203
[Regulation C; Docket No. R-0951]
Home Mortgage Disclosure
AGENCY: Board of Governors of the Federal Reserve System.
[[Page 28621]]
ACTION: Final rule.
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SUMMARY: The Board is publishing final revisions to Regulation C (Home
Mortgage Disclosure). The revisions implement the amendments to the
Home Mortgage Disclosure Act included in the Economic Growth and
Regulatory Paperwork Reduction Act of 1996. The action makes final an
interim rule adopted in January, which set the asset-exemption
threshold for depository institutions at $28 million. The final rule
also establishes an alternative way for institutions to provide
disclosure statements in metropolitan areas where they have branch
offices, which they may begin using immediately. In addition, the Board
is extending its information collection authority under the Paperwork
Reduction Act for another three years, and making technical amendments
to the transmittal sheet accompanying the loan/application register.
DATES: Effective date. This rule is effective July 1, 1997.
Applicability date. This rule applies to all data collection in
1997.
Compliance date. Voluntary compliance with the disclosure
provisions in Sec. 203.5 and paragraphs III. D., E., and F. of Appendix
A to Part 203 can begin June 1, 1997.
FOR FURTHER INFORMATION CONTACT: Jane Jensen Gell, Senior Attorney, or
Manley Williams, Staff Attorney, Division of Consumer and Community
Affairs, Board of Governors of the Federal Reserve System, at (202)
452-3667; for the hearing impaired only, Diane Jenkins,
Telecommunications Device for the Deaf, at (202) 452-3544.
SUPPLEMENTARY INFORMATION:
I. Background
The Home Mortgage Disclosure Act of 1975 (HMDA) (12 U.S.C. 2801 et
seq.) requires most mortgage lenders located in metropolitan
statistical areas (MSAs) to collect data about their housing-related
lending activity. Annually, lenders must file reports with their
federal supervisory agencies and make disclosures available to the
public. The Board's Regulation C (12 CFR Part 203) carries out the
provisions of HMDA. Provisions of the Economic Growth and Regulatory
Paperwork Reduction Act of 1996 (the 1996 Act) (Pub. L. 104-208, 110
Stat. 3009) amended HMDA to expand the exemption for small depository
institutions and modify the disclosure requirements.
To implement the amendments to HMDA, in December 1996 the Board
published a proposal for public comment. (61 FR 68168, Dec. 27, 1996.)
The Board received about 30 comment letters. The comments came from
community groups, financial institutions and their representatives, and
financial services firms. Overall, the commenters supported the
proposed amendments, although views were mixed on some issues. Based on
a review of the comment letters and upon further analysis, the Board
has made some changes to the proposal, as discussed below. The revised
exemption for depository institutions is applicable to all data
collection in 1997. Compliance with the revised disclosure provisions
is optional until July 1, 1997, the effective date for mandatory
compliance.
II. Revisions
A. Increasing the Exemption Based on Asset Size
The 1996 Act increased the asset-size exemption for depository
institutions. Previously, depository institutions with assets of $10
million or less were exempt from HMDA. The 1996 Act adjusts the $10
million figure by the change since 1975 in the Consumer Price Index for
Urban Wage Earners and Clerical Workers (CPIW)--rounded to the nearest
million--and provides for annual adjustments thereafter in accordance
with CPIW changes. In January, the Board published an interim rule to
implement the first threshold change. This change reflects the change
in the CPIW (not seasonally adjusted) from 1975 through 1996. On an
annual average basis, the ratio of the CPIW for 1996 to the CPIW for
1975 was 2.848. Thus, the new threshold, rounded to the nearest
million, is $28 million. Depository institutions with assets of $28
million or less as of December 31, 1996 are not required to collect
HMDA data in 1997. (62 FR 3603, Jan. 24, 1997.) The Board is now
publishing final revisions to Sec. 203.3(a)(1)(ii) of Regulation C and
making conforming amendments to Appendix A--Form and Instructions for
Completion of HMDA Loan/Application Register, and to Supplement I--
Staff Commentary.
