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Supplement I to Part 203--Staff Commentary
Introduction
1. Status. The commentary in this supplement is the vehicle by
which the Division of Consumer and Community Affairs of the Federal
Reserve Board issues formal staff interpretations of Regulation C
(12 CFR part 203).
Section 203.1--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, which 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 as a home purchase
loan an assumption (or an application for an assumption) 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 203.2--Definitions
2(b) Application. 1. Consistency with Regulation B. Board
interpretations that appear in the official staff commentary to
Regulation B (Equal Credit Opportunity, 12 CFR part 202, Supplement
1) 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.
2(c) 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 metropolitan areas 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
metropolitan areas where they do not have a physical location.)
2(d) 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.
2(e) Financial institution. 1. General. An institution that met
the test for coverage under HMDA in year 1, and then 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
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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
Sec. 203.2(e)(2)(ii)(A) and (B), 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. Depository institutions with assets at or below $32
million are exempt from collecting data for 2002.
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 I
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
Secs. 203.1(c) and 203.4(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. 203.2(e)(1) 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. 203.2(e)(2) of Regulation C.
2(g) 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.
2(h) 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, 24 CFR 3500.5(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 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.
Section 203.4--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.
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vi. A financial institution submits all required data to its
supervisory 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.
4(a)(1) Application number and application date. 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) Purpose.
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) Occupancy.
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), Property location.)
Paragraph 4(a)(7) Loan amount.
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) Type of action taken and date.
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 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) Property location.
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
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report the property location by census tract in a metropolitan area
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
metropolitan area 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) Applicant and income data.
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) Purchaser.
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) Rate spread information.
1. Treasury securities. To determine the yield on a Treasury
security for the pricing information, lenders may use the Board's
``Selected Interest Rates'' (statistical release H-15) or the actual
auction results. Treasury auctions are held at different intervals
for the different types of securities. These figures are published
by major financial and metropolitan newspapers and are also
available from Federal Reserve Banks. Lenders must use the yield on
the security that has the nearest maturity at issuance to the loan's
maturity. For example, if a lender must compare the annual
percentage rate to Treasury securities with either 7-year or 10-year
maturities, the annual percentage rate for a 9-year loan is compared
with securities that have a 10-year maturity. If the loan maturity
is exactly halfway between, the annual percentage rate is compared
with the Treasury security that has the lower yield. For example, if
the loan has a maturity of 20 years and comparable securities have
maturities of 10 years with a yield of 6.501 percent and 30 years
with a yield of 6.906 percent, the annual percentage rate is
compared with the yield of 6.501 percent, the lower of the two
yields.
Paragraph 4(c)(3) Optional data--home-equity lines of credit.
1. An institution that opts to report home-equity lines reports
the disposition of all applications, not just originations.
Paragraph 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 203.5(a)--Disclosure and Reporting
Paragraph 5(a) Reporting to agency.
1. Submission of data. Institutions submit data to their
supervisory agencies in an automated, machine-readable form. The
format must conform to that of the HMDA/LAR. An institution should
contact its federal supervisory 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
nonautomated 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 metropolitan area, or
chronologically, or by census tract numbers, or in any other
particular order.
5. Change in supervisory agency. If the supervisory 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 its new supervisory 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
parent's supervisory agency) 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 metropolitan
areas in which they have home or branch offices.
Paragraph 5(b) Public disclosure of statement.
1. Business day. For purposes of Sec. 203.5, a business day is
any calendar day other than a Saturday, Sunday, or legal public
holiday.
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2. Format. An institution 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 CD Rom).
Paragraph 5(c) Public disclosure of modified loan/application
register.
1. Format. An institution may make the modified register
available in paper or automated form (such as by PC diskette or
computer tape). 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.
Paragraph 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
financial regulatory agencies and HUD 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 203.6--Enforcement
Paragraph 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.
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