[Federal Register Volume 75, Number 118 (Monday, June 21, 2010)]
[Notices]
[Pages 35030-35033]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-14904]
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FEDERAL RESERVE SYSTEM
[Docket No. OP-1388]
RIN 7100-AD51
Home Mortgage Disclosure Act; Notice of Hearings
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Notice of public hearings; request for comment.
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SUMMARY: The Federal Reserve Board will conduct four public hearings on
potential revisions to the Board's Regulation C, which implements the
Home Mortgage Disclosure Act (HMDA). HMDA requires mortgage lenders to
provide detailed information about their mortgage lending activity to
federal agencies and the public. Consumers, consumer advocacy
organizations, mortgage lenders, and other interested parties will be
invited to participate in the hearings. The Board also invites members
of the public to attend the hearings and to comment on the issues that
will be the focus of the hearings. Additional information about the
hearings will be posted to the Board's Web site at http://www.federalreserve.gov.
DATES: The hearings are scheduled as follows.
Thursday, July 15, 2010: Federal Reserve Bank of Atlanta, 1000
Peachtree Street, NE., Atlanta, GA 30309, 8 a.m. to 1 p.m.
Thursday, August 5, 2010: Federal Reserve Bank of San Francisco,
101 Market Street, San Francisco, CA 94105, 8 a.m. to 1 p.m.
Thursday, September 16, 2010: Federal Reserve Bank of Chicago, 230
South LaSalle St., Chicago, IL 60604, 8 a.m. to 1 p.m.
Friday, September 24, 2010: Federal Reserve Board, 20th Street and
Constitution Avenue, NW., Washington, DC 20551, 8 a.m. to 3:30 p.m.
Comments from persons unable to attend the hearings or otherwise
wishing to submit written views on the issues raised in this notice
must be received by August 20, 2010.
ADDRESSES: You may submit comments, identified by Docket No. OP-1388,
by any of the following methods:
Agency Web Site: http://www.federalreserve.gov. Follow the
instructions for submitting comments at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
[[Page 35031]]
E-mail: [email protected]. Include the
docket number in the subject line of the message.
Fax: (202) 452-3819 or (202) 452-3102.
Mail: Address to Jennifer J. Johnson, Secretary, Board of
Governors of the Federal Reserve System, 20th Street and Constitution
Avenue, NW., Washington, DC 20551.
All public comments will be made available on the Board's Web site
at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as
submitted, unless modified for technical reasons. Accordingly, comments
will not be edited to remove any identifying or contact information.
Public comments may also be viewed electronically or in paper form in
Room MP-500 of the Board's Martin Building (20th and C Streets, NW.)
between 9 a.m. and 5 p.m. on weekdays.
FOR FURTHER INFORMATION CONTACT: Jennifer S. Benson, Jamie Z. Goodson,
or Maureen C. Yap, Attorneys, Paul Mondor, Senior Attorney, or John C.
Wood, Counsel, Division of Consumer and Community Affairs, Board of
Governors of the Federal Reserve System, Washington, DC 20551, at (202)
452-2412 or (202) 452-3667. For users of Telecommunications Device for
the Deaf (TDD) only, contact (202) 263-4869.
SUPPLEMENTARY INFORMATION:
I. Background
A. HMDA and Regulation C
The Home Mortgage Disclosure Act (HMDA), 12 U.S.C. 2801 et seq.,
enacted in 1975, requires depository institutions and certain for-
profit, nondepository institutions to collect, report to federal
agencies, and disclose to the public data about originations and
purchases of home mortgage loans (home purchase and refinancing) and
home improvement loans, as well as loan applications that do not result
in originations (for example, applications that are denied or
withdrawn). HMDA has three purposes. First, HMDA data can be used to
help determine whether institutions are serving the housing needs of
their communities. Second, HMDA data can help public officials target
public investment to attract private investment where it is needed.
Third, HMDA data can assist in identifying possible discriminatory
lending patterns and enforcing antidiscrimination statutes.
The Board's Regulation C implements HMDA. See 12 CFR Part 203. The
information reported under Regulation C includes, among other items:
Application date; loan type, purpose, and amount; property location and
type; race, ethnicity, sex, and annual income of the loan applicant;
action taken on the loan application (approved, denied, withdrawn,
etc.), and date of that action; whether the loan is covered by the Home
Ownership and Equity Protection Act (HOEPA); lien status (first lien,
subordinate lien, or unsecured); and certain loan price information.