Under the proposal, the annual adjustments to the asset-size
exemption threshold were to be based on the change in the CPIW data for
the month of December as compared to the previous December, and
published in the Federal Register as soon as those data became
available in January. The proposal requested comment, however, on
whether the Board should base the annual adjustments on the data for
the month of November instead, which would allow the Board to announce
the new threshold by year-end. Many of the commenters on this issue
recommended that the Board use the November data, suggesting that this
could reduce burden by providing certainty and predictability of
coverage for the initial weeks of the reporting year. Other commenters
recommended using the December data because of the potential for a
higher threshold. A few commenters recommended that the Board publish
an initial threshold based on the November data and revise it upward,
if appropriate, based on the December data.
A related issue is whether the annual adjustments should be based
on the CPIW data for December of the current year as compared to the
CPIW data for December of the previous year, or on the annual average
of the CPIW for the current year compared to the annual average of the
CPIW for the previous year. Under the proposal, the annual adjustments
to the asset-size exemption threshold were to be based on comparing the
data for December with the data for the previous December. Some
commenters asserted that this would produce undesirable volatility in
the annual adjustments, especially because the Board would not be using
seasonally adjusted numbers.
Based on the comments and upon further analysis, the Board has
decided to base the threshold change on the annual average of the CPIW
data for the 12-month period ending in November. Because the 1996 Act
provides that the increase should be based on the ``annual percentage
increase,'' the Board believes that comparing the average of 12 months
of data with the average of the prior 12 months of data, would be more
appropriate than comparing the data for a single month with the data
for that month in the prior year. The Board also believes that basing
the threshold change on a 12-month period ending in November rather
than on a 12-month period ending in December would be less burdensome.
This will allow the Board to revise the regulation and publish the new
threshold in the Federal Register in December, for compliance beginning
January 1. Although in some cases this could result in a lower
threshold than if the Board used a 12-month average ending in December,
a review of the CPIW data suggests that such instances would be rare.
B. Alternative Disclosure Statement Requirements
The 1996 Act amends section 304 of HMDA (12 U.S.C. 2803) to provide
that an institution must make its disclosure statement available at the
institution's home office and either (1) in at least one
[[Page 28622]]
branch office in each additional MSA where the institution has offices;
or (2) provide notice that the disclosure statement is available from
the home office upon written request, and mail or deliver a copy within
fifteen calendar days of receiving a written request.
The proposal did not require institutions to receive requests at
their home office, but permitted them to specify the address where
requests should be sent, for more efficient distribution of the data.
The proposal also did not require an institution to post a notice
identifying the address where a written request should be sent. A
number of community group commenters expressed concern that eliminating
the requirement that the disclosure be available at certain branches
would result in the diminished availability of the HMDA data in many
cases, and a reduction in timely access to the data in almost all
cases. They believed that these problems would be exacerbated if
institutions did not post the address to which requests for disclosures
should be sent.
The statute requires that institutions which opt for the
alternative branch disclosure approach must provide a notice at branch
offices stating that the information is available from the home office
upon request. This provision could be read to require that requests go
to institutions' home offices, but the Board does not believe that such
a strict interpretation is necessary. The intent of the provision is to
reduce burden while preserving the public availability of the data. The
Board believes that if an institution chooses to specify a service
center or a central location for requests relating to all banks in a
multibank holding company, for example, that is permissible. After
consideration of the comments and upon further analysis, however, the
Board has determined that to preserve the public availability of the
data, it is reasonable and appropriate to require banks to post the
address to which a request should be sent. Accordingly, the final rule
permits institutions that elect to provide the information upon request
instead of at one branch per MSA, to select the address to which
requests should be sent, but requires them to post that address in each
branch office in an MSA. The Board believes that this approach will
best satisfy the amendment's goals of reducing compliance burden while
preserving the prompt public availability of the data. The Board has
revised Sec. 203.5 and Appendix A--Form and Instructions for Completion
of HMDA Loan/Application Register accordingly.
Because the requirements for public disclosure of the disclosure
statement differ from the requirements for the modified loan
application register, the Board has also reorganized several paragraphs
in Appendix A, Section III. Submission of HMDA-LAR and Public Release
of Data to clarify the requirements. A cross reference in Supplement
I--Staff Commentary has been revised accordingly. As part of this
reorganization, the Board has clarified some requirements that may have
been ambiguous. For example, the revised section makes clear that an
institution need not prepare a modified loan application register in
advance of receiving a request for it.
