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Inactive Financial Institution Letters 

Home Mortgage Disclosure Act
February 13, 1996

SUBJECT: New Staff Commentary on HMDA Reporting Requirements

The Board of Governors of the Federal Reserve (Federal Reserve) has adopted its staff s commentary that interprets Regulation C, which implements the Home Mortgage Disclosure Act (HMDA). The attached commentary is being provided to all FDIC-supervised institutions because of the interest expressed by many institutions that may become subject to Regulation C as a result of future mergers and acquisitions.

Previously, A Guide to HMDA Reporting -- Getting It Right!, the Federal Financial Institutions Examination Council s (FFIEC) annual publication, was the only guidance available from the Federal Reserve on the requirements of Regulation C and its Appendix A, the instructional portion of the regulation. The new commentary complements Appendix A and should he read alongside it for fuller understanding. The informal presentation in the Guide will remain a helpful reference for lending institutions, especially its flow chart depicting HMDA coverage criteria, the step-by-step guidance to completion of the report form, and the table of state and county codes for counties in Metropolitan Statistical Areas (MSAs). The 1996 Guide will be mailed in March to HMDA-reporting institutions supervised by the FDIC.

The staff commentary interprets many complex data reporting issues, including:

  • Clarification of reporting requirements for transactions involving refinancings, broker and investor institutions, affiliate bank underwriting, participations, and assumptions. For example, Paragraph 1(c)(2),"Scope," clarifies that transactions involving renewal, modification, extension, or consolidation -- but not satisfaction and replacement -- of an existing obligation are not refinancings for HMDA purposes and, thus, are not reported.

  • Definitions of an application, branch office, dwelling, home- improvement loan and home-purchase loan. The discussion of applications concludes that prequalification requests are not applications for purposes of Regulation C, even though they may be applications under the Federal Reserve s Regulation B, which implements the Equal Credit Opportunity Act.

  • Descriptions of institutions that are exempt from HMDA. Building on ( the 1995 Guide s scenarios is the addition of the case in which a newly formed institution acquires a covered institution. Post-merger data collection for the year of the merger is optional; however, reporting pre-merger transactions for the covered institution is required.

  • Clarification of issues concerning compilation of loan data, including reporting of counteroffers, rescinded transactions, conditional approva1s, and applications approved but not accepted; home improvement loans involving multiple properties; and collecting data on applicants e1ectronically.

Also, the commentary deals with two technical changes that affect the collection of data during calendar year 1996. These technical changes have resulted in two revisions to the CY96 FFIEC HMDA data collection software, which has been provided to all FDIC-supervised HMDA-reporting institutions. The changes are:

  • Appendix A of Regulation C instructs institutions to enter owner- occupancy code 3 ("not applicable") for a multi-family property that houses five or more families, The commentary allows, hut does not require, an institution to report the actual owner-occupancy status of a multi-family property (Paragraph 4(a)(3),"Occupancy").

  • An institution may report property location by entering the code for a block numbering area (BNA) (Paragraph 4(a)(6), "Property ( location"). Institutions that are required by the recently revised Community Reinvestment Act regulations (12 CFR 345.42) to report lending data are now required, by Regulation C, to record property locations of all HMDA-reportable loans and app1ications (12 CFR 203.4). For those locations within BNAs, the BNA number may be recorded.

The Federal Reserve will revise the commentary as needed to include clarifications of other issues and future amendments to Regulation C. If you have questions concerning the staff commentary or other HMDA issues, Please contact your FDIC regional office.

Carmen J. Sullivan


Regional Offices

PDF Format (68 kb, PDF help or hard copy), HTML Format

Distribution: FDIC Supervised Banks (Commercial and Savings)

Last Updated 11/9/2011

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