Institutions report HMDA data to their supervisory agencies on an
application-by-application basis using a register format. Institutions
must make their loan/application registers available to the public,
with certain fields redacted to preserve applicants' privacy. The
Federal Financial Institutions Examination Council, on behalf of the
supervisory agencies, compiles the reported data and prepares an
individual disclosure statement for each institution, aggregate reports
for all covered institutions in each metropolitan area, and other
reports. These disclosure statements and reports are also available to
the public.
B. Prior Revisions to Regulation C
HMDA and Regulation C have been amended numerous times since they
were adopted in 1975. The Board last conducted a comprehensive review
of Regulation C in 2002. See 67 FR 7222, February 15, 2002; 67 FR
30771, May 8, 2002; and 67 FR 43218, June 27, 2002. The 2002 revisions
to Regulation C were intended to facilitate fair lending analysis and
enhance understanding of the home mortgage market generally and the
subprime market in particular. In adopting changes to Regulation C, the
Board carefully considered changes that had occurred in the home
mortgage market, including the growth of subprime lending.
Among other things, the 2002 revisions to Regulation C:
Required lenders to report pricing information for higher-
priced mortgage loans;
Required lenders to identify loans subject to HOEPA;
Required lenders to report denials of applications
received through certain preapproval programs and permitted lenders to
report requests for preapproval that are approved but not accepted;
Expanded the coverage of nondepository lenders by adding a
loan origination dollar-volume threshold of $25 million;
Required lenders to report whether a loan involves a
manufactured home; and
Required lenders to ask applicants their ethnicity, race,
and sex in applications taken by telephone.
In 2008, the Board amended Regulation C to revise the rules for
reporting price information on higher-priced mortgage loans. See 73 FR
63329, October 24, 2008. These revisions conformed Regulation C
requirements to the definition of ``higher-priced mortgage loan''
adopted by the Board under Regulation Z (Truth in Lending) in July
2008. The Regulation C revisions required lenders to report the spread
between a loan's annual percentage rate and a survey-based estimate of
annual percentage rates currently offered on prime mortgage loans of a
comparable type if the spread is equal to or greater than 1.5
percentage points for a first-lien loan or 3.5 percentage points for a
subordinate-lien loan.
II. Information About the Hearings
The hearings are open to the public. Seating will be limited,
however. Visitors will be required to register in advance for security
purposes.
All hearings will include panel discussions by invited speakers.
Other members of the public may deliver oral statements of five minutes
or less during an ``open-mike'' period. Written statements of any
length may be submitted for the record by submitting comments in
accordance with the instructions above.
Information on registration to attend the hearings, registration to
deliver an oral statement, and other information about the hearings, as
it becomes available, will be posted on the Board's Web site at http://www.federalreserve.gov.
III. Hearings Topics and Request for Comment
The hearings will serve three objectives. First, the Board will
gather information to evaluate the effectiveness of the 2002 revisions
to Regulation C in providing useful and accurate information about the
mortgage market. Second, the hearings will provide information that
will assist the Board in its pending review of Regulation C and help
assess the need for additional data. Third, the hearings will help
identify emerging issues in the mortgage market that may warrant
additional research.
The hearings' panel discussions will focus on, and the Board
solicits public comment on, the matters described below. The Board asks
that commenters address the importance or utility of particular
information in light of the purposes of HMDA and the burdens and
possible privacy risks associated with
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collecting and reporting that information.
A. Data Elements
As part of its review of Regulation C, the Board is seeking to
identify ways to improve the quality and usefulness of HMDA data. The
Board therefore is considering whether any data elements should be
added, modified, or deleted.
For example, Regulation C currently does not require lenders to
submit information on several factors lenders routinely use to make
credit decisions and set loan prices. These factors include information
about the borrower's creditworthiness and loan-to-value and debt-to-
income ratios. Regulation C also currently does not require lenders to
submit other information that some HMDA data users and others have
identified as potentially useful, such as an applicant's age and a
loan's originator channel (i.e., whether a loan is originated directly
by the lender or through a third party originator such as a mortgage
broker or correspondent). In addition, Regulation C currently requires
lenders to report rate spread data only for higher-priced mortgage
loans.
Some HMDA data users and others believe that collecting additional
information would improve the usefulness of HMDA data in identifying
possible discriminatory lending patterns and enforcing
antidiscrimination statutes. On the other hand, the Board recognizes
that requiring institutions to report additional data elements would
increase reporters' compliance burden and costs and could pose risks to
consumers' privacy.
In addition, Regulation C currently requires lenders to report only
the amount of an applicant's income relied on in processing the
application. Because lenders report only income they relied on in
considering an application, HMDA data users cannot distinguish low- or
moderate-income applicants from higher-income applicants who rely on
only a portion of their income for purposes of their loan applications.