C. Revisions to the HMDA Loan/Application Register
The Board proposed to make three minor revisions to the HMDA loan/
application register, and has adopted the changes generally as
proposed. First, the Board deleted the requirement to list the name and
address of the respondent's supervisory agency. Because respondents
must report the agency code, this additional requirement was
unnecessary. Second, to facilitate prompt communication, the Board
added a blank for the respondent's facsimile number. Third, the Board
added a notice required under the Paperwork Reduction Act, but shifted
the location of that notice from the transmittal form to the Paperwork
Reduction Act Notice section of the Instructions for Completion of the
HMDA Loan/Application Register.
III. Regulatory Flexibility Analysis
In accordance with section 3(a) of the Regulatory Flexibility Act
(5 U.S.C. 604), the Board's Office of the Secretary has reviewed the
amendments to Regulation C. Overall, the amendments reduce the burden
on small entities. The regulatory revisions implement the 1996 Act
which, in part, increases the exemption threshold for depository
institutions. The 1996 Act also creates an alternative means for making
branch disclosures available. The Board certifies that the regulatory
revisions will not have an adverse effect on a substantial number of
small entities.
IV. Paperwork Reduction Act
A. Paperwork Burden
The revisions to the information collection requirements are found
in 12 CFR 203.3, 203.5, and Appendix A to Part 203 and implement the
data collection and reporting requirements established by the Home
Mortgage Disclosure Act. The respondents are mortgage lenders in
metropolitan areas. Under the act, each respondent must make its loan/
application register available to the public for three years; and must
provide for five years the disclosure statement that the Federal
Financial Institutions Examination Council prepares from the data
submitted by the respondent. The data provide the public and government
officials with information to enable them to determine whether mortgage
lenders are fulfilling the housing needs of the communities and
neighborhoods in which they are located and to assist public officials
in their determination of the distribution of public sector
investments.
The amendments decrease the number of respondents and ease
compliance with the public disclosure requirements of the regulation.
The amendments directly affect small businesses: many are no longer
required to collect, report, or disclose the information.
Regulation C applies to all types of financial institutions and
other mortgage-lending institutions that meet the coverage tests. Under
the Paperwork Reduction Act, however, the Board accounts for the
paperwork burden associated with Regulation C only for state member
banks, their subsidiaries, subsidiaries of bank holding companies, and
other entities regulated by the Federal Reserve. Any estimates of
paperwork burden for other respondents are provided by the federal
agency or agencies that supervise them.
The Board estimates that the effect of the amendments on the burden
per response is negligible. The estimated burden per response varies
from 10 to 10,000 hours, depending on individual circumstances, with
estimated averages of 202 hours for state member banks and 160 hours
for mortgage banking subsidiaries.
It is estimated that of the 565 state member banks that were
covered in 1996 because their assets exceeded the $10 million
threshold, 39 will be exempt as a result of the higher threshold. The
93 mortgage banking subsidiaries reporting HMDA data to the Federal
Reserve remain covered. The total amount of annual burden is estimated
to decrease from 129,168 hours to 121,368 because of these exemptions.
The Board estimates that there would be no capital or start-up cost
associated with these amendments, and that there is no annual cost
burden beyond the estimated burden hours.
The Board did not receive any comments specifically addressing the
burden estimate.
[[Page 28623]]
B. OMB Control Number
Under the Paperwork Reduction Act, an agency may not conduct or
sponsor, and an organization is not required to respond to, a
collection of information unless it displays a currently valid OMB
control number. The Federal Reserve's OMB control number applicable to
the HMDA-LAR data collection is 7100-0247.
C. Confidentiality
The Board has previously determined that the HMDA loan/application
register is required by law (12 U.S.C. 2801-2810; 12 CFR Part 203) and
completion of the register, submission to the appropriate federal
supervisory agency, and disclosure to the public on request are
mandatory. The data, as modified according to Appendix A of the
regulation (paragraph III.E.), are made publicly available and are not
considered confidential. Information that might identify individual
borrowers or applicants is given confidential treatment under exemption
6 of the Freedom of Information Act (5 U.S.C. 552(b)(6)).
D. Extension of Authority
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
3506; 5 CFR 1320 Appendix A.1), the Board has reviewed Regulation C
under the authority delegated to the Board by the Office of Management
and Budget. The Board is extending the authority to collect the HMDA
loan/application register for three years through May 31, 2000.
