FRB Issues Proposal to Expand HMDA Reporting

By Lucy Griffin, Editor, Compliance Action

The FRB has published a proposal to amend Regulation C, Home Mortgage Disclosure, to increase the amount of information that institutions report on the Loan Application Register ("LAR"). The number of items reported would increase from 13 to17 items.

The FRB's rationale for expanding data reporting is to provide more robust information about subprime and predatory lending. The proposed new LAR would include information on the terms of the loan by requiring lenders to report the APR (Annual Percentage Rate) and to indicate whether the loan is subject to the Home Ownership and Equity Protection Act ("HOEPA") rate, to indicate whether the property is a manufacture home, and to report race and ethnicity using multiple categories.

The proposal incorporates new monitoring data categories for reporting race and ethnicity as designated by OMB. The proposal would make a significant change from previous versions of Regulation C by allowing reporting of multiple race or ethnic categories.

The proposal also broadens the number and types of loans that would be reported. The new categories include mandatory reporting of open-end home equity lines of credit and reporting all home improvement loans, without regard to how the institution >
In addition, the definition of refinancing would be broadened to include virtually all loans secured by the borrower's home. This would include reporting of loans for non-purchase related activities such as funding costs of education.

The proposal would also make the significant change of including pre-approvals. These applications have been exempt from HMDA reporting unless and until a property is involved. The FRB now proposes to capture pre-approvals that are considered potentially important for fair lending examinations. These would be reported by indicating n/a for the property location.

The FRB staff has designed a new LAR that they believe will strike a reasonable balance between regulatory burden and the need for and usefulness of the additional data. Industry comments will be critical in enabling the FRB to evaluate whether the balance is correct or unduly burdensome. The FRB is requesting comments within 60 days of publication which should occur in the first days of December making comments due at the beginning of February. Happy holidays!

All institutions affected by this proposal should take the time to prepare and submit a comment letter. A model comment letter will be available on this website shortly.

The memorandum and proposal have been posted at:
http://www.bog.frb.fed.us/boarddocs/meetings/2000/20001129/OpenMemos.htm

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