Some HMDA data users and others have suggested that HMDA data would be
more useful for determining whether institutions serve the housing
needs of low- and moderate-income individuals if lenders were required
to collect and report each applicant's total income, rather than just
that relied on.
The Board recognizes, however, that it may be difficult to measure
total income in a way that generates consistent, meaningful data
because lenders may not collect information on applicants' total income
in all cases. For example, an applicant may qualify for a particular
loan on the basis of salary alone, and therefore may not provide the
lender with information on other sources of income, such as an annual
bonus, investment income, or alimony. Income sources that are included
on an application would be easier for lenders to report but would not
necessarily provide reliable information. To the extent lenders do not
rely on such income they likely would not have verified it, possibly
rendering such data of only questionable utility. Requiring lenders to
collect and report total income information would increase reporters'
compliance burden and costs.
The Board requests comment on the following questions:
What, if any, additional data should be collected? What
are the benefits, costs, and privacy issues associated with requiring
lenders to report, for example: (i) Wnderwriting data such as
borrower's credit score, loan-to-value ratio, combined loan-to-value
ratio (i.e., including both the reported loan and other debts), and
borrower's debt-to-income ratio; (ii) borrower's age; (iii) loan
originator channel; and (iv) rate spreads for all loans, instead of
only for higher-priced loans?
Should any existing data elements be modified? If so, how?
For example, what are the benefits, costs, and privacy issues
associated with requiring lenders to report total income, rather than
income relied on by the lender?
Should any existing data elements be eliminated? Why?
B. Coverage and Scope
Coverage
Regulation C currently requires depository institutions (i.e.,
banks, savings associations, and credit unions) and for-profit mortgage
lenders to submit HMDA data if they meet criteria set forth in the
rule. Whether a depository institution or other mortgage lender is
required to report depends on its size, the extent of its business in a
metropolitan statistical area, and the extent to which it engages in
residential mortgage lending. Some HMDA data users and others believe
that other types of institutions, such as mortgage brokers and non-
lender loan purchasers, also should be required to collect and report
HMDA data. The Board requests comment on the following questions:
Should mortgage brokers and non-lender loan purchasers be
required to report HMDA data? Should other types of institutions be
required to report? If so, which types?
Should any types of institutions be exempt from reporting?
Should the rules governing who must collect and report
HMDA data be revised in other ways? If so, how?
Scope
Regulation C currently requires lenders to report information about
home purchase loans, home improvement loans, and refinancings of home
purchase loans. The Board requests comment on the following questions:
Should any other types of mortgage loans be reported?
Should any types of mortgage loans be excluded from
reporting?
Should the rules governing which mortgage loans are
subject to reporting be revised in other ways? If so, how?
C. Preapproval Programs
Regulation C currently requires lenders to collect and report data
regarding requests under a preapproval program if the preapproval
request is denied; preapproval requests that are approved but not
accepted may be reported at the lender's option. Regulation C defines a
preapproval program as a program in which a lender, after a
comprehensive review of the creditworthiness of the applicant, issues a
written commitment to the applicant valid for a designated period of
time to extend a home purchase loan up to a specified amount. Questions
have been raised regarding whether lenders use preapproval programs as
defined by Regulation C and whether there is a clear benefit to
requiring lenders to report on these programs. The Board also is aware
that some lenders may have difficulty applying the definition of
preapproval program and determining when this requirement applies. In
addition, lenders that do understand the definition may evade the
reporting requirements, such as by communicating preapproval decisions
orally.
The Board requests comment on the following questions:
Do lenders use preapproval programs as defined by
Regulation C?
Is there a benefit to requiring lenders to report on these
programs?
How could the definition of preapproval program be
modified to be easier to apply and to make reporting more useful?
D. Compliance and Technical Issues
The Board among other things seeks to clarify and simplify
Regulation C in order to facilitate compliance and resolve technical
issues. The Board requests comment on the following questions:
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What are the most common compliance issues institutions
face under HMDA and Regulation C?
What parts of Regulation C would benefit from
clarification or additional guidance?
Are there technical issues regarding Regulation C that
should be resolved?
E. Other Issues
As part of its review of Regulation C, the Board is seeking to
identify emerging issues in the mortgage market that may warrant
additional research, respond to technological and other developments,
reduce undue regulatory burden on industry, and delete obsolete
provisions. The Board therefore requests comment on any emerging issues
likely to affect the usefulness and accuracy of HMDA data and on any
other changes to Regulation C the Board should consider.
By order of the Board of Governors of the Federal Reserve
System, June 15, 2010.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 2010-14904 Filed 6-18-10; 8:45 am]
BILLING CODE 6210-01-P