E. Request for Comments
The Board has a continuing interest in the public's opinions of
Federal Reserve collections of information. Comments regarding the
burden estimate, or any other aspect of this collection of information,
including suggestions for reducing the burden, may be sent at any time
to: Secretary, Board of Governors of the Federal Reserve System, 20th
and C Streets, N.W., Washington, DC 20551; and to the Office of
Management and Budget, Paperwork Reduction Project (7100-0247),
Washington, DC 20503.
List of Subjects in 12 CFR Part 203
Banks, banking, Consumer protection, Federal Reserve System,
Mortgages, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the Board amends 12 CFR
part 203 as follows:
PART 203--HOME MORTGAGE DISCLOSURE (REGULATION C)
1. The authority citation for part 203 continues to read as
follows:
Authority: 12 U.S.C. 2801-2810.
2. Section 203.3 is amended by revising paragraph (a)(1)(ii) to
read as follows:
Sec. 203.3 Exempt institutions.
(a) Exemption based on location, asset size, or number of home
purchase loans.
(1) * * *
(ii) The institution's total assets were at or below the asset
threshold established by the Board. For data collection in 1997, the
asset threshold is $28 million as of December 31, 1996. For subsequent
years, the Board will adjust the threshold 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.
The Board will publish any adjustment in the asset figure in December.
* * * * *
3. Section 203.5 is amended as follows:
a. Paragraph (b) is revised;
b. Under paragraph (c), the last sentence is revised; and
c. Paragraph (e) is revised.
The revisions and additions read as follows:
Sec. 203.5 Disclosure and reporting.
* * * * *
(b) Public disclosure of statement. (1) A financial institution
shall make its mortgage loan disclosure statement (to be prepared by
the Federal Financial Institutions Examination Council) available to
the public at its home office no later than three business days after
receiving it from the Examination Council.
(2) In addition, a financial 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 additional MSA where the institution has offices (the disclosure
statement need only contain data relating to the MSA where the branch
is located); or
(ii) Post the address for sending written requests for the
disclosure statement in the lobby of each branch office in an MSA 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 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 loan application register. * * * The
modified register need only contain data relating to the MSA for which
the request is made.
* * * * *
(e) Notice of availability. A financial institution shall post a
general notice about the availability of its HMDA data in the lobby of
its home office and of each branch office located in an MSA. It shall
promptly upon request provide the location of the institution's offices
where the statement is available for inspection and copying, or it may
include the location in the notice.
4. In Appendix A to Part 203 under the heading Paperwork Reduction
Act Notice, the undesignated paragraph is revised to read as follows:
Appendix A to Part 203--Form and Instructions for Completion of HMDA
Loan/Application Register
Paperwork Reduction Act Notice
Public reporting burden for collection of this information is
estimated to vary from 10 to 10,000 hours per response, with an
average of 202 hours per response for state member banks and 160
hours per response for mortgage banking subsidiaries, including time
to gather and maintain the data needed and to review instructions
and complete the information collection. This report is required by
law (12 U.S.C. 2801-2810 and 12 CFR part 203). An agency may not
conduct or sponsor, and an organization is not required to respond
to, a collection of information unless it displays a currently valid
OMB Control Number. The OMB Control number for this information
collection is 7100-0247. Send comments regarding this burden
estimate or any other aspect of this collection of information,
including suggestions for reducing the burden, to Secretary, Board
of Governors of the Federal Reserve System, Washington, D.C. 20551;
and to the Office of Information and Regulatory Affairs, Office of
Management and Budget, Washington, D.C. 20503.
* * * * *
5. Paragraph I of Appendix A to Part 203 is amended as follows:
a. Paragraph A. is amended by redesignating the introductory text,
paragraph 1., and paragraph 2., as paragraph 1., paragraph 1.a., and
paragraph 1.b., respectively;
b. Newly designated paragraph 1.a. is revised;
c. A new paragraph 2. is added; and
d. The undesignated paragraph EXAMPLE, is designated as paragraph
3. and revised.
[[Page 28624]]
The addition and revisions read as follows:
* * * * *
I. Who Must File a Report
A. Depository Institutions
1. * * *
a. Had assets of more than the asset threshold for coverage as
published by the Board each year in December, and
b. * * *
2. For data collection in 1997, the asset threshold is $28
million in total assets as of December 31, 1996.
