Background and Summary of Regulation C

INSTITUTIONS COVERED
DATA REQUIREMENTS
DISCLOSURE

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Regulation C implements the Home Mortgage Disclosure Act (HMDA) (12 U.S.C. 2801-2810), enacted in 1975. The period of 1988 through 1992 saw substantial changes to HMDA. Especially significant were the amendments expanding coverage to include many independent nondepository mortgage lenders, in addition to the previously covered banks, savings associations, and credit unions.

The purposes of HMDA are (1) to provide the public with information that will help show whether financial institutions are serving the housing credit needs of the neighborhoods and communities in which they are located; (2) to help public officials target public investments from the private sector to areas where they are needed; and (3) by requiring the collection and disclosure of data about applicant and borrower characteristics to identify possible discriminatory lending patterns and enforce antidiscrimination statutes.

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INSTITUTIONS COVERED

Regulation C covers two categories of financial institutions. The first category is a “depository institution”—a bank, savings association, or a credit union—that originated, in the preceding calendar year, a first-lien home-purchase loan (including refinancings of such loans) on a one- to four-family dwelling if (1) the institution is federally insured or regulated; (2) the loan is federally guaranteed, insured, or supplemented; or (3) the institution intended to sell the loan to the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation. The other category of financial institution is a for-profit, nondepository “mortgage-lending institution.” An entity is considered to be a mortgage lending institution if, in the preceding calendar year, 10 percent or more of its loan-origination volume, measured in dollars, consisted of home-purchase loans or refinancings.

An institution is exempt if it does not have a home or branch office in a metropolitan statistical area (MSA). Nondepository mortgage lenders are considered to have a branch office in an MSA if they took applications for, originated, or purchased five or more home-purchase or home-improvement loans on properties located in that MSA in the previous calendar year.

An institution is also exempt from HMDA if, at the end of the previous calendar year, it had assets below a specified threshold. For depository institutions, the threshold was $29 million or less as of December 31, 1997. This figure is adjusted annually to reflect the annual percentage increase in the Consumer Price Index. For nondepository mortgage lenders, a $10 million threshold applies. Regardless of asset size, however, nondepository mortgage lenders are covered by HMDA if they originated 100 or more home-purchase loans (including refinancings of such loans) in the preceding calendar year.

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DATA REQUIREMENTS

For each calendar year, a financial institution must report data on its orginations and purchases of home-purchase and home-improvement loans. It must also provide data on loan applications that did not result in originations: loan denials, withdrawn applications, applications that are approved but not accepted, and application files that are closed for incompleteness.

Regulation C defines a home-purchase loan as a loan secured by a dwelling (both one- to four-family and multifamily) and made for the purpose of purchasing that, or another, dwelling. A home-improvement loan is defined as one that will be used for repairing, rehabilitating, or remodeling a dwelling, and that is classified by the institution as a home improvement loan. Home-improvement loans may be secured or unsecured.

Institutions must report the application date, the action taken on the loan, and the date action was taken. They must also identify the type (conventional or government-insured), purpose (home purchase, home improvement, refinancing, multifamily), amount, and owner-occupancy status of the loan.

The MSA number, state and county codes, and the census-tract number of the location of the property must be reported if the property is in an MSA in which the institution has a home or branch office. Certain depository institutions must provide this data for all loans, even for those loans located outside any MSA.

Institutions must also report the race or national origin, the sex, and the annual income of applicants for loans originated or applied for, but not for loans purchased. If an institution originates or purchases a loan and then sells it in the same calendar year, it must report the type of entity that purchased the loan.

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DISCLOSURE

The HMDA loan/application register (HMDA-LAR) must be submitted to the financial institution’s regulatory agency by March 1 following the calendar year in which the data was collected. The Federal Financial Institutions Examination Council (FFIEC) produces a disclosure statement for each institution, cross-tabulating the individual loan data in various groupings. These statements are mailed to the financial institutions. An institution’s home office must make its disclosure statement available to the public within three business days of receipt. Additionally, an institution must either (1) make its disclosure statement available to the public in at least one branch office in each additional MSA in which it has offices or (2) post in the lobby of each branch office the address to which written requests for disclosure statements should be sent, and mail or deliver a copy upon request.

An institution must also make its loan/application register available to the public after modifying it to delete the application or loan number, the date the application was received, and the date of action taken (to protect the privacy of applicants and borrowers). The modified HMDA-LARs must be made publicly available upon request.

The FFIEC also produces aggregate tables to illustrate the lending activity of all covered financial institutions in each MSA. The disclosure statements and these tables are sent to central data depositories, such as public libraries, in each MSA, and are also available directly from the FFIEC and on the FFIEC’s website.

An institution must retain its full HMDA-LAR for at least three years for examination purposes. It must also make each modified HMDA-LAR available to the public for three years and each disclosure statement for five years. Institutions may impose reasonable fees for costs incurred in providing or producing the data for public release.