3. Example. If on December 31 you had a home or branch office in
an MSA and your assets exceeded the asset threshold, you must
complete a register that lists the home-purchase and home-
improvement loans that you originate or purchase (and also lists
applications that did not result in an origination) beginning
January 1.
* * * * *
6. Paragraph III. of Appendix A to Part 203 is amended as follows:
a. Paragraph D. is revised;
b. Under paragraph E., paragraph 2. is revised and a new paragraph
3. is added;
c. Paragraph F. is removed; and
d. Paragraph G. is redesignated as paragraph F., and in newly
redesignated paragraph F, the first paragraph following the heading is
designated as paragraph 1. and a new heading is added to the newly
designated paragraph 1., and paragraph 2. is added after the Home
Mortgage Disclosure Act Notice.
The revisions and additions read as follows:
* * * * *
III. Submission of HMDA-LAR and Public Release of Data
* * * * *
D. Availability of disclosure statement. 1. The Federal
Financial Institutions Examination Council (FFIEC) will prepare a
disclosure statement from the data you submit. Your disclosure
statement will be returned to the name and address indicated on the
transmittal sheet. Within three business days of receiving the
disclosure statement, you must make a copy available at your home
office for inspection by the public. For these purposes a business
day is any calendar day other than a Saturday, Sunday, or legal
public holiday. You also must either:
a. Make your disclosure statement available to the public,
within ten business days of receiving it from the FFIEC, in at least
one branch office in each additional MSA where you have offices (the
disclosure statement need only contain data relating to properties
in the MSA where the branch office is located); or
b. Post in the lobby of each branch office in an MSA the address
where a written request for the disclosure statement may be sent,
and mail or deliver a copy of the statement to any person requesting
it, within fifteen calendar days of receiving a written request. The
disclosure statement need only contain data relating to the MSA for
which the request is made.
2. You may make the disclosure statement available in paper form
or, if the person requesting the data agrees, in automated form
(such as by PC diskette or computer tape).
E. Availability of modified loan application register.
* * * * *
2. You may make the modified register available in paper or
automated form (such as by PC diskette or computer tape). Although
you are not required to make the modified loan application register
available in census-tract order, you are strongly encouraged to do
so in order to enhance its utility to users.
3. You must make your modified register available following the
calendar year for which the data are complied, by March 31 for a
request received on or before March 1, and within 30 days for a
request received after March 1. You are not required to prepare a
modified loan application register in advance of receiving a request
from the public for this information, but must be able to respond to
a request within 30 days. A modified register need only reflect data
relating to the MSA for which the request is made.
F. Posters.
1. Suggested language. * * *
2. Additional language for institutions making the disclosure
statement available upon request. For an institution that makes its
disclosure statement available upon request instead of at branch
offices must post a notice informing the public of the address to
which a request should be sent. For example, the institution could
include the following sentence in its general notice: ``To receive a
copy of these data send a written request to [address].''
* * * * *
7. In Appendix A to part 203, the LOAN/APPLICATION REGISTER
Transmittal Sheet is revised to read as follows:
* * * * *
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* * * * *
8. Supplement I to Part 203 is amended as follows:
a. Under Section 203.3--Exempt Institutions, under 3(a) Exemption
based on location, asset size, or number of home-purchase loans, the
second sentence of Paragraph 1. General is revised; and
b. Under Section 203.5--Disclosure and Reporting, under 5(e) Notice
of availability, the parenthetical at the end of Paragraph 1. Poster--
suggested text is revised.
The revisions read as follows:
Supplement I to Part 203--Staff Commentary
* * * * *
Section 203.3--Exempt Institutions
3(a) Exemption based on location, asset size, or number of home-
purchase loans.
1. General. * * * For example, a bank whose assets are at or
below the threshold on December 31 of a given year reports data for
that full calendar year, in which it was covered, but does not
report data for the succeeding calendar year. * * *
* * * * *
Section 203.5--Disclosure and Reporting
5(e) Notice of availability.
1. Poster--suggested text. * * * (Appendix A of this part,
paragraph III.F.)
* * * * *
By order of the Board of Governors of the Federal Reserve
System, May 19, 1997.
William W. Wiles,
Secretary of the Board.
[FR Doc. 97-13593 Filed 5-23-97; 8:45 